Opinion
B222380
10-11-2011
MARGARET M. WOJDAK, Plaintiff and Respondent, v. KRISTE KNIGHT, Defendant and Appellant.
Law Office of Alan Goldberg and Alan M. Goldberg for Defendant and Appellant. Law Offices of Michael D. Finley and Michael D. Finley for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. LC074056)
APPEAL from an order of the Superior Court of Los Angeles County, Bert Glennon, Jr., Judge. Reversed and remanded.
Law Office of Alan Goldberg and Alan M. Goldberg for Defendant and Appellant.
Law Offices of Michael D. Finley and Michael D. Finley for Plaintiff and Respondent.
The trial court granted plaintiff Margaret M. Wojdak's motion to enforce a settlement agreement (Code Civ. Proc., § 664.6) without being apprised of her death. Defendant Kriste Knight contends on appeal that the order must be reversed as a result of the failure to effect a substitution of a real party in interest in the place of the deceased plaintiff. We reverse and remand for a determination whether a proper substitution can be made.
All further undesignated statutory references are to the Code of Civil Procedure.
BACKGROUND
Plaintiff Wojdak created a revocable living trust, the Margaret M. Wojdak 2000 Trust (trust). Wojdak appointed her daughter, defendant Kriste Knight, as trustee, but later appointed her sons, Wendell Wodjak and Scott Wojdak, as successor trustees. For the sake of clarity and convenience, we will refer to the family members by their first names, with no disrespect intended.
Margaret and Kriste were parties to this and other lawsuits concerning the trust and other assets. In May 2007, they resolved all of their lawsuits, disputes, and claims by executing a settlement and release agreement (agreement) that was also signed by Wendell and Scott, and their respective spouses. The agreement specified that the superior court was to retain jurisdiction to enforce the agreement under section 664.6.
Section 664.6 provides: "If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement."
The second sentence of section 664.6 has been construed to mean "that even though a settlement may call for a case to be dismissed, or the plaintiff may dismiss the suit of its own accord, the court may nevertheless retain jurisdiction to enforce the terms of the settlement, until such time as all of its terms have been performed by the parties, if
the parties have requested this specific retention of jurisdiction." (Wackeen v. Malis (2002) 97 Cal.App.4th 429, 439.)
The agreement imposed certain requirements on Margaret as to taxes and Kriste as to payments. Margaret was to pay all state and federal taxes for which she "bears responsibility under the law, including trust and personal income taxes, payroll taxes, and other employment related taxes, through and including the calendar year ending December 31, 2006, and for all prior years not previously filed and paid." Kriste was to pay the principal sum of $146,375 in two phases. The first phase consisted of three payments totaling $50,000 ($33,056.88 payable to Margaret and her attorney, Michael D. Finley; $14,000 payable directly to the authorities for Margaret's payroll tax liabilities; and $2,943.12 payable to Countrywide). The second phase required payments totaling $96,375 ($750 payable to Georgette Fischer and $95,625 payable to Margaret, "or as subsequently authorized by her in writing duly noticed," plus monthly interest "against the $96,375.00 balance, or any adjusted balance, then outstanding, until" the completion of a sale by Kriste of a condominium.
On July 2, 2009, Margaret filed the "Third Motion for Enforcement of Settlement Pursuant to C.C.P. § 664.6" (motion or section 664.6 motion) that is the subject of this appeal. The motion sought to enforce Kriste's compliance with the agreement's provisions for: (1) no contact; (2) payment of $95,625 to Margaret or her assignees;and (3) payment of monthly interest on the outstanding balance owed to Margaret.Margaret died on July 19, 2009, two months before the September 17, 2009 hearing on her section 664.6 motion. At the September 17 hearing, the trial court, which had not been informed of Margaret's death, granted the motion and awarded her attorney fees and costs of $2,139.
The agreement provided in relevant part: "Margaret M. Wojdak and Kriste Knight expressly covenant that neither they nor any person or entity acting on their behalf now or in the future will ever contact, attempt to contact or come within fifty (50) feet of the other, in any form nor commit, encourage or approve any conduct constituting investigation into the affairs of the other, nor commit any act constituting or which might constitute civil harassment, except and unless as expressly provided otherwise, if at all, in this Agreement. Additionally, Margaret M. Wojdak agrees not to enter the premises, interiors, and/or common areas of Warner West Condominiums, Newcastle Manor, Tarzana Villa and/or any other property owned in whole or in part by any of the Knight Parties. Similarly, Kriste Knight agrees not to enter the premises, interiors and/or common areas of the Chatsworth Summerville Retirement property as long as Margaret M. Wojdak shall reside there."
The agreement allowed Margaret to authorize payment to her assignees in a "writing duly noticed." By a notice dated April 4, 2008, Margaret specified that in the event of her death, "all payments from the Settlement Agreement that were to be sent to her are to be sent to Wendell Wodjak and Scott Wodjak at 22261 Romar Street, Chatsworth, CA 91311, to hold and administer on behalf of the Margaret Wodjak 2000 Trust."
The section 664.6 motion was precipitated in part by Kriste's withholding of what she claimed were taxes from the monthly interest payments. Margaret objected that the withholding violated the agreement, and that Kriste had failed to provide tax returns for the withheld taxes.
At the September 17 hearing, the trial court rejected Kriste's argument that she needed to withhold taxes from the interest payments in order to protect herself from liability for Margaret's unpaid taxes. The trial court stated: "I'll tell you what. We'll resolve that problem right now. As part of this order, as part of granting this motion, I am going to order the following: First, Miss Knight is to make full payment of monthly settlement interest payment amounts without federal withholding tax . . . . If you have a problem with the I.R.S., you've got a court order that says how to do it." "The second part of the court order is: Kriste Knight is not to have Margaret investigated or photographed, as these would be a violation of the stay away, no contact or no visitation clause at page 11 of the settlement agreement. And Kriste Knight is to make the final payment of $95,625.00 that was due in May 2009. And the request for attorney's fees in the amount of $2,139.00 is granted. And that's the order."
Following the hearing, Margaret's attorney, Finley, drafted and submitted a proposed order, to which Kriste filed a "Motion Objecting to Plaintiff's Proposed Order and for Filing of Defendant's Proposed Order." Kriste objected that Finley's proposed order erroneously: (1) prohibited her from withholding taxes from payments made under the agreement; (2) prohibited her from taking a "deduction" or credit for her prior payment of $3,542.05 ($750 to Georgette Fischer and $2,792.05 for real property expenses); and (3) awarded Margaret fees and costs of $3,979 rather than $2,139.
Finley's proposed order stated in relevant part:
"1. Plaintiff's motion is granted and KRISTE KNIGHT is ordered to comply with the Settlement Agreement. In addition, the following orders are given for clarification:
"2. KRISTE KNIGHT is ordered to pay the sum of $95,625.00 in a valid check made payable to MARGARET WOJDAK and delivered to plaintiff's attorney forthwith, making no deductions or tax withholdings therefrom. KRISTE KNIGHT may not impose any conditions whatsoever on the delivery or negotiation of the check.
"3. KRISTE KNIGHT is further ordered to pay all interest payments that are or have been required by the Settlement Agreement without deductions or tax withholdings therefrom in a valid check made payable to MARGARET WOJDAK and delivered to plaintiff's attorney forthwith. KRISTE KNIGHT may not impose any conditions whatsoever on the delivery or negotiation of the check.
"4. KRISTE KNIGHT shall not investigate nor photograph the plaintiff, nor have anyone else investigate or photograph the plaintiff.
"5. KRISTE KNIGHT is ordered to pay the plaintiff's attorney's fees and costs in the amount of $3,979.00."
According to Kriste, the $2,792.05 payment for real property expenses consisted of: (1) $1,747.20 paid for a "Burbank condo HOA dues (Westcom)" (according to the opening brief, the correct amount paid was $1,596.31); (2) $325.10 paid to "Burbank condo insurer (State Farm)"; (3) $352.50 paid to "2nd mortgage on the Burbank condo (Countrywide)"; and (4) $367.25 paid to "1st mortgage on the Burbank condo (Countrywide)."
Kriste's proposed order stated in relevant part:
"1. Defendant Knight is to make full payment of outstanding monthly Settlement Agreement interest payments without withholding federal tax therefrom.
"2. Defendant Knight is to make the final Settlement Agreement payment of $95,625.00 that was due in May 2009 subject to the express conditions of the Settlement Agreement.
"3. Defendant Knight shall pay $2,139 of plaintiff Wojdak's attorney's fees.
"4. Checks are to be delivered to plaintiff's counsel's office. Plaintiff Wojdak does not need to be present to personally receive and sign for those checks.
"5. Defendant Knight is not to have plaintiff Wojdak investigated or photographed in violation of the 'Stay Away, No contact and No Investigation' clause at page 11 of the Settlement Agreement."
In response to Kriste's objections, Finley submitted a declaration attesting that nothing in his proposed order would preclude Kriste from "receiving credit for payments actually made. The problem is that she proposes to deduct her attorney's fees, her fictional 'estimated' potential tax liabilities, and other pro-rated expenses, for which she should not be allowed to make any deductions or withholdings or the court's order would be thwarted."
One day before the hearing on the proposed orders, Kriste informed the court that Margaret had died on July 19, 2009. Kriste requested a continuance of the December 17, 2009 hearing to allow the appointment and substitution of a personal representative for Margaret.
At the December 17 hearing, Kriste argued that Finley had failed to disclose Margaret's death at the September 17 hearing, and that Finley lacked standing to represent a deceased plaintiff without the appointment and substitution of a personal representative. Finley, on the other hand, denied having any prior knowledge of Margaret's death: "The client was alive when I filed my motion which the court ruled on, so I'll have to check into this and see if this is true. She's got a death certificate, so probably she has passed away." Finley argued that the substitution of a personal representative was unnecessary given that Margaret "had a trust with personal representatives" and "powers of attorney in place," which allowed payments to "be processed through the trust without any further ado."
The trial court indicated its approval of Finley's proposed order, stating: "The only correction that I see that needs to be made to the order is as to the attorney's fees[] and cost amounts that were set forth [as] $3,979, but I said the correct amount should be $2,139. The rest of the order is consistent with exactly what was ordered at the time. And as to the rest, the motion to change it is denied. And the motion to correct the amount of the attorney's fees, that motion is granted."
Kriste objected that the adjusted principal balance was only about $92,000 (rather than $95,625) as a result of her payments of $750 to Georgette Fischer and $2,792.05 for real property expenses in 2007. The trial court responded that Kriste was entitled to a credit for whatever amounts had been paid, but the amount of such credit, if any, was not presently before the court: "Whatever monies had been paid you should get credit for. [¶]. . . That's what the order said. How much it is, that's a different issue. But as to the motions before this court this morning, I'm now making a ruling twice or three times, the only area that requires correction is the amount of the attorney's fees, and that is granted."
The trial court signed and entered Finley's proposed order, after correcting the amount of fees and costs. This timely appeal followed.
DISCUSSION
Section 367 provides that "[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute." "If any person other than a real party in interest brings an action, it is subject to general demurrer. [Citations.]" (Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 427.)
Kriste argues that as a result of Margaret's death prior to the September 17, 2009 hearing on her section 664.6 motion, there "is no real party in interest in this case. It is settled that the real party in interest is the person possessing the right sued upon by reason of the substantive law. Ventura County Ry. Co. v. Hadley Auto Transport (1995) 38 Cal.App.4th 878, 880. Mr. Finley does not possess that right. Nor does anyone else because the trial court erred in not ordering the appointment of a representative for the deceased plaintiff and no probate court-appointed representative appeared or responded. A representative must first be appointed so that the Plaintiff is represented and so that someone, on her behalf, can perform the contract."
Finley, who filed a respondent's brief on behalf of "Margaret M. Wojdak (deceased) and the Margaret Wojdak 2000 Trust," argues that Margaret's cause of action to enforce the agreement survived her death, because the "Settlement Agreement authorized MARGARET to designate other person(s) to receive the payments on her behalf." He points out that Margaret designated her sons Wendell and Scott as recipients, on behalf of her trust, of payments made under the agreement, and argues that a personal representative is not necessary because Margaret's property can be administered through her trust without a probate proceeding.
The problem, however, is that because neither Wendell nor Scott is a party to this action, there is no real party in interest. Although Finley purports to represent Margaret's estate or trust, "'[a]n estate or trust is not a legal entity, and therefore has neither capacity nor standing to sue[.] Title to estate or trust assets is held by the executor, administrator or trustee, on behalf of the beneficiaries. Thus, as to claims held by an estate or trust, the executor, administrator or trustee is the real party in interest. Such fiduciary has the right to sue[.]' (Weil and Brown, Cal. Practice Guide[: Civil Procedure Before Trial (The Rutter Group 2003)] ¶ 2:6, p. 2-2, italics omitted.)" (O'Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1095.)
Before it may proceed with this action following Margaret's death, the trial court must determine whether the action survived her death, and whether a personal representative or successor in interest can be substituted in her place. Section 377.31 provides: "On motion after the death of a person who commenced an action or proceeding, the court shall allow a pending action or proceeding that does not abate to be continued by the decedent's personal representative or, if none, by the decedent's successor in interest."
"'Personal representative' means executor, administrator, administrator with the will annexed, special administrator, successor personal representative, public administrator acting pursuant to Section 7660, or a person who performs substantially the same function under the law of another jurisdiction governing the person's status." (Prob. Code, § 58, subd. (a).)
According to section 377.11, "'decedent's successor in interest' means the beneficiary of the decedent's estate or other successor in interest who succeeds to a cause of action or to a particular item of the property that is the subject of a cause of action."
If the trial court concludes that the action survived Margaret's death and that a personal representative or successor in interest can be substituted in her place, "the court shall allow" the proceeding to continue. (§ 377.31, italics added.) We therefore reverse and remand with directions to determine whether a substitution of plaintiffs is possible under section 377.31.
In light of our determination that the order must be reversed for lack of a real party in interest, we need not reach Kriste's remaining contentions that the written order misstated the trial court's oral ruling and altered the terms of the parties' agreement.
DISPOSITION
The order is reversed and the cause remanded with directions to determine whether a substitution of plaintiffs is possible under section 377.31. If so, the court shall allow the action to be continued by the plaintiff's personal representative or successor in interest, and if not, a dismissal shall be entered. Kriste Knight is awarded her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
SUZUKAWA, J.
We concur:
EPSTEIN, P. J.
MANELLA, J.