Roden v. Bergen Brunswig Corp.

• Decision Date: 28 March 2003
• Docket Number: No. G029574.,G029574.
• Citation: 107 Cal.App.4th 620,132 Cal.Rptr.2d 549
• Court: California Court of Appeals Court of Appeals
• Parties: Donald R. RODEN, Plaintiff and Respondent, v. BERGEN BRUNSWIG CORPORATION, Defendant and Appellant.

132 Cal.Rptr.2d 549

107 Cal.App.4th 620

Donald R. RODEN, Plaintiff and Respondent, v. BERGEN BRUNSWIG CORPORATION, Defendant and Appellant.

No. G029574.

Court of Appeal, Fourth District, Division 3.

March 28, 2003.

Paul, Hastings, Janofsky & Walker, Howard C. Hay, Donald L. Morrow, Costa Mesa, Paul W. Cane, San Francisco, and Laura A. Forbes, Costa Mesa, for Defendant and Appellant.

Jeffer, Mangels, Butler & Marmaro, Paul R. Hamilton and Herbert A. Bernhard, Los Angeles, for Plaintiff and Respondent.

OPINION

MOORE, J.

The parties to a hastily drawn Code of Civil Procedure section 998¹ settlement agreement found themselves in litigation concerning its meaning. After numerous motions, hearings and court orders, the defendant filed an appeal from an order interpreting the judgment encapsulating the section 998 settlement agreement. The defendant requests this court to resolve once and for all just one issue out of the portly ball of wax previously at issue in this complex employment litigation: Does the lump sum payment required by the judgment include an amount for retirement benefits, or are continuing retirement benefits to be provided to the plaintiff under the judgment provision requiring the defendant to continue employment benefits? The judgment is clear and unambiguous. Paragraph 2 thereof requires the defendant to continue to provide specified employment benefits, including retirement benefits, to the plaintiff. Consequently, the amount the defendant is required to pay as a lump sum under paragraph 1 of the judgment does not resolve the defendant's liability with respect to the plaintiffs retirement benefits. We affirm the post-judgment order.

I FACTS

Donald R. Roden (Roden) was hired as president and chief operating officer of Bergen Brunswig Corporation (Bergen) in 1995 and he became president and chief executive officer in 1997. Roden and Bergen signed an employment agreement in 1995. It provided Bergen could not terminate Roden, except for cause, or upon three years' notice, and provided substantial damages to Roden on termination without cause.

On November 3, 1999, Bergen terminated Roden, without cause. For some time, Bergen continued paying Roden his salary and continued his participation in company benefit plans. Roden filed suit against Bergen, for breach of contract, intentional interference with prospective economic relations, slander, intentional infliction of emotional distress, and other causes of action. Roden sought not only benefits due under his employment agreement, but also damages in connection with Bergen's purported false communications to prospective business relations and others regarding Roden's alleged mismanagement of Bergen.

The parties developed strained relations and were interested in resolving Bergen's remaining financial obligations under the employment agreement in less than three years. Bergen had a special incentive to resolve the matter quickly, since it was obligated to pay Roden's attorney fees in the event of a dispute under the employment agreement, pursuant to subsection 13(d) thereof. The parties discussed reducing certain benefits to present value. After lengthy negotiations, Bergen made a section 998 settlement offer and Roden accepted it.

The rancor only increased thereafter. Bergen had dashed off a stunningly brief offer. After Roden had accepted it, Bergen realized what petty few terms were contained therein and that more needed to be said, to make certain the parties agreed as to all the points not articulated in the offer. Roden resisted any attempts at clarification and filed an application for entry of judgment. Roden prevailed on that application.

Bergen followed with a motion to set aside the judgment, which was denied. Roden later filed a motion to enforce the judgment, and the court entered an order favorable to Roden. Bergen filed a motion for reconsideration, which was denied, and then an appeal from the order interpreting the judgment.

II DISCUSSION

A. Principles of Interpretation and Standard of Review

We apply general contract principles to the interpretation of a section 998 judgment. (Lanyi v. Goldblwm (1986) 177 Cal.App.3d 181, 184, 223 Cal.Rptr. 32.) "`[A] stipulation or consent judgment, being regarded as a contract between the parties, must be construed as any other contract. [Citations.]...' [Citation.]" (Id. at p. 184, fn. 3, 223 Cal.Rptr. 32.)

In the interpretation of the contract, "parol evidence is only admissible if the contract terms are ambiguous. [Citation.]" (Appleton v. Waessil (1994) 27 Cal. App.4th 551, 554, 32 Cal.Rptr.2d 676.) "The decision whether to admit parol evidence involves a two-step process. The first is to review the proffered material regarding the parties' intent to see if the language is `reasonably susceptible' of the interpretation urged by a party. [Citation.] If that question is decided in the affirmative, the extrinsic evidence is then admitted to aid in the second step, which involves actually interpreting the contract. [Citation.]" (Ibid.)

In reviewing the trial court's construction of the contract, and thus its interpretation of the judgment, several different standards of review may apply, if a party offers parol evidence to aid in interpretation. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165-1166, 6 Cal.Rptr.2d 554.) "On appellate review, the trial court's threshold determination of ambiguity is a question of law [citation] and is thus subject to our independent review [citation]." (Appleton v. Waessil, supra, 27 Cal.App.4th at pp. 554-555, 32 Cal. Rptr.2d 676.) If parol evidence is admitted and is in conflict, the substantial evidence test applies. (Id, at p. 556, 32 Cal. Rptr.2d 676.) "However, when ... the competent parol evidence is not conflicting, construction of the instrument is a question of law, and the appellate court will independently construe the writing. [Citation.]" (Winet v. Price, supra, 4 Cal. App.4th at p. 1166, 6 Cal.Rptr.2d 554.)

B. Analysis

1. Language of Offer and Employment Agreement

Bergen's June 30, 2000 settlement offer, which Roden accepted, provided in relevant part, "Pursuant to California Code of Civil Procedure Section 998, Bergen Brunswig Corporation hereby offers to have judgment entered on plaintiffs First Amended Complaint on the following terms: [¶] 1. In favor of plaintiff in the amount of $5,000,000, less legally required deductions. [¶] 2. Continuation of the benefits provided in Section 5(d), (e), and (i) of his Employment Contract. [¶] 3. Reasonable attorney fees and costs in an amount to be determined by the Court." Those three terms were reiterated in the judgment.

A number of questions arose as to the scope and interpretation of the judgment. The only issue on appeal is whether benefits payable under Bergen's Supplemental Executive Retirement Plan (SERP) were reduced to present value and incorporated into the $5,000,000 lump sum payment under paragraph 1 of the judgment, as Bergen contends, or whether Roden was to have continued SERP participation pursuant to paragraph 2 of the judgment, as Roden contends.

"A contract must be `interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting' (Civ.Code, § 1636), and where, as here, the contract is in writing, `the intention ... is to be ascertained from the writing alone, if possible....' (Civ.Code, § 1639.)" (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 559, 90 Cal.Rptr.2d 469.) In this case, it is not possible to ascertain the intent without looking outside of the settlement contract, to the employment agreement referenced therein.

Subsections 5(d), (e) and (i) of the employment agreement provide as follows: "(d) Employee Benefit Programs. The Executive shall be entitled to participate in all employee health and benefit programs of the Company from time to time in effect for senior executives of the Company ..., including, but not limited to, health, life, disability and dental insurance and retirement plan benefit programs, subject to a determination of Executive's eligibility under the terms of said plans and otherwise in accordance with their respective terms. [¶] (e) Automobile Allowance, The Company shall elect to provide to the Executive (1) a minimum automobile allowance of $800.00 per month, ... or (2), in lieu of an automobile allowance, an automobile which will be owned by the Company .... [¶] ... [¶] (i) Other. The Executive shall be entitled to receive and/or participate in all other benefits and programs made available, from time to time, to other senior executives of the Company...."

The language of the employment agreement is clear. Subsection 5(d) thereof specifically provides that Roden may participate in the company retirement plan benefit programs, and Bergen does not dispute that the benefit at issue is a retirement plan benefit. Inasmuch as paragraph 2 of the judgment requires the continuation of subsection 5(d) benefits, and subsection 5(d) addresses retirement benefits, the resolution of retirement benefits is covered by paragraph 2 of the judgment, not paragraph 1.

2. Extrinsic Evidence

(a) introduction

The plain language of the judgment and employment agreement notwithstanding Bergen asks us to look at extrinsic evidence to interpret the judgment. As Bergen points out, subsection 13(b) of the employment agreement provides that Roden's damages for termination without cause "shall equal, the present value (determined on the date such damages are received) of the compensation the Executive would otherwise have received under this Agreement for the remaining term of this Agreement...." Bergen states that it sought to comply with its subsection 13(b) obligation to pay Roden the present value of three years of post-termination compensation. Bergen also says that, in furtherance of this intention, it calculated the value of Roden's SERP benefits, had he remained employed for another...