Estate of CHARLES A. JONES, Deceased. HELEN GRAYS-JONES,
A162543
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE
Filed 9/2/22
CERTIFIED FOR PUBLICATION; (San Mateo County Super. Ct. No. 17PRO01298)
The answer is no. We conclude the settlement agreement contained a condition precedent as to the method of payment, but Spencer‘s independent promise to pay $3 million is enforceable and remains payable upon the property‘s sale. We reverse and remand.
BACKGROUND
In 1999, decedent established, and later restated, the Charles A. Jones Trust (trust) and named Spencer succеssor trustee. The property — where decedent had operated a mortuary — was the trust‘s principal asset. In 2006, decedent married Grays-Jones, but he did not amend the trust to include her.
In 2017, decedent entered into an agreement to sеll the property to Calvano Development, Inc. (CDI), a real estate developer, for $13.6 million. The decedent died shortly thereafter, while the property was in escrow. Spencer became successor trustee.
A fеw months later, Grays-Jones petitioned for an interest in decedent‘s estate as an omitted spouse (
Shortly thereafter, the trial court entered a stipulated judgment incorporating the settlement, and the parties initially complied with their obligations. That is, Spencer, as trustee, paid Grays-Jones a $150,000 advance on the $3 million, and Grays-Jones moved out of decedent‘s residence. But three
In 2020, Grays-Jones petitioned the trial court to enforce the stipulated judgment. (
The trial court denied the petition to enforce the stipulated judgment. It concluded the settlement agreement — and, cоnsequently, the judgment — were unenforceable. Relying on what it deemed the unambiguous language in the settlement agreement, and declining to consider extrinsic evidence, the court determined the $3 million “was to be paid from the escrow proceeds from the sale of the property. That set up an implied condition precedent to the settlement agreement . . . . The condition precedent never materialized.” The court also found there “was no independent promise to pay $3 million in that there was to be one fund from which the $3 million would be paid. That fund never materialized.” Accordingly, there was “nothing . . . for the court to enforce.” The court ordered the parties to mediation.
DISCUSSION
Stipulated judgments are interpreted according to contract principles. (Jamieson v. City Council of the City of Carpinteria (2012) 204 Cal.App.4th 755, 761.) When interpreting a contract, courts give effect to the parties’ mutual intentions, first examining the contract‘s plain language. (
A “condition precedent is either an act of a party that must be performed or an uncertain event that must happen before the contractual right accrues or the contractual duty arises.” (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313;
The trial court concluded the sale of the prоperty was a condition precedent to Spencer owing Grays-Jones $3 million. This was erroneous. The settlement agreement contains two related — but independent — promises, each of which is recited in a separate sentence. The first of the two sentences recites an unequivocal promise that the trust will pay Grays-Jones $3 million. Indeed, in reciting the payment obligation, the agreement uses “shall,” a word courts construe as mandatory. (Jones v. Catholic Healthcare West (2007) 147 Cal.App.4th 300, 307.) The second sentence specifies the method of payment — i.e., that Spenсer, as trustee, will pay the money from the escrow account. Thus, Spencer‘s promise to pay $3 million is independent from — albeit related to — the parties’ agreement concerning the source of the funds. (Owens v. Owens (1962) 210 Cal.App.2d 705, 706-708 [obligation to cоnsult with the defendant regarding choice of medical provider was not a condition precedent to the defendant‘s obligation to pay certain medical bills]; see also Starr v. Davis (1930) 105 Cal.App. 632, 634-636.) Contrary to Spencer‘s suggestion, there is no “link” betweеn the two sentences such that the obligation in the first is contingent on the second, and we “cannot insert in the contract language [a term] which one of the parties now wishes were there.” (Levi Strauss & Co. v. Aetna Casualty & Surety Co. (1986) 184 Cal.App.3d 1479, 1486.)
The
The trial court also erred when it concluded the failed sale rendered the entire settlement agreement unenforceable. The agreement is sufficiently definite to determine the parties’ respective obligations and to determine whether those obligations have been performed or breached. (Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 623 [identifying circumstances for enforcing a contract].) While payment to Grays-Jones must be “out of the escrow from the sale of the [property],” nothing in the agreement specified that CDI be the purchaser (or that the property be sold for $13.6 million), contrary to Spenсer‘s assertions. (Italics added.) Even though the sale to CDI fell through, Spencer can nonetheless comply with the agreement by selling the property to another buyer and paying Grays-Jones from the escrow of that sale. If Spencer only intended payment to come out of the escrow from the then-pending sale of the property to CDI, she could have negotiated to incorporate that provision. (Ritzenthaler v. Fireside Thrift Co. (2001) 93 Cal.App.4th 986, 991.) She did not, and we will not rewrite the agreement to includе such a requirement.
Because the settlement agreement does not require the property to be sold to CDI to trigger the obligation to pay the remaining monies owed, the last issue is whether the agreement, and thus the stipulated judgment, аre nonetheless enforceable if the condition precedent has not yet occurred. We conclude that it is — “conditions in a contract, will if possible be construed to avoid forfeiture.” (O‘Morrow v. Borad (1946) 27 Cal.2d 794, 800.) Courts have enforced payment obligations even when payment must be made from a specific fund that has not yet materialized. (Pitzer, supra, 73 Cal.App.2d at pp. 88-91.) In such circumstances, the “law implies that the contract shall be performed within a reasonable time.” (Id. at p. 91;
Here too. The settlement agreement did not fix the time for paying Grays-Jones from the escrow of the sale of the property. And the triаl court did not hear extrinsic evidence regarding — among other things — whether a reasonable time has passed to secure the source for those funds.1 Nor did it make any determinations regarding Spencer‘s good faith efforts to secure another buyer within a reasonable time or whether the nonoccurrence of the condition precedent may be excused. (Jacobs v. Tenneco West, Inc. (1986) 186 Cal.App.3d 1413, 1418-1419.) We remand for the court to exercise its inherent authority to enforce the stipulated judgment, including, where appropriate, making determinations regarding breach and excuse from
performance. (Machado v. Myers (2019) 39 Cal.App.5th 779, 796, fn. 13.) We express no opinion on how the court should resolve these issues.
In light of this conclusion, we do not address Grays-Jones‘s remaining arguments.
DISPOSITION
The order denying enforcement of the stipulated judgment is reversed, and the matter remanded for further proceedings. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
Rodríguez, J.
WE CONCUR:
Tucher, P. J.
Petrou, J.
A162543
Superior Court of San Mateo County, Hon. Jоhn L. Grandsaert.
Reed Smith, Raymond A. Cardozo; Law Offices of Anthony K. Reid and Anthony K. Reid for Petitioner and Appellant.
Patton Sullivan Brodehl, John H. Patton and Kevin R. Brodehl for Objector and Respondent.