Cite as A162543
Filed September 2, 2022, First District, Div. Three
By Michelle Barnett Batista
Aaron, Riechert, Carpol & Riffle, APC
Headnotes: Settlement Agreement – Condition Precedent
Summary: Court can enforce settlement agreement with implied condition precedent that has not yet materialized.
Charles executed a trust naming his daughter, Sandra, as successor trustee. Upon his death, Helen petitioned for an interest in the estate as an omitted spouse. Sandra and Helen agreed that the trust would pay $3 million to Helen as her interest in the estate. Sandra, as trustee, would pay the funds “out of the escrow from the sale of” specified real property. At the time of the agreement, there was a pending sale of the property to Calvano Development, Inc. (CDI) for $13.6 million. The trial court entered a stipulated judgment incorporating the settlement. Thereafter, the sale of the property fell through and escrow never closed. Sandra failed to pay the funds and Helen filed a petition to enforce the settlement agreement under Code of Civil Procedure section 664.6. The trial court denied the petition on the ground that the sale of the property was an implied condition precedent that never materialized and thus, the settlement agreement was unenforceable. Helen appealed.
The appellate court reversed. The court may interpret the settlement terms and conditions, but it cannot impose terms to which the parties did not agree. While payment to Helen must be “out of 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. The settlement agreement contained a condition precedent as to the method of payment, but the trustee’s independent promise to pay $3 million was enforceable and remained payable upon the sale of the property.