Court Opinion

ID: 7806068
Source: CourtListenerOpinion
Date Created: 2022-09-02 18:01:27.743182+00
Date Added: 2024-06-11T16:30:09.535527
License: Public Domain

Filed 9/2/22
                      CERTIFIED FOR PUBLICATION

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        FIRST APPELLATE DISTRICT

                               DIVISION THREE

 Estate of CHARLES A. JONES,
 Deceased.

 HELEN GRAYS-JONES,
         Petitioner and Appellant,            A162543
 v.
                                              (San Mateo County
 SANDRA SPENCER, as Trustee, etc.,
                                              Super. Ct. No. 17PRO01298)
         Objector and Respondent.

       Upon the death of Charles A. Jones (decedent), his daughter, Sandra
Spencer, became successor trustee of his trust. His third wife, Helen Grays-
Jones, was not included in the trust. Unsurprisingly, this litigation ensued.
The parties settled, agreeing the trust would pay Grays-Jones $3 million.
But the settlement agreement also provided the money would be paid “out of
the escrow from the sale” of specified real property (property). Sale of the
property — pending at the time the parties reached their agreement — fell
through. Escrow never closed, and Spencer, as trustee, never paid the $3
million. Did the collapse of the sale void Spencer’s promise to pay?
       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.

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                                BACKGROUND
      In 1999, decedent established, and later restated, the Charles A. Jones
Trust (trust) and named Spencer successor 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 sell 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 few months later, Grays-Jones petitioned for an interest in decedent’s
estate as an omitted spouse (Prob. Code, § 21610). In 2019 — and while the
property was still in escrow — Grays-Jones and Spencer, as trustee, reached
a settlement. They agreed the trust “shall pay to [Grays-Jones] a total of
$3,000,000 . . . as her full and final settlement of [Grays-Jones’s] interest in
the Estate. Payment of said amount shall be paid to [Grays-Jones] out of the
escrow from the sale of the [property].” The parties also agreed Grays-Jones
would move out of decedent’s residence in exchange for $150,000, which
would constitute “an advance against the total settlement amount.”
      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 months after judgment was entered, the sale of the
property fell through, and Spencer did not pay Grays-Jones the outstanding
$2.85 million.
      In 2020, Grays-Jones petitioned the trial court to enforce the stipulated
judgment. (Code Civ. Proc., § 664.6.) Grays-Jones alleged Spencer frustrated

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the sale of the property, and she requested the court appoint a temporary
trustee to sell the decedent’s residence and the property. Grays-Jones also
requested the temporary trustee pay her $2.85 million from the sale proceeds,
plus interest, costs, and attorney fees. Spencer opposed the petition.
      The trial court denied the petition to enforce the stipulated judgment.
It concluded the settlement agreement — and, consequently, 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
      Code of Civil Procedure section 664.6 authorizes the trial court to enter
judgment incorporating terms of a settlement agreement if parties stipulate
in writing to settle the case and, if requested, retain jurisdiction to enforce its
judgment. (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1182.) On a motion
to enforce, the court must determine whether the settlement agreement is
valid and binding. (Ibid.) The court assesses whether the material terms of
the settlement were reasonably well-defined and certain, and whether the
parties expressly acknowledged that they understood and agreed to be bound
by those terms. (In re Marriage of Assemi (1994) 7 Cal.4th 896, 911.) It may
interpret the settlement terms and conditions, but it cannot impose terms to

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which the parties did not agree. (Weddington Productions, Inc. v. Flick
(1998) 60 Cal.App.4th 793, 810.)
      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. (Civ. Code,
§ 1636; undesignated statutory references are to this code; Bank of the West
v. Superior Court (1992) 2 Cal.4th 1254, 1264.) The language governs if it is
clear, explicit, and does not involve absurdity. (Jamieson, at p. 761; § 1638.)
It must be read in the context of the whole instrument and circumstances of
the case. (Bank of the West, at p. 1265.) The construction should give effect
to all provisions without inserting or omitting text. (Code Civ. Proc., § 1858.)
In the absence of extrinsic evidence, as here, interpreting a contract is
a matter of law subject to de novo review. (Taylor v. Nu Digital Marketing,
Inc. (2016) 245 Cal.App.4th 283, 288.)
      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; § 1436.) Conditions precedent may be created
either expressly — by words such as “subject to” or “conditioned upon” — or
impliedly. (Minton v. Mitchell (1928) 89 Cal.App. 361, 368; Rubin v. Fuchs
(1969) 1 Cal.3d 50, 54.) They are generally disfavored and are strictly
construed against a party arguing the agreement imposes one. (Helzel v.
Superior Court (1981) 123 Cal.App.3d 652, 663.) Courts will not interpret
a provision as a condition precedent absent clear, unambiguous language
requiring that construction. (Ibid.)

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      The trial court concluded the sale of the property 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 Spencer, 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 consult 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” between 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 trial court was correct, however, that the agreement contains an
implied condition precedent — escrow closing on the sale of the property — to
the trust paying the remaining money. (1 Witkin, Summary of Cal. Law
(11th ed. 2022) Contracts, § 814 [identifying examples of conditions
precedent]; Pitzer v. Wedel (1946) 73 Cal.App.2d 86, 90 (Pitzer).) That is, the
property is the most valuable asset in the trust, and its sale must occur
before the trust can pay the outstanding money. Undisputedly, escrow did

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not close because the sale, pending at the time the parties entered into the
agreement, fell through. As such, Spencer, as trustee, cannot pay $3 million
from the escrow of the sale — as required by the settlement agreement — if
the sale has not yet happened. In sum, the sale of the property was a
condition precedent, the satisfaction of which triggered Spencer’s obligation
to pay the remaining $2.85 million to Grays-Jones from the escrow account.
      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 Spencer’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 include 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, are
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

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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; § 1657.) Where a contract
does not fix a time for payment, “[r]easonable diligence and good faith must
be required in such instances and it is the duty of the court to hear evidence
and therefrom fix a time which would be fair.” (Pitzer, at p. 91.) For
example, in Pitzer, a grantee agreed to pay a third party’s debt from crop
proceeds, but those proceeds never materialized. (Id. at p. 88.) The Pitzer
court acknowledged “the fund from which the sum was to be paid made the
agreement conditional.” (Id. at p. 90.) Yet because a reasonable time to
secure that source of funds had passed, the court held the grantee’s payment
obligation was now due. (Id. at pp. 89–91.)
      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 trial 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

      1 Grays-Jones does not challenge the trial court’s refusal to consider
extrinsic evidence. “ ‘Issues do not have a life of their own: if they are not
raised . . . we consider [them] waived.’ ” (City of Eureka v. Superior Court
(2016) 1 Cal.App.5th 755, 765, brackets in original.)

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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).)

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                                _________________________
                                Rodríguez, J.

WE CONCUR:

_________________________
Tucher, P. J.

_________________________
Petrou, J.

A162543

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Superior Court of San Mateo County, Hon. John 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.

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