Rael v. Davis

• Decision Date: 24 September 2008
• Docket Number: No. B197971.,No. B200217.,B197971.,B200217.
• Citation: 83 Cal. Rptr. 3d 745,166 Cal.App.4th 1608
• Court: California Court of Appeals Court of Appeals
• Parties: CRUZ CARDENAS RAEL, Plaintiff and Appellant, v. DAVID M. DAVIS, Defendant and Respondent; CRUZ CARDENAS RAEL, Plaintiff and Respondent, v. DAVID M. DAVIS, Defendant and Appellant.

166 Cal.App.4th 1608

83 Cal. Rptr. 3d 745

CRUZ CARDENAS RAEL, Plaintiff and Appellant, v. DAVID M. DAVIS, Defendant and Respondent;

CRUZ CARDENAS RAEL, Plaintiff and Respondent, v. DAVID M. DAVIS, Defendant and Appellant.

No. B197971.

No. B200217.

Court of Appeals of California, Second District, Division Four.

September 24, 2008.

Tyre Kamins Katz & Granof, Leah Phillips Falzone; Palarz & Williams and Herman S. Palarz for Plaintiff and Appellant and for Plaintiff and Respondent.

Brown and Associates and Matthew C. Brown for Defendant and Respondent and for Defendant and Appellant.

OPINION

MANELLA, J.

INTRODUCTION

In consolidated appeals, plaintiff/appellant Cruz Cardenas Rael contends the trial court erred in excluding as inadmissible a document prepared in the course of a mediation, and finding the purported agreement unenforceable as not signed by all parties.¹ She contends that promises made by one of the parties to the agreement were severable and separately enforceable. In his appeal, defendant/respondent/appellant David M. Davis contends that the trial court erred in refusing to award attorney fees pursuant to Civil Code section 1717.

We conclude that the trial court did not err in excluding the agreement and finding it unenforceable. We thus affirm the judgment. We also affirm the trial court's denial of attorney fees, as no statutory exception to mediation confidentiality permits application of Civil Code section 1717.

BACKGROUND

1. The Pleadings

In 2005, Cruz Cardenas Rael commenced this action for breach of contract against Davis as the executor of the estate of her deceased husband, Tony G. Rael, Jr., and as the successor trustee of the Rael Family 1993 Inter Vivos Trust.² The complaint alleged that Tony G. Rael, Jr., died in 2003, and that prior to his death, he participated in a mediation regarding the distribution of his assets after his death with Cruz Cardenas Rael and Tony's children— Mark Rael, Julianne Christina Rael-Duch and Yolanda Southern.³ On April 24, 2002, the mediation allegedly resulted in a settlement, memorialized in a written settlement agreement. It was alleged that under the settlement agreement, Tony promised to exercise his power of appointment in favor of Cruz, so that she would receive one-third the assets of his estate, rather than the bequests given to her under Tony's preexisting will and living trust. The complaint alleged that Tony breached the agreement by failing to amend the trust instrument in the manner promised. The complaint alleged that on March 12, 2004, Cruz filed a creditor's claim, and served the claim on Davis, the executor of Tony's will and successor trustee of the trust, but Davis failed to abide by the terms of the alleged written contract. The complaint prayed for damages equal to one-third the estate's assets, due to Tony's alleged breach of contract, and for costs and attorney fees.

In his answer to the complaint, Davis denied the formation and enforceability of the alleged settlement agreement or any obligation under it, and objected to the discovery and admissibility of the agreement pursuant to Evidence Code section 1119.⁴

2. The Court's Findings of Fact

The case was tried October 23, 24 and 25, 2006, and the court filed its statement of decision January 12, 2007. Because the court filed a statement of decision and Cruz does not contend the evidence is insufficient to support the trial court's findings, we are bound by the court's factual findings set forth in the statement.⁵ We therefore quote them at length.

"Plaintiff in this matter is the surviving spouse of the now deceased Tony G. Rael, Jr., having married him on June 13, 2000 and having been widowed by him on March 12, 2003. [¶] Tony G. Rael, Jr., was also survived by his three children, Mark Rael, Julianne Christina Rael-Duch and Yolanda Southern, all from Tony G. Rael, Jr.'s prior wife who predeceased him.

"Prior to the death of Tony G. Rael, Jr., and more specifically on February 7, 2002, Mark Rael initiated a legal proceeding for conservatorship of the estate and person of Tony G. Rael, Jr. in the Central District of the Los Angeles Superior Court under [Los Angeles Superior Court] case number BP 071693 (the `Conservatorship Matter').[⁶] [¶] ... [¶] As a result of the initiation of the Conservatorship Matter, Tony G. Rael, Jr. and Mark Rael were ordered by the Court in the Conservatorship Matter to participate in a mediation.

"Four mediation sessions took place pursuant to the order by the Court in the Conservatorship Matter, on the following dates: March 08, 2002; March 25, 2002; April 8, 2002 and April 24, 2002. [¶] All the mediation sessions which took place pursuant to the aforementioned order were mediated by Richard Hirrel. [¶] Various people participated in the four mediation sessions, including the following: Tony G. Rael, Jr., each of his three children, Plaintiff, Muriel Avina (daughter of Plaintiff), Susan House (legal counsel for Tony G. Rael, Jr.) Ruth Phelps (legal counsel for Mark Rael) and James Helms (legal counsel for Plaintiff). [¶] On March 8, 2002, all of the aforementioned mediation participants signed a Retainer Agreement for Confidential Mediation applicable to all the mediation sessions.

"Mark Rael was not physically present at the last of the four mediation sessions, which took place on April 24, 2002. [¶] Tony G. Rael, Jr., Julianne Christina Rael-Duch, Yolanda Southern and Plaintiff signed a proposed settlement agreement document prepared at the April 24, 2002, mediation session on that day, which was also signed by Susan House, Ruth Phelps and James Helms. [¶] Mark Rael never signed any document prepared at the April 24, 2002, mediation session.

"Following the April 24, 2002, mediation session various letters were exchanged between legal counsel for the mediation participants, including a letter dated May 13, 2002, from Susan House to Ruth Phelps, written at the request of Tony G. Rael, Jr., wherein Susan House wrote as follows:

"`Dear Ruth:

"`It has now been almost three weeks since our last mediation when everyone but your client, Mark Rael, signed the Settlement Agreement. Although you and I have spoken on several occasions, you have described your client's wishes and I have tried to respond, no progress has been made.

"`We have discussed the situation with our client. We have explained to him the demands being made by Mark and the uncertainty surrounding the resolution of the conservatorship controversy caused by the conditional nature of the signatures given on April 24 and your client's refusal to sign. In light of all this, we have been instructed to inform you that unless Mark Rael signs the Settlement Agreement as it was signed by everyone else on April 24 by the close of business on Wednesday, May 15, there is no settlement and we will proceed to prepare for trial on July 15. By copy of this letter we are instructing Mr. Hirrel to destroy the original Settlement Agreement[] in his possession unless your client signs by the close of business on Wednesday.

"`We regret to have to proceed on this basis, but we see no alternative. We will need at least 60 days to prepare for trial, and we must proceed as quickly as possible.

                                            "`Very truly yours
                                                   "`/s/
                                            "`Susan T. House
                        "`Cc: Tony G. Rael
                            "`James Helms
                            "`Richard G. Hirrel'
                

"Susan House's above quoted May 13, 2002, letter was sent to Ruth Phelps on May 13, 2002. [¶] A copy of Susan House's above quoted May 13, 2002, letter was also sent or delivered to Plaintiff's counsel, James Helms, and the mediator, Richard Hirrel, on May 13, 2002.

"Tony G. Rael, Jr., Mark Rael and Plaintiff all participated in the August 7, 2002, trial. [¶] Tony G. Rael, Jr. was represented by legal counsel from the law firm of Hahn & Hahn at the August 7, 2002 trial in the Conservatorship Matter, and Plaintiff was represented by her lawyer, James Helms, at the August 7, 2002, trial in the Conservatorship Matter. [¶] The August 7, 2002 trial in the Conservatorship Matter resulted in the appointment of Plaintiff as conservator of the person and estate of Tony G. Rael, Jr.

"After the first two mediation sessions but prior to the last two mediation sessions, Tony G. Rael, Jr. executed several estate planning documents, including (a) a will date[d] March 29, 2002, (b) an exercise of power of appointment dated March 29, 2002, and (c) a trust amendment dated March 29, 2002. [¶] The aforementioned will, exercise of power of appointment and trust amendment were all prepared for Tony G. Rael, Jr. at his request by his legal counsel, Susan House, and were all executed by Tony G. Rael, Jr. in her presence on March 3, 2002.

"Plaintiff was named as a beneficiary in the aforementioned will, exercise of power of appointment and trust amendment. [¶] Specifically, Tony G. Rael, Jr. left the following benefits to Plaintiff pursuant to the terms of the March 29, 2002, estate planning documents: (A) his liquor store business, including the liquor license associated with that business, (B) a right to occupy space in one of his properties in order to operate the liquor store for two years from the date of his death on a rent free basis, and (C) up to $100,000 to pay off the balance of the Plaintiff's mortgage on her personal residence, as of the date of his death. [¶] The remainder of Tony G. Rael, Jr.'s assets were left equally to his three children, Mark Rael, Julianne Christina Rael-Duch and Yolanda Southern.

"After the death of Tony G. Rael, Jr., and specifically on August 25, 2005, Plaintiff filed an unverified complaint in this matter alleging that her deceased husband, Tony G. Rael, Jr., had entered into a written contract with her at the April 24, 2002, mediation session, and that he breached the alleged written contract, causing her to suffer damages.

"Plaintiff alleged that the assets in Tony G....