MOORE, J.
After the trial court granted a motion for summary adjudication in favor of the plaintiff in a breach of contract action, the defendants moved for reconsideration. After receiving the motion, the court, sua sponte, reconsidered the motion for summary adjudication and denied the same, because the underlying contract did not have a lawful object. The defendants then filed a motion for summary judgment, which was granted. The plaintiff appeals.
Although the motion for reconsideration was defective, the court had the inherent authority to reconsider its ruling. (LeFrancois v. Goel (2005) 35 Cal.4th 1094, 1108.) The subject of the contract in question was, in large part, the assignment of a legal malpractice claim. Inasmuch as such a claim is not assignable (Curtis v. Kellogg & Andelson (1999) 73 Cal.App.4th 492, 504), the court correctly concluded that the contract was unenforceable. We affirm.
In what we have previously characterized as "an acrid dispute between neighbors," James Michael Harm and Soraya Maria Harm (the Harms) filed suit against Wayne T. Hetman (Hetman), and Hetman filed a cross-complaint against the Harms and certain others. (Harm v. Hetman (Super Ct. Orange County, 2007, No. 06CC03911).) That lawsuit resulted in three prior appeals. (Harm v. Hetman (Mar. 16, 2011, G043206) [nonpub. opn.];
Before this court rendered a decision in any of the appeals, the Harms offered to settle the litigation. On July 2, 2008, Attorney Richard Jones, counsel for the Harms, sent a letter to Attorney Andrew Weiss, counsel for Hetman. The letter stated in pertinent part, "I have been asked to pass this settlement offer onto you, CIG and Mr. Hetman. [¶] As you know, both Judge Munoz and I attempted to convince you to utilize a General Verdict at trial. Your insistence on a Special Verdict was, unfortunately, a breach of a duty to Mr. Wayne Hetman. CIG Insurance Company's failure to indemnify Mr. Hetman (i.e., the negligence cause of action, inter alia final) is clearly a breach of the California Insurance Code § 790.03, et seq. Accordingly, my clients are willing to settle with Mr. Hetman for an assignment of his rights against CIG Insurance Company and the Law Offices of Andrew Weiss. [¶] . . . I need to hear your client's decision within one week."
Attorney Donald McIntyre, then representing Hetman, sent a July 3, 2008 letter in reply. It stated, in pertinent part: "Mr. Hetman hereby accepts the settlement offer stated in your letter of July 2, 2008 . . . . [¶] I am preparing a settlement agreement for your consideration and expect to have it to you Monday morning." Attorney McIntyre subsequently prepared a draft formal settlement agreement, but it was never signed by the parties.
In September 2008, Hetman filed a breach of contract action against the Harms and certain others—the second lawsuit between the parties and the one underlying this appeal. He asserted that the exchange of letters constituted a binding settlement agreement. He alleged that, the settlement agreement notwithstanding, the Harms had continued to pursue collection of their judgment in the first lawsuit and had recorded an abstract of judgment against his real property. Hetman sought specific performance of the settlement agreement, damages for breach, and declaratory and injunctive relief.
Hetman thereafter filed a motion for summary adjudication. He sought summary adjudication of the causes of action for specific performance, declaratory relief and injunctive relief, in addition to summary adjudication of the Harms's Code of Civil Procedure section 664.6 defense.
The parties stipulated to have Attorney Ferne Michaelson act as temporary judge. The court held that the parties had entered into a valid, enforceable settlement agreement and that Code of Civil Procedure section 664.6 did not provide the only method for enforcing the settlement agreement. Consequently, the court granted summary adjudication in favor of Hetman on the causes of action for specific performance and for declaratory relief and on the Code of Civil Procedure section 664.6 defense. It denied summary adjudication of the cause of action for injunctive relief, due to Hetman's "failure to inform the court of the essence of the injunction and its exact wording" or to provide legal authority.
Ten days later, the Harms, individually and on behalf of the Harm Family Living Trust dated May 26, 2005, filed a motion for reconsideration pursuant to Code of Civil Procedure section 1008. They based their motion on the ground that, under California law, a plaintiff may not assign his or her legal malpractice claim to a defendant. They argued that to grant summary adjudication in favor of Hetman would be to order the parties to enter into an illegal contract. In bringing their motion, the Harms acknowledged that the parties had not previously briefed this issue of law. In support of their motion, the Harms filed the declaration of Attorney Jones, who represented that when he wrote the letter to Attorney Weiss, he did not know that California law did not permit the assignment of a legal malpractice claim.
In opposition to the motion for reconsideration, Hetman asserted that the motion for reconsideration was defective, inasmuch as it was not based on new facts or law. (Code Civ. Proc., § 1008.) He argued, inter alia, that the law regarding the nonassignability of legal malpractice claims was not "new" and could have been raised previously.
The court granted the motion for reconsideration. It then denied Hetman's motion for summary adjudication.
The Harms thereafter filed a motion for summary judgment based on three grounds: (1) the purported settlement agreement did not satisfy the requirements of Code of Civil Procedure section 664.6; (2) no contract was formed because there was no meeting of the minds; and (3) even if a contract had been formed it would have been unenforceable because malpractice claims are not assignable. The court granted the motion because when Attorney Jones conveyed the settlement offer he was unaware that malpractice claims are not assignable, and the settlement agreement was thus unenforceable based on either unilateral or mutual mistake. Hetman appeals.
Hetman contends that the court had no jurisdiction to reconsider its ruling on his motion for summary adjudication. He emphasizes that the Harms's motion for reconsideration was not based on any "new or different facts, circumstances, or law," as required by Code of Civil Procedure section 1008, subdivision (a). Although the Harms, in their motion for reconsideration, offered law they had not previously cited in opposition to his motion for summary adjudication, that law was not "new." As Hetman well points out, the law regarding the nonassignability of malpractice claims is well established (see e.g., Curtis v. Kellogg & Andelson, supra, 73 Cal.App.4th at p. 504) and could have been offered by the Harms previously had they been diligent in their legal research.
Be that as it may, in this case, the court stated that it was reconsidering the motion sua sponte. At the hearing on the motion for reconsideration, the court stated at the outset: "The motion for reconsideration is granted based on the court's motion sua sponte, as brought to its attention by defendants to reconsider portions of its ruling and order on the motion for summary adjudication." In taking this action, the court expressed its reliance on LeFrancois v. Goel, supra, 35 Cal.4th 1094. It noted that, according to LeFrancois, Code of Civil Procedure section 1008 "`limit[s] the parties' ability to file repetitive motions, but [does] not limit the court's ability, on its own motion, to reconsider its prior interim orders so it may correct its own errors.'" (LeFrancois v. Goel, supra, 35 Cal.4th at p. 1107.)
Hetman says the court erred in its application of LeFrancois v. Goel, supra, 35 Cal.4th 1094, and that it had no power to reconsider its ruling when prompted to do so by the Harms. We disagree.
As the LeFrancois court stated: "We cannot prevent a party from communicating the view to a court that it should reconsider a prior ruling . . . . We agree that it should not matter whether the `judge has an unprovoked flash of understanding in the middle of the night' [citation] or acts in response to a party's suggestion. If a court believes one of its prior interim orders was erroneous, it should be able to correct that error no matter how it came to acquire that belief." (LeFrancois v. Goel, supra, 35 Cal.4th at p. 1108.) The court further stated that it is improper for a party to file a motion for reconsideration when the requirements of Code of Civil Procedure section 1008 are not met. (LeFrancois v. Goel, supra, 35 Cal.4th at p. 1108.) Be that as it may, once the improper motion has been filed, it may prompt a "flash of understanding" on the part of the trial court.
True, the Le Francois court also stated: "Unless the requirements of [Code of Civil Procedure] section . . . 1008 are satisfied, any action to reconsider a prior interim order must formally begin with the court on its own motion. To be fair to the parties, if the court is seriously concerned that one of its prior interim rulings might have been erroneous, and thus that it might want to reconsider that ruling on its own motion . . . it should inform the parties of this concern, solicit briefing, and hold a hearing. [Citations.]" (LeFrancois v. Goel, supra, 35 Cal.4th at p. 1108.)
Here, Hetman did not have notice that the court was giving the matter consideration sua sponte until the hearing on the Harms's motion. However, Hetman had already had the opportunity to brief not only the merits of the nonassignability issue, but also the court's authority to reconsider the ruling at issue. Indeed, in their motion for reconsideration, the Harms, citing various authorities, emphasized that the court had the inherent constitutional authority to reconsider and correct its interim rulings and that such authority could be exercised sua sponte. In opposition to the motion for reconsideration, Hetman argued that the Harms's motion was an improper vehicle for prompting a court to exercise its inherent constitutional authority to reconsider its ruling. He cited LeFrancois v. Goel, supra, 35 Cal.4th 1094 and Kerns v. CSE Ins. Group (2003) 106 Cal.App.4th 368, addressing the distinction between a true sua sponte motion by the court and a reconsideration provoked by a party's motion.
At the beginning of the hearing on the reconsideration motion, the court announced its intention to consider the matter sua sponte. Then, Hetman had the opportunity to argue orally about the court's authority to reconsider in this manner. Indeed, at the hearing, he presented his arguments concerning LeFrancois v. Goel, supra, 35 Cal.4th 1094, upon which the court stated it was relying, as he had already done in his briefing. Hetman does not say what additional arguments he would have made if he had known in advance the court was going to announce at the hearing that it was considering the matter sua sponte. We do not see what harm Hetman suffered by not having additional notice.
"Nonetheless, [Hetman] argues that an order granting reconsideration must be reversed if its issuance was prompted by the filing of a motion for reconsideration that did not meet the requirements of the reconsideration statutes. We disagree. There is nothing in the Supreme Court's opinion in Le Francois that justifies this conclusion. To the contrary, an examination of the result in Le Francois provides support for the opposite conclusion. . . . [I]t is clear that a party's filing of a motion for reconsideration in violation of the reconsideration statutes does not erect a permanent, insurmountable barrier to reconsideration by the trial court on its own motion." (In re Marriage of Barthold (2008) 158 Cal.App.4th 1301, 1309.)
Furthermore, "even if a trial judge errs in granting reconsideration, `that error cannot be deemed reversible without reaching the merits of the . . . issue' on which the court ruled. [Citation.]" (In re Marriage of Barthold, supra, 158 Cal.App.4th at p. 1313.) "[S]ection 13 of article VI of the California Constitution precludes the reversal of a judgment `"for any error as to any matter of procedure, unless, after an examination of the entire cause . . . the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice."' . . . In our view, the California Constitution requires that in any case in which a trial judge reconsiders an erroneous order, and enters a new order that is substantively correct, the resulting ruling must be affirmed regardless of any procedural error committed along the way. Because [Code of Civil Procedure] section 1008 must be construed to be consistent with constitutional principles [citation], it cannot be interpreted to preclude this result. [Citation]." (In re Marriage of Barthold, supra, 158 Cal.App.4th at p. 1313, fn. omitted.)
Here, to the extent the court may have erred in reconsidering the matter sua sponte, the error was harmless error. As the Harms point out, had the court not reconsidered the ruling on Hetman's motion for summary adjudication, they would have challenged the ruling in this court based on illegality of contract. That challenge would have been successful, for reasons we shall show.
"Under summary judgment law, any party to an action, whether plaintiff or defendant, `may move' the court `for summary judgment' in his [or her] favor on a cause of action . . . or defense (Code Civ. Proc., § 437c, subd. (a)) — a plaintiff `contend[ing]... that there is no defense to the action,' a defendant `contend[ing] that the action has no merit' (ibid.). The court must `grant[]' the `motion' `if all the papers submitted show' that `there is no triable issue as to any material fact' (id., § 437c, subd. (c)) — that is, there is no issue requiring a trial as to any fact that is necessary under the pleadings and, ultimately, the law [citations] — and that the `moving party is entitled to a judgment as a matter of law' (Code Civ. Proc., § 437c, subd. (c))." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.)
"In moving for summary judgment, a `plaintiff . . . has met' his `burden of showing that there is no defense to a cause of action if' he `has proved each element of the cause of action entitling' him `to judgment on that cause of action. Once the plaintiff . . . has met that burden, the burden shifts to the defendant . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. The defendant . . . may not rely upon the mere allegations or denials' of his `pleadings to show that a triable issue of material fact exists but, instead,' must `set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.' (Code Civ. Proc., § 437c, subd. (o)(1)."
"Similarly, in moving for summary judgment, a `defendant . . . has met' his [or her] `burden of showing that a cause of action has no merit if' he [or she] `has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to that cause of action. Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. . . .' (Code Civ. Proc., § 437c, subd. (o)(2).)"
On review of a summary judgment, we "examine the record de novo and independently determine whether [the] decision is correct. [Citation.]" (Colarossi v. Coty US Inc. (2002) 97 Cal.App.4th 1142, 1149.)
Upon reconsidering its ruling on Hetman's motion for summary adjudication, the court found that no contract had been formed because of a mutual mistake regarding the assignability of a legal malpractice claim. The court noted that there are four essential elements to the formation of a contract, one of them being a lawful object. (Civ. Code, § 1550.) It observed that Hetman had made no attempt to show that there was a lawful object to the contract, inasmuch as a malpractice action is not assignable as a matter of law. Given this, the court held that Hetman, in his motion for summary adjudication, had not met his initial burden to demonstrate contract formation and the motion should have been denied.
Similarly, in granting the Harms's motion for summary judgment, the court stated that they had shown there was no enforceable settlement agreement, inasmuch as their counsel was unaware, at the time he conveyed the settlement offer, that malpractice claims are not assignable. The result was the same, the court observed, whether the mistake in question was characterized as unilateral or mutual.
It is "well-established . . . that legal malpractice claims are not assignable as a matter of California public policy. [Citations.]" (Curtis v. Kellogg & Andelson, supra, 73 Cal.App.4th at p. 504.) Hetman does not contend otherwise. However, he asserts that what he agreed to assign was "his right to the
This notwithstanding, Hetman insists the evidence supports his position. We shall see.
Attorney Jones's July 2, 2008 offer letter did not state that the Harms were willing to settle for an assignment of the proceeds of a claim if ever there were any such proceeds. Rather, the letter stated plainly: "Accordingly, my clients are willing to settle with Mr. Hetman for an assignment of his rights against . . . the Law Offices of Andrew Weiss." (Italics added.) As Hetman himself states with regard to this language, "the terms of the Harms' settlement proposal were clear and unequivocal." We agree. This language on its face is an offer to settle for an assignment of such rights as Hetman then had vis-à-vis Attorney Weiss, which would include a right to commence litigation against him and prosecute that litigation to completion, but did not include a right to then nonexistent proceeds.
In support of their motion for summary judgment the Harms provided an excerpt of the transcript of the February 27, 2009 deposition of Hetman, to which an exhibit 2 was attached. During the deposition, exhibit 2, prepared by Attorney McIntyre, was marked for identification and Hetman was questioned concerning the exhibit. That exhibit was a settlement agreement and mutual release, to which were attached an assignment of potential action against Attorney Weiss, an assignment of potential action against CIG, and a lien release.
The proposed settlement agreement, sent by facsimile transmission from Attorney McIntyre's office on July 8, 2008, stated that the Harms and certain others, as releasors, and Hetman, as releasee, agreed: "1. Releasee will execute the assignments attached hereto as Exhibits 1 and 2 for purposes of assigning to Releasors . . .: [¶] . . . [¶] ii) Any and all malpractice claims Releasee may have against the Law offices of Andrew D. Weiss arising out of or in connection with its representation of Releasee in the Action." (Italics added.)
The agreement continued: "2. The rights or potential rights assigned in paragraph `1' above, are assigned without warranty. Releasors hereby acknowledge that Releasee has not made any representations regarding the existence, value, worth, viability, assignability, timeliness, or collectability of such rights or claims arising out of the rights assigned or purportedly assigned in paragraph `1' above. . . . Releasors hereby acknowledge that Releasee has not previously asserted any claim against the Law Offices of Andrew D. Weiss for malpractice. . . . Releasors hereby accept all risks, both legally and factually, regarding their ability to pursue claims against the Law Offices of Andrew D. Weiss . . . based on the rights assigned herein. Releasee specifically does not waive any attorney client privilege related to the rights assigned in paragraph `1' above." (Italics added.)
Tellingly, the relevant assignment attached to the proposed settlement agreement provided: ". . . Assignor hereby assigns and transfers to the Assignees all claims and causes of action for malpractice, [to] the extent permitted by law, Assignor may now have or hereafter acquire against the Law Offices of Andrew D. Weiss based on his representation of Assignor in the Action. [¶] Any lawsuit or proceeding to enforce the rights assigned to the Assignees shall be instituted and maintained by the Assignees in their own name and at their own expense." (Italics added.)
Clearly, the proposed formal settlement agreement prepared by Attorney McIntyre demonstrates an intent to assign the malpractice claim itself, not any proceeds thereof.
In support of his motion for summary adjudication, Hetman provided a copy of a letter written by Attorney Jones on July 10, 2008. In that letter, Attorney Jones wrote to Attorney McIntyre that he wanted to memorialize their telephone conversation of July 9, 2008. He reiterated that he needed certain information and/or documentation. In addition, Attorney Jones stated: "I advised you that I would like Attorney Neil Bahan to represent Mr. Hetman." He also stated: "As I repeated throughout our telephone call... the Appeal must continue until the parties are able to formalize an agreement."
Hetman focuses his attention on the first quoted sentence, about the requested representation by Attorney Bahan. He says this shows that the Harms intended, when the July 2, 2008 settlement offer was sent, that Hetman would prosecute the malpractice litigation in his name and that they would accept an assignment of any proceeds ultimately arising out of the litigation. However, this loses sight of the fact that the July 10, 2008 letter was written after Attorney McIntyre had prepared a formal comprehensive settlement agreement that made clear that what Hetman was willing to assign was a malpractice claim, not proceeds, and also the fact that Attorney Jones made clear that no formal settlement had been reached. In other words, the two attorneys were in the process of negotiating terms. By July 10, 2008, it would appear Attorney Jones was considering the possibility of Hetman being the named plaintiff, to be represented by Attorney Bahan.
In support of his opposition to the motion for summary judgment, Hetman pointed to an October 13, 2009 letter from Attorney Jones to Attorney Candice Bryner, who then represented Hetman. In that letter, Attorney Jones stated: "Regardless of the fact that a legal malpractice cause of action is not assignable, I still think Mr. Hetman should sue Attorney Weiss for malpractice. . . . [¶] I hope you will consider apprising Mr. Hetman of the fact that a successful malpractice suit against Mr. Weiss could potentially pay the majority of the Judgment owed."
This letter does not show that more than a year earlier Attorney Jones had intended to convey a settlement offer based on an assignment of the proceeds of a claim against Attorney Weiss. It only shows that in October 2009, Attorney Jones was then offering a practical suggestion for how Hetman might acquire sufficient funds to pay off the judgment the Harms held against him.
In his opposition to the motion for summary judgment, Hetman referenced a portion of the August 5, 2010 deposition of Attorney Jones to show that the Harms always intended to settle for an assignment of the proceeds of any claim against Attorney Weiss, rather than for an assignment of the claim itself.
The only pages of the deposition transcript provided show two answers regarding the assignment, but we do not know what the first question was. The exchange reads as follows: "THE WITNESS: Could you read that back? I didn't follow the second part of it. [¶] (Record read.) [¶] THE WITNESS: I don't think—if that's kind of a hybrid of an assignment, the law is very clear it is not assignable. I think he should have. I think he still should. I think Mr. Weiss did him a terrible [injustice] by asking for that special verdict. . . . Now whether or not Mr. Hetman would then after recovering a verdict or judgment against Mr. Weiss . . . want to turn it over to my clients, I find that unlikely. But I don't know—I don't think that would be legal the way you've phrased it. Does he have a right or did he have a right to sue Weiss? Absolutely 100 percent. [¶] Q. All right. But in any event, at the time that you wrote your July 2nd, 2008 letter you were contemplating that it would be Mr. Hetman who was actually filing the lawsuit against Mr. Weiss; is that correct? [¶] A. The only way I could envision it at the time—and again, I have now come to learn that it is illegal. It is unenforceable. It is void. Was that Mr. Hetman would enter into some written agreement assigning all of his rights. In other words, any recovery that he would achieve in that lawsuit to my clients. I have never seen such a document. I didn't know really where we were kind of going on that. But, yeah, he would have had to have been the plaintiff. And he still could be the plaintiff and sue Mr. Weiss." (Italics added.)
Attorney Jones did not state that at the time he sent the July 2, 2008 letter, he intended to convey an offer to settle for an assignment of any proceeds that might ever come into existence. Rather, he admitted that by August 5, 2010, he had come to learn that an assignment of a malpractice claim was unenforceable and that he hadn't thought through the mechanics of the assignment at the time he proposed it. In other words, by the date of his deposition, he realized that Hetman would have had to be the plaintiff in any malpractice action against Attorney Weiss.
On the one hand, we have the plain language of the July 2, 2008 letter offering to settle for an assignment of Hetman's rights against Attorney Weiss, the plain language of the July 3, 2008 response that Attorney McIntyre would prepare a settlement agreement, and the plain language of Attorney McIntyre's July 8, 2008 proposed settlement agreement stating Hetman would assign his malpractice claim and the Harms would pursue the litigation in their own names. On the other hand, we have the subsequent letters of July 10, 2008 and October 13, 2009 and the August 5, 2010 deposition testimony, which do not suffice to raise a triable issue of material fact to show that on July 2, 2008 the Harms intended to offer to settle for an assignment of proceeds. Inasmuch as Hetman has failed to raise a triable issue of material fact on that point, we need not address what he characterizes as an issue of first impression in California—whether the proceeds of a malpractice claim, as opposed to malpractice claims themselves, are assignable.
Hetman claims the court erred in concluding the settlement agreement was based on a mistake of law. He cites Civil Code section 1578, which provides: "Mistake of law constitutes a mistake . . . only when it arises from: [¶] 1. A misapprehension of the law by all parties, all supposing that they knew and understood it, and all making substantially the same mistake as to the law; or, [¶] 2. A misapprehension of the law by one party, of which the others are aware at the time of contracting, but which they do not rectify."
Given this definition, Hetman claims there is no evidence to support the trial court's finding that there was a mistake of law. Hetman acknowledges that Attorney Jones provided a declaration to the effect that, at the time he sent the settlement offer, he was unaware that it was against public policy to assign a malpractice claim. However, Hetman says that there is no evidence regarding the knowledge of either himself or his counsel on the topic.
In other words, Hetman says that there is no evidence that either he or his counsel was unaware of the public policy proscription and therefore mistaken as to the law. Consequently, Hetman argues, there is no evidence to support a conclusion that there was a mistake of law as defined by Civil Code section 1578, paragraph 1. At the same time, Hetman says there is no evidence that either he or his counsel was aware of the public policy proscription but failed to disclose it. Consequently, he contends, there is no evidence to support a conclusion that there was a mistake of law as described in Civil Code section 1578, paragraph 2.
We can make short order of this business. The evidence showed that one party was unaware of the public policy proscription. It was necessarily the case that either the other party was also unaware of it, in which case Civil Code section 1578, paragraph 1 applied, or the other party was aware of it and failed to bring it to light, in which case Civil Code section 1578, paragraph 2 applied. Hetman cannot avoid this conclusion just by failing to offer a declaration of knowledge one way or the other.
As an aside, our unassisted review of the reporter's transcript shows that Hetman's counsel, at the hearing on the Harms's motion for summary judgment, readily acknowledged that the parties had made a mutual mistake. She conceded that, at the time the settlement was proposed, neither party was aware that a malpractice claim was not assignable. Although the attorney was not providing testimony on the point, Hetman's current position on the state of the parties' knowledge is a bit disingenuous.
In any event, the record supports the trial court's finding that there was a mistake of law.
In their motion for summary judgment, the Harms argued that to the extent any settlement agreement was formed, it was unenforceable due to illegality and the court could not sever the illegal portion. They cited, among other statutes, Civil Code section 1608.
Civil Code section 1608 provides: "If any part of a single consideration for one or more objects, or of several considerations for a single object, is unlawful, the entire contract is void." As our supreme court has repeatedly explained, "`If . . . there are several considerations for one promise, some of which are legal and others illegal, the promise is wholly void, as it is impossible to say which part or which one of the considerations induced the promise. . . .' [Citations.]" (Teachout v. Bogy (1917) 175 Cal. 481, 486; First Nat. Bk. v. Thompson (1931) 212 Cal. 388, 404; Haas v. Greenwald (1925) 196 Cal. 236, 247.) Applying that rule here, the purported settlement agreement was void, since the agreement to assign rights against Attorney Weiss was prohibited by California law.
Hetman counters that the contract was severable. He says all the court needed to do was sever the unenforceable provision of the settlement agreement and enforce the remaining terms. He cites Keene v. Harling (1964) 61 Cal.2d 318, among other cases, in support of his position.
In Keene v. Harling, supra, 61 Cal.2d 318, the plaintiffs owned and operated a coin machine route. They sold the route and all related business equipment to the defendant for $50,000. (Id. at p. 319.) After the defendant defaulted on the monthly payments due, the plaintiffs filed suit. The unpaid balance of the purchase price at the time of trial was $32,500. The equipment sold to the defendant included some bingo-type pinball machines, the sale of which was illegal. The trial court found that the value of those machines at the time of sale was $4,600. In addition, it concluded that the contract was severable. Consequently, the court entered judgment for the plaintiffs in an amount equal to the unpaid balance of $32,500 minus the $4,600 value of the illegal machines. (Id. at p. 320.)
The Supreme Court affirmed. (Keene v. Harling, supra, 61 Cal.2d at p. 325.) It stated, "the rule relating to severability of partially illegal contracts is that a contract is severable if the court can, consistent with the intent of the parties, reasonably relate the illegal consideration on one side to some specified or determinable portion of the consideration on the other side." (Id. at p. 321.) In applying that rule to the case before it, the court explained: "Since the consideration on the buyer's side was money, the court properly construed the contract by equating the established market price of the illegal machines to a portion of the money consideration. `The rule is well settled that where several things are to be done under a contract, if the money consideration to be paid is apportioned to each of the items to be performed, the covenants are ordinarily regarded as severable and independent.' [Citation.]" (Id. at p. 323.)
However, the case before us does not pertain to goods sold. We cannot establish a monetary value for the claim against Attorney Weiss and reduce the Harms's performance obligations by the same value. Moreover, just as there is no way to know what the exact value of a claim against Attorney Weiss might be, there is no way to know what the exact value of a claim against the insurance carrier might be. Neither value can be known until litigation is commenced and completed to judgment or settlement. In the end, either claim could be determined to be valueless. The Harms were willing to take the gamble that either one or the other claim would pay off. But they did not offer to settle the first lawsuit in consideration of an assignment of only one of those two claims.
As the Keene court also stated, "if the court is unable to distinguish between the lawful part of the agreement and the unlawful part, the illegality taints the entire contract, and the entire transaction is illegal and unenforceable." (Keene v. Harling, supra, 61 Cal.2d at p. 321.) That is the case here.
In making his motion for summary adjudication, Hetman failed to meet his burden to show that there was an enforceable contract. Consequently, the trial court properly denied his motion. In making their motion for summary judgment, the Harms met their burden to show that an element of each cause of action could not be established inasmuch as they showed there was no enforceable contract. The burden then shifted to Hetman to raise a triable issue of material fact as to the existence of the contract. He failed to do so. The purported contract was based in significant part on an agreement to assign a nonassignable malpractice claim and that agreement was not severable from the rest of the contract. The trial court properly granted summary judgment in favor of the Harms.
The summary judgment is affirmed. The Harms shall recover their costs on appeal.
O'LEARY, ACTING P. J. and FYBEL, J., concurs.
