APPEAL from a judgment of the Superior Court of Los Angeles County. James R. Dunn, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC312118)
The opinion of the court was delivered by: Mosk, J.
CERTIFIED FOR PARTIAL PUBLICATION*fn1
Appellants appeal from a judgment based on, inter alia, a determination that they were judicially estopped from denying that they are bound by a settlement agreement. We hold that even if the settlement agreement had not been binding, appellants were judicially estopped from denying the enforceability of that agreement because they represented to the trial court that the case had settled and the trial court discharged the jury in reliance on that representation.
Eva Cassidy was a popular singer and songwriter who died in 1996. Her parents, respondents Hugh and Barbara Cassidy, inherited the rights to Eva's work. In November of 1997, the Cassidys, pursuant to an agreement, exclusively licensed William Straw, doing business as Blix Street Records, the predecessor of Blix Street Records, Inc.,*fn2 to exploit the rights to the Eva Cassidy audio recordings. The license agreement was modified in 1999.
Disputes between Blix Street and the Cassidys arose over royalty payments and the Cassidys' plan for a motion picture about their daughter's life. The Cassidys had contracted with Allen Gelbard and Eva Cassidy Partners, LLC (ECP) (in which Gelbard was a partner) to make the motion picture. In March of 2004, Blix Street Records, Inc. sued the Cassidys, Gelbard, and ECP concerning the motion picture and an alleged breach of warranty. The Cassidys and their son Daniel subsequently cross-complained against Blix Street for royalties allegedly owing.*fn3
The trial of the case commenced in March of 2006, presided over by Los Angeles County Superior Court Judge Lee Edmon. During jury selection, each lead counsel gave a "mini opening statement" to the jury panel. After the jury was selected, Judge Edmon suspended the trial for scheduling reasons and ordered the parties and the jury to report back on April 3, 2006. During the break, the parties engaged in a mediation with the mediator Anthony Piazza. Gelbard, who was in bankruptcy, and ECP did not participate, but their counsel, Christopher Dieterich, indicated they would enter into a settlement so long as they did not have to pay money and received full general releases. Those present at the mediation were Hugh and Barbara Cassidy and their counsel, Brian Sun, who also represented the absent Daniel Cassidy, and Straw and his counsel. The parties to the mediation reached a settlement and executed a handwritten settlement agreement. The document was signed by Straw, for himself and for Blix Street Records, Inc., Hugh Cassidy, Barbara Cassidy, and Sun for Daniel Cassidy. The "approved as to form" spaces on the document were signed by Blix Street's counsel and Sun for the Cassidys.
The settlement agreement provided, "Although subject to more formal documentation, including the preparation and filing of a dismissal of the entire action with prejudice, this is a final binding agreement subject to judicial enforcement pursuant to CCP 664.6." The settlement agreement extended the licensing agreement and provided for, inter alia, minimum royalties over a period of years, a means to determine the amount of royalties, a business plan, cooperation concerning the motion picture, and releases. The agreement specifically stated that, "The parties hereby release all claims of any type or nature from inception through today, including rights as to Gelbard, Engel [a former attorney for some of the parties] and Eva Cassidy Partners, LLC (Gelbard and ECP to be releasors under the more formal agreement documents) . . ." and that Blix Street's first payment to the Cassidys "shall occur upon delivery to Blix's counsel of a full, executed dismissal of the entire action with prejudice and any order necessary from the U.S. Bankruptcy Court and U.S. Trustee."
At the time of the execution of the settlement agreement, Straw believed that there were no additional terms that needed to be negotiated. On March 26, 2006, Blix Street's counsel sent an e-mail to Judge Edmon that stated, "Judge Edmon: the parties reached a settlement at the mediation on Friday, March 24, 2006 and signed a document that can be enforced pursuant to CCP Section 664.6. We need to get a signature from the Eva Cassidy Partnership (Dieterich's client) which should not be that difficult. There are issues relating to the release of claims against Gelbard given his bankruptcy that we need to navigate, but the case has settled."
During the week of March 27, 2006, Straw, an attorney who had negotiated entertainment contracts, began to have concerns about the agreement and what he considered the negative effect it could have on his business. He believed it was one-sided in favor of the Cassidys and decided to take the position that material terms were missing from the settlement agreement and that some existing terms were ambiguous. He testified, "That's--I started thinking about those things. And, if those things weren't worked out, then I really hadn't agreed to anything." Thus, from his perspective, the litigation was not concluded. He said he wanted "to try to get out from under the settlement agreement." He added that it was the "worst agreement I'd ever seen . . . . It didn't contain, even the material terms necessary to settlement [sic] the issues that caused the litigation in the first place . . . . They were--it was just missing. No mention." He testified at some length as to the various areas that were not covered by the settlement agreement. He said he did not, however, "withdraw from the deal" because he was "very hopeful" that he could resolve all issues in the long form agreement negotiations.
The parties returned to court on April 3, 2006. Blix Street's attorneys had not communicated to the Cassidys' attorneys that there was any problem with the settlement agreement, even though Straw believed that an enforceable agreement had not been reached. Blix Street's lead counsel, Bert Deixler, and the Cassidys' lead counsel, Sun, as well as his co-counsel, Frederick Feldman, were present in court. Straw was also present, as was Gelbard and his counsel, Dieterich. In chambers, Sun recalled that he or Deixler informed Judge Edmon that the parties had resolved the case at the mediation and that there were a few things to do, "but that we all felt that [the judge] could dismiss the jury." Another lawyer who was in chambers at that time testified that Sun may have mentioned "there was a bankruptcy issue as to Gelbard." But no one, including Straw, suggested the settlement agreement was not enforceable, even though Straw had considered telling his counsel to inform the judge that there was no settlement.
Straw testified that Sun stated in the in-chambers meeting that Gelbard was threatening not to sign a settlement agreement unless he received money and that he might sue Blix Street for malicious prosecution. Straw, although "stunned," did not state there was no settlement.
After the in-chambers meeting, Judge Edmon took the bench and called for the jury. She informed the jury as follows: "Good morning to everybody. I have some news for all of you. Since the last time we were together, the case has settled . . . . I can't overemphasize what an important role all of you played in that. Some cases just can't settle until they get right up to trial. And it was seeing all of you and actually getting started that got this case to settle."
After some further comments to the jurors, Judge Edmon dismissed them. Neither Straw nor Deixler informed Judge Edmon prior to the dismissal of the jury that Straw believed the settlement agreement was not enforceable. Then the following colloquy took place: "The Court: Mr. Deixler here, you're plaintiff's counsel. The representation has been made to me in our conversation off the record that this matter is settled. And I just want to hear from all the parties with respect to that issue. [¶] [Deixler]: Yes, Your Honor. The matter, subject to having the long form agreement being prepared and obtaining the approval of the bankruptcy court with regard to the Gelbard piece and the Eva Cassidy Partners piece, the case is settled, subject to those two provisions, which we expect will be resolved in the next 30 days. [¶] [Sun]: The short form agreement, the parties agree that they're going to try to put as quickly as possible. The long form agreement--so we can get that part of it consummated as well. And Mr. Weeks already said there is something in the short form agreement about coordinating with the bankruptcy court certain aspects regarding Mr. Gelbard's status of the case. But the parties have reached a settlement, and we think it's enforceable under the C.C.P. and we have to get the rest of it done." Dieterich, counsel for Gelbard, stated he agreed. After scheduling an order to show cause re dismissal after settlement, Judge Edmon concluded by saying to the parties "Good luck with it," presumably referring to the steps necessary to finalize the settlement.
On April 10, a new attorney for Blix Street wrote to counsel for the Cassidys, stating "Bill Straw and Blix Street have retained the undersigned to act as transactional attorney in the negotiation of a settlement agreement regarding the above referenced cause. [¶] We have advised our client, based upon the writings so far presented to us for review, that it is our opinion that the parties purported short-form settlement agreement is neither binding nor enforceable for several reasons, including by way of example and not by way of limitation, (i) the omission of at least one necessary party (to wit: defendant Gelbard) as a signatory to the document; and (ii) the ambiguities of a substantive nature therein." On April 24, new litigation counsel for Blix Street reiterated that the settlement agreement was "neither binding nor enforceable" because Gelbard did not sign the agreement and because "there was no meeting of the minds on many material terms."
Blix Street opposed the Cassidys' motion to approve the settlement in the bankruptcy court. At the May 10 hearing in that court, Gelbard personally advised the court that he had signed the settlement agreement and considered the case settled. The bankruptcy court denied the Cassidys' motion without prejudice, finding, "This is a settlement of this trial in the state court, and you've either got a deal that's going to settle the whole trial or you don't, and I think that I should step aside and allow the state court judge to make a determination . . . . Then you should come back here to approve it . . . . I kind of think the judge in Superior Court is going to be a little ticked if you don't go and present a settlement agreement in a trial that you've got sitting there." The court added, "You know, again, if everybody to a settlement comes in and says, 'We're thrilled. Here's the settlement agreement,' you'd be amazed how fast I'll sign the order."
In June, the Cassidys successfully moved the trial court for entry of judgment based on the settlement agreement pursuant to California Code of Civil Procedure section 664.6 (section 664.6). The court stated in the judgment, "In a declaration submitted to the Court, Daniel Cassidy expressly agreed to the terms of the Settlement Agreement and affirmed the authority of his counsel to sign ...