Court Opinion

ID: 2655026
Source: CourtListenerOpinion
Date Created: 2014-02-27 19:38:50.846888+00
Date Added: 2024-06-11T08:37:53.302784
License: Public Domain

Filed 2/27/14 Van Vliet v. Escobar CA2/5
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION FIVE

WILLIAM VAN VLIET AND LINDA                                          B245655
VAN VLIET,
                                                                     (Los Angeles County
         Plaintiffs and Appellants,                                  Super. Ct. No. SC107657)

         v.

SEBASTIAN ESCOBAR,

         Defendant and Respondent.

         APPEAL from a judgment of the Superior Court of the County of Los Angeles,
John H. Reid, Judge. Affirmed.
         Jacobs & Jacobs, Stanley K. Jacobs, Thomas F. Borcher; Stoll, Nussbaum &
Polakov, Matthew Stoll for Plaintiffs and Appellants.
         Shaver, Korff & Castronovo, Thomas W. Shaver, and Tod M. Castronovo for
Defendant and Respondent.
                                    INTRODUCTION
       Plaintiffs and appellants William Van Vliet and Linda Van Vliet1 appeal from a
judgment entered in their favor against defendant and respondent Sebastian Escobar in
the sum of $15,000 for each plaintiff. The judgment was entered based on the trial
court’s conclusion, after a bench trial, that defendant’s affirmative defense—the parties
entered into a settlement and compromise agreement—was determinative. Plaintiffs
contend that the trial court erred its ruling. We affirm.

                  FACTUAL AND PROCEDURAL BACKGROUND
       On September 27, 2009, William was operating a 2008 Harley Davidson on which
Linda was a passenger when they were involved in a multi-vehicle accident involving
defendant (accident). Defendant was insured under an automobile policy issued by
Alliance United Insurance Company (Alliance United).
       On March 24, 2010, plaintiffs, through their counsel, sent a letter to Alliance
United, stating, “On October 9, 2009, we offered to settle our clients’ claims for policy
limits of your insured provided that those limits were $100,000 or less. [¶] On October
19, 2009, you attempted to accept our policy limits offer based upon your representation
that [defendant’s] insurance coverage limit was $15,000/30,000. However, you
conditioned your acceptance by requiring our clients to enter into an agreement with an
alleged third claimant [Renata Pereria] to accept the $30,000 payment and divided it
among themselves with no one claimant receiving more than $15,000. Your condition
constituted a counter-offer and this was a rejection of my clients’ offer to settle for policy
limits. [¶] . . . [¶] As purely a courtesy on my part, I am giving you one last opportunity
to pay the policy limits to my clients without conditioning it on Ms. Pereria’s
participation in the settlement. If you choose to pay those policy limits solely to our
clients, we agree that the settlement is inclusive of any and all liens and will include any

1
        Because plaintiffs share the same surname, they are referred to separately by their
first names.

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claims of loss of consortium, provided that you accept this offer in writing received by
my office no later than April 7, 2010.”
       On April 1, 2010, Alliance United sent a letter to plaintiffs’ counsel stating, “In
response to your correspondence dated March 24, 2010, we have agreed to accept
settlement of your client[s’] injury claim for our insured policy limits of $15,000 per
person, $30,000 maximum aggregate (per accident). This settlement is inclusive of any
and all liens, including loss of consortium, as indicated in your correspondence.
Enclosed you will find a Release of All Claims for each of your clients to execute. Please
have your clients sign and date the enclosed Release and return it to me as soon as
possible. [¶] . . . [¶] We will send the settlement draft out to you on the next business
day after receiving the signed release and your [W-9 Request for Taxpayer Identification
Number and Certification] form. Thank you for your assistance in bringing this matter to
an amicable conclusion.”
       Alliance United’s April 1, 2010, letter enclosed two identical releases— one for
each of the two plaintiffs to sign. Each of the releases were captioned as a “RELEASE
OF ALL CLAIMS,” and stated, “FOR AND IN CONSIDERATION of delivery of a
draft or check in the sum of Fifteen Thousand Dollars only ($15,000.00) . . . I/we
[plaintiff] . . . do hereby release, acquit and forever discharge [defendant], Janet Escobar
and Luis Escobar, his/her/it’s agents, representatives, successors and assigns of and
from any and all actions, causes of action, claims, demands, damages, costs, loss of
services, expenses and compensation, on account of or in any way growing out of any
and all known and unknown personal injuries and property or other damage resulting
from an accident that occurred on or about September 27, 2009 at or near Pacific Coast
Highway, City of Malibu, CA. [¶] I further represent that should any outstanding liens
exist against the proceeds of this settlement, I am wholly responsible for their
satisfaction. I agree to indemnify, hold harmless and defend [defendant], Janet Escobar
and Luis Escobar his/her/it’s related individuals and entities, their insurer or insurers, and
attorneys, for any amounts of said lien or liens. [¶] It is understood and agreed that all
rights under section 1542 of the Civil Code of California [w]hich provides as follows,

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‘CERTAIN CLAIMS NOT AFFECTED BY GENERAL RELEASE—A general
release does not extend to the claims where the Creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him, must
have materially affected his settlement with Debtor,’ are hereby expressly
waived. [¶] . . . [¶] This release agreement contains the entire agreement between
the parties hereto, and the terms of this release are contractual and not a mere
recital.”
       On April 19, 2010, plaintiffs filed a complaint, arising out of the accident, for
personal injuries and property damage against defendant and others alleging causes of
action for “motor vehicle,” general negligence and negligence per se. Defendant
answered the complaint alleging, inter alia, an affirmative defense of compromise
settlement.
       On July 20, 2010, Alliance United sent a letter to plaintiffs’ counsel stating, “It has
come to our attention that the Releases issued to your office under our letter of April 1,
2010 inadvertently included reference to property damage. [¶] As clearly indicated in
our cover letter, the release[s were] intended to cover only the bodily injury claim as we
were accepting the terms of your March 24, 2010 letter. That letter referenced your
clients’ injury claim only and it was our intention to accept those terms. [¶] Enclosed
please find corrected releases for your clients to execute and return to our office so that
the settlement checks can be issued.”
       The July 20, 2010, letter again enclosed two identical releases—one for each of
the two plaintiffs to sign. The releases attached to the July 20, 2010, letter were identical
to the releases attached to Alliance United’s April 1, 2010, except that they were
captioned as a “RELEASE OF BODILY INJURY CLAIM,” and deleted the phrase “and
property or other damage” from the claims being released.
       On July 21, 2010, Alliance United sent a letter to plaintiffs’ counsel stating, “In
regards to the issue you raise about our April 1, 2010 letter enclosing releases that
included property damage language, I believe that I addressed those concerns in [one of]
my [prior letters]. In order to assist you regarding your concerns, under separate cover

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you will receive releases that have deleted the reference to ‘property damage.’ The
original ‘general release[s]’ [were] sent out with a clerical error that inadvertently
included property damage language. However, the cover letter clearly outlined our
intent.”
       On April 16, 2012, in a bifurcated trial, the trial court conducted a bench trial
solely on the issue of defendant’s affirmative defense of compromise settlement. At the
trial, the parties stipulated that had defendant testified, he would have testified that prior
to March 19, 2010, defendant met with one of his attorneys and defendant agreed as to
his insurance policy with Alliance United, that “Alliance United Insurance Company
could deplete the full $15,000 per person bodily injury limits and $30,000 per accident
bodily injury limits to resolve the bodily injury claims of [plaintiffs] . . . and leave
essentially out there a prospective bodily injury claim of a third person known as Ms.
Pereira.”
       During trial, plaintiffs’ counsel stated that plaintiffs’ March 24, 2010, letter was an
offer to settle plaintiffs’ bodily injury claims, and it did not offer to settle plaintiffs’
property damage claims or any other claims they may have had. Plaintiffs’ counsel
conceded that prior to March 24, 2010, there never were any settlement discussions that
“dealt with” property damage, and insurance companies are “entitled to get a release of
the claim that they are settling.”
       Satyan Jethwa testified that he was employed by Alliance United from May 2009
to September 2011; worked for four insurance companies prior to being employed by
Alliance United, for whom he “handled claims” and settled bodily injury and property
damages cases; and attended law school from September 1996 to May 1997.
       Jethwa testified that he caused the April 1, 2010 letter to be sent, and the releases
enclosed with that letter were from preprinted forms. The only information he inputted
on those release forms were the amount of the settlement, the names of the settling
parties, and the date and location of the accident. The trial court overruled plaintiffs’
motion to strike Jethwa’s testimony concerning the matters he inputted on the release
forms made on the grounds of relevance.

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       Jethwa said that he did not completely read the releases attached to the April 1,
2010, before they were sent to plaintiffs, and as of April 1, 2010, he did not have an
understanding what an “integration clause” meant. He did not intend for the releases
attached to the April 1, 2010, letter to include a release of property damages claims; the
settlement agreement “was for bodily injury only.” He therefore prepared the July 20,
2010, letter. Plaintiffs’ counsel stated that plaintiffs do not contend that Jethwa
intentionally tried “to pull a fast one” by attempting to obtain from plaintiffs a release of
their property damage claims—“I don’t have to show that.”
       David Edwards, a branch manager for Alliance United at the time of plaintiffs’
accident, testified that Jethwa was employed by Alliance United as a claims examiner,
and Jethwa was assigned to plaintiffs’ claims against defendant’s insurance policy.
Before Alliance United sent the April 1, 2010, letter to plaintiffs’ counsel, Edwards and
Jethwa discussed their response to the March 24, 2010, letter from plaintiffs’ counsel.
       Edwards testified that at the time Alliance United sent the April 1, 2010, letter to
plaintiffs’ counsel, Alliance United had a release of “all claims” form that it used when it
settled claims, but after April 1, 2010, the release form was modified to create a “bodily
injury-only release.” Regarding Alliance United’s release of all claims form, Jethwa
could have changed the form from saying it was a release of “ALL CLAIMS” to a release
of “BODILY INJURY CLAIMS,” and he could have deleted from the release of all
claims form the phrase “and property or other damage.” Alliance United’s “intent in
sending the [April 1, 2010,] letter” was to accept “the offer to settle the bodily injury
claim.” In accepting plaintiffs’ settlement offer, there were no discussions that he wanted
“to cover” concerning not only the personal injury claims, but also the property damage
claims. Edwards testified that he was not “trying to be sneaky and settle the property
damage” claims.
       Edwards said that before plaintiffs received Alliance United’s April 1, 2010, letter,
he was aware that each of the releases provided to plaintiffs included the language that,
“This release agreement contains the entire agreement between the parties hereto, and the
terms of this release are contractual and not a mere recital.” It is his understanding that

                                              6
such language means “that the deal you are making is contained solely within the
release.”
       The trial court said to plaintiffs’ counsel during the trial, “[A]ll the communication
was for 15/30 for bodily injury and both sides agreed to that, [and] you have injected into
this release ‘all claims of property damage,’ yet there . . . was never a discussion of
property damage, and if you are then alluding to the last paragraph that says, ‘we will
send out a draft to you after we receive all releases, that has nothing to do with the
substance of resolving the claim for 15/30. It is a mechanism to complete the
settlement.” The trial court also stated, “‘The April 1st letter by [Jethwa] is clear in
response to your correspondence dated March 24th, 2010. We have agreed to accept
settlement of your client[s’] injury claim[s].’ [¶] . . . [¶] The response letter [states], ‘we
accept [the March 24, 2010, demand],” and here, ‘send the releases,’ which is a vehicle to
get the money exchanged in performing on the contract. [¶] . . . [¶] [T]he agreement is,
‘we accept. We will pay the 15/30 bodily injury.’”
       The trial court found “that there has been a settlement of bodily injury claim,”
stating, “[T]he court is going to find that the intent by both parties, [plaintiffs’ counsel]
and Alliance [United], was to settle the bodily injury claim for 15/30. . . . [¶] . . . [¶]
[T]his is the acceptance, and the agreement was for bodily injuries, period. [¶] . . . [¶] I
have not before me the property damage. This is not—I don’t believe it is the defense
that the property damage has been settled. It is only bodily injury that has been settled.
[¶] . . . [¶] The vehicle to get the money exchanged and releases is where the breakdown
was. [¶] . . . [¶] [I]t can’t be a judgment because the judgment has to be one judgment.
All I found is that there has been a settlement of the bodily injury claim and the
complaint calls for property damage.”
       Plaintiffs’ dismissed the balance of their complaint for property damage with
prejudice,[2] and the trial court entered judgment on defendant’s affirmative defense

2
       Plaintiff states that, “Alliance United eventually paid [plaintiffs]’ personal
property damage claim.”

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stating the each of the plaintiffs are to recover $15,000 from defendant. Plaintiffs timely
appealed.

                                       DISCUSSION
       The trial court found that based on the March 24, 2010, letter and the April 1,
2010, letter, the parties entered into an agreement to settle plaintiffs’ bodily injury claims,
and the releases attached to the April 1, 2010, letter were merely “mechanism[s]” or
“vehicle[s] to get the money exchanged in performing the contract.” We agree. The
reasonable meaning of the parties’ words and actions constituted mutual assent to settle
plaintiffs’ bodily injury claims.
       “Contract formation requires mutual consent, which cannot exist unless the parties
‘agree upon the same thing in the same sense.’” (Bustamante v. Intuit, Inc. (2006) 141
Cal.App.4th 199, 208, quoting Civ. Code, § 1580; see Civ. Code, §§ 1550, 1565.) The
manifestation of mutual consent is usually achieved through the process of offer and
acceptance. (1 Witkin Summary Cal. Law (10th ed. 2005) Contracts, § 117, p. 156.)
       “‘“Mutual assent is determined under an objective standard applied to the outward
manifestations or expressions of the parties, i.e., the reasonable meaning of their words
and acts, and not their unexpressed intentions or understandings.” [Citations.]’
[Citation.]” ‘Where the existence of a contract is at issue and the evidence is conflicting
or admits of more than one inference, it is for the trier of fact to determine whether the
contract actually existed. But if the material facts are certain or undisputed, the existence
of a contract is a question for the court to decide.’ [Citations.]” (HM DG, Inc. v. Amini
(2013) 219 Cal.App.4th 1100, 1109.) The surrounding circumstances are relevant in
determining whether a binding contract has been formed, and even a letter of intent can
constitute a binding contract, depending on the expectations of the parties. (California
Food Service Corp. v. Great American Ins. Co. (1982) 130 Cal.App.3d 892, 897.)
       It is undisputed that on March 24, 2010, plaintiffs offered to Alliance United to
settle their bodily injury claims. Plaintiffs’ March 24, 2010, letter offered to settle their
claims for policy limits of $15,000 per person, $30,000 maximum for each accident.

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Plaintiffs’ counsel stated during trial that plaintiffs’ March 24, 2010, letter was an offer to
settle plaintiffs’ bodily injury claims. On April 1, 2010, Alliance United expressly
accepted plaintiffs’ offer to settle their personal injury claims for defendant’s policy
limits. Alliance United’s April 1, 2010, letter to plaintiffs’ counsel stated, “In response to
your correspondence dated March 24, 2010, we have agreed to accept settlement of your
client’s injury claim for our insured policy limits of $15,000 per person, $30,000
maximum aggregate (per accident).”
       Plaintiffs contend that the releases enclosed with Alliance United’s April 1, 2010,
letter contained new terms, including a release of plaintiffs’ property damage claims, and
therefore the release constituted a rejection of plaintiffs’ settlement offer or a counteroffer
such that there was no mutual assent to settle plaintiffs’ claims. The releases, however,
were not incorporated by reference into Alliance United’s April 1, 2010, letter. In
addition, “Whether a writing constitutes a final agreement or merely an agreement to
make an agreement depends primarily upon the intention of the parties. In the absence of
ambiguity this must be determined by a construction of the instrument taken as a whole.
[Citations.] Where all of the essential terms of an agreement are definitely agreed upon
in the writing there is a binding contract even though there is an intention that a formal
writing will be executed later. [Citations.] The intent of the parties is to be determined
by an objective standard and not by the unexpressed state of mind of the parties.
[Citation.]” (Smissaert v. Chiodo (1958) 163 Cal.App.2d 827, 830.)
       “Where the writing at issue shows ‘no more than an intent to further reduce the
informal writing to a more formal one’ the failure to follow it with a more formal writing
does not negate the existence of the prior contract. [Citation.]” (Harris v. Rudin,
Richman & Appel (1999) 74 Cal.App.4th 299, 307.) “‘“Any other rule would always
permit a party who has entered into a contract like this, through letters and telegraphic
messages, to violate it, whenever the understanding was that it should be reduced to
another written form, by simply suggesting other and additional terms and conditions. If
this were the rule the contract would never be completed in cases where, by changes in
the market, or other events occurring subsequent to the written negotiations, it became

                                              9
the interest of either party to adopt that course in order to escape or evade obligations
incurred in the ordinary course of commercial business. . . . If the parties did not become
bound in this case they cannot be bound in any case.”’ [Citation.]” (Stephan v. Maloof
(1969) 274 Cal.App.2d 843, 848-849.)
       The essential terms “of [the] agreement [were] definitely agreed upon” (Smissaert
v. Chiodo, supra, 163 Cal.App.2d at p. 830) here, as established by the March 24, 2010,
offer letter and the April 1, 2010, acceptance letter. The parties agreed to settle plaintiffs’
bodily injury claims for defendant’s policy limits of $15,000 per person, $30,000
maximum for each accident, and as conceded by plaintiffs’ counsel, Alliance United, an
insurance company, is “entitled to get a release of the claim that they are settling.”
       In addition, Alliance United’s April 1, 2010, letter links the return of signed
releases and a W-9 tax form to the timing of the payment of the agreed upon settlement
amount of $30,000 to be paid to plaintiffs. The April 1, 2010, letter states, “We will send
the settlement draft out to you on the next business day after receiving the signed
release[s] and your [W-9 Request for Taxpayer Identification Number and Certification]
form.” A reasonable person would conclude that the parties did not intend that the
agreement must be reduced to release agreements in order for the agreement to be
binding on the parties, or that the terms and signing of the release was a condition of
acceptance of the policy limits to settle plaintiff’s bodily injury claim. Instead, a
reasonable person would conclude that the releases were for implementing the settlement
and a mechanism governing the timing of the payment of the settlement proceeds to
plaintiffs. Because we conclude that the March 24, 2010, letter and the April 1, 2010,
letter, the parties entered into an agreement to settle plaintiffs’ bodily injury claims, we
do not reach plaintiffs’ contention that the trial court erred in admitting evidence
concerning Jethwa’s intent in sending the April 1, 2010, letter and the enclosed releases,
and his mistake in including in the attached releases a release of plaintiffs’ property
claims.
       We recognize that generally parties to a contract are bound by the express
language they use, and if an offeree makes a mistake in the attempted acceptance, there

                                              10
may not be a binding contract. (2 Williston on Contracts (4th ed. 2007) § 659, pp. 857-
858.) Here, however, the actual acceptance was unequivocal. The only problem was
with the form release enclosures. Often parties settle a case without a binding release.
(See, e.g., Blix Street Records, Inc. v. Cassidy (2010) 191 Cal.App.4th 39, 49 [“The
necessity of bankruptcy court approval for a release in a settlement agreement does not
foreclose the ultimate enforceability of the settlement agreement’].) That in effect was
what occurred here.
       Even if we were to go beyond the March 24, 2010, and April 1, 2010, letters to
determine if the parties entered into an agreement, there is an ambiguity as to whether the
terms of Alliance United’s response to plaintiffs’ settlement offer was a release of
plaintiffs’ bodily injury claims, as stated in the April 1, 2010, letter, or a release of
plaintiffs’ bodily injury and property damage claims, as stated in the releases. A stated
above, “‘Where the existence of a contract is at issue and the evidence is conflicting or
admits of more than one inference, it is for the trier of fact to determine whether the
contract actually existed.’ . . . [Citations.]” (HM DG, Inc. v. Amini, supra, 219
Cal.App.4th at p. 1109.) The surrounding circumstances are relevant in determining
whether a binding contract has been formed. (California Food Service Corp. v. Great
American Ins. Co., supra, 130 Cal.App.3d at p. 897.) As conceded by plaintiffs’ counsel,
there were never any prior settlement discussions concerning property damage. It is
reasonable for the trial court to conclude, as it did, that despite the conflicting terms used
in Alliance United’s April 1, 2010, letter and the enclosed releases, the parties intended to
settle plaintiffs’ bodily injury claims only.
       Plaintiffs contend that the releases enclosed with the April 1, 2010, letter
contained terms not specifically included in the April 1, 2010, letter that are in addition to
a release of plaintiffs’ property damage claims. These terms include a waiver of the
rights Civil Code section 1542, and an agreement to indemnify defendant, Janet Escobar
and Luis Escobar, and their insurer or insurers and attorneys, for any lien claims made
against the proceeds of the settlement. Plaintiffs contend that these terms constituted a
rejection of plaintiffs’ settlement offer or a counteroffer such that there was no mutual

                                                11
assent to settle plaintiffs’ claims. Those terms, however, are of the type that parties
would reasonably expect to be included in a settlement of claims arising out of an
automobile accident and, therefore, “applying reasonable meaning [to the] words and acts
of the parties,” the parties intended to settle plaintiffs’ bodily injury claims. Those terms
did not constitute a rejection of plaintiffs’ settlement offer or a counteroffer.

                                       DISPOSITION
       The judgment is affirmed. Defendant is awarded his costs on appeal.
       NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                   MOSK, J.

We concur:

              TURNER, P. J.

              MINK, J.


      Retired Judge of the Los Angeles Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

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