JACKSON, J.
Appellants Meghan Noland, an individual, and Meghan Noland, Inc. appeal from a judgment following summary adjudication in favor of respondents Rigo International, Inc.; Peter Ma; PTMG, LLC; and Flat Top, LLC. We affirm.
Meghan Noland (Noland) was a fashion designer in the early years of her career in the garment industry. She engaged the services of an attorney, Grant Hallstrom (Hallstrom), in connection with starting her company, Meghan Noland, Inc. (Noland, Inc.).
In January 2003, Noland, Inc., Rigo, and Clearstone entered into an operating agreement which formed PTMG, LLC (PTMG) to conduct business in the garment industry.
During its first year of business, PTMG suffered losses of approximately $800,000. The other interest holders attributed the losses to poor management by Noland. Faced with a growing inventory of unsold garments, ostensibly on behalf of himself, Rigo and Noland, Ma entered into a business agreement in 2003 with Sam Eshaghian (Eshaghian) to market the garments that bore Noland's trademarks of "Meghan Noland" and "Meg & Ginger" to the discount retailer market, rather than to high-end retailers as originally planned. Subsequently, Ma and Eshaghian formed Flat Top, LLC (Flat Top), through which Eshaghian conducted the discount retailer marketing.
In 2004, Noland resigned from PTMG. Then she joined with Sacha Hason (Hason) to form a new business, S&M Fashion Group, Inc. (S&M). They sought a loan through Ma from Rigo for use in operating S&M for the first few months. Ma agreed to make the loan on behalf of Rigo, provided that Noland would execute a settlement agreement with regard to PTMG.
On behalf of herself and Noland, Inc., Noland entered into a redemption and settlement agreement as of January 1, 2005 with PTMG (the settlement agreement). The settlement agreement specified that the parties entered into it "for the purposes of compromising disputed claims and avoiding . . . litigation." Then Ma, Noland, Hason and S&M executed a credit and distribution agreement (S&M loan) which provided for a short-term loan of $120,000 from Ma through Rigo to Noland, Hason, and S&M. The signing of the settlement agreement was part of the consideration for the S&M loan.
Pursuant to the settlement agreement, PTMG agreed to redeem the Noland parties' interest in the company and relieve the Noland parties from any responsibility for PTMG debt. In return, the Noland parties agreed to withdraw from PTMG and transfer to PTMG all rights to the trademarks "Meghan Noland" and "Meg & Ginger," including all rights to recover damages for past infringements of the trademarks.
The settlement agreement also included a detailed mutual general release from liability by each party and its specified "Successors in Interest"
When S&M failed to repay the bulk of the S&M loan, Rigo initiated a lawsuit against Noland, Hason, and S&M to collect the loan (the collection action).
In the collection action cross-complaint, the Noland parties alleged causes of action stemming from alleged misrepresentations about PTMG losses and its value, which allegedly induced the Noland parties to enter into the settlement agreement, which, in turn, resulted in losses to them. They alleged causes of action for rescission of the settlement agreement based on fraud; damages based on fraud; damages based on negligent misrepresentation; an accounting by PTMG; trademark infringement; Rigo's breach of fiduciary duty with regard to financial records for PTMG; and unjust enrichment.
The Noland parties voluntarily dismissed their cross-complaint in the collection action prior to settlement or trial. Eventually, the trial court granted a stipulated judgment in the collection action in favor of Rigo and Ma and against Meghan Fabulous fka Meghan Noland, Hason and S&M for stipulated damages totaling $118,840.75.
While the collection action was pending, Eshaghian filed suit against Rigo, Ma and Noland for breach of the contract to pay him for selling "Meghan Noland" and "Meg & Ginger" garments to discount retailers.
The trial court granted cross-defendants' motion for judgment on the pleadings in September 2008 against cross-complainant Noland individually pursuant to the compulsory cross-complaint statute, Code of Civil Procedure section 426.30, subdivision (a).
In October, the trial court granted cross-defendants' subsequent motion against the remaining cross-complainant for summary adjudication as to the first, second, third, fourth, fifth, seventh and eighth causes of action. In its order, the court stated that "[c]ross-complainant fails to provide evidence to refute the evidence provided by cross-defendants."
The Noland parties voluntarily dismissed the sixth cause of action in January 2009. Judgment was entered March 11, 2009 against cross-complainants and in favor of cross-defendants on the remaining causes of action.
In the cross-complaint, the Noland parties seek rescission of the settlement agreement and relief for alleged losses they incurred arising from actions of the Rigo parties with respect to PTMG business prior to the execution of the settlement agreement. The settlement agreement includes a general release which bars imposition of liability against cross-defendants "relating to PTMG or its activities, assets, liabilities, or partners." The Rigo parties claim that the Noland parties failed to submit evidence sufficient to warrant rescission of the settlement agreement, the general release remains effective as a bar to liability for the Noland parties' alleged losses and, accordingly, the cross-complaint causes of action lack merit. As we shall explain more fully below, we agree with the Rigo parties and affirm the judgment.
We review a judgment based upon the grant of a motion for summary adjudication de novo to determine "whether there is any triable issue as to any material fact and, if not, whether the moving party is entitled to adjudication in his favor as a matter of law." (Certain Underwriters at Lloyd's of London v. Superior Court (2001) 24 Cal.4th 945, 972.) A party may move for summary adjudication on the ground that the cause of action has no merit (Code Civ. Proc., § 437c, subd. (f)(1)), and may establish that fact by conclusively negating an essential element of the cause of action or by establishing a complete defense to it (id., subd. (o ); Maria D. v. Westec Residential Security, Inc. (2000) 85 Cal.App.4th 125, 133).
When a moving cross-defendant has met his or her burden of showing that a cause of action has no merit, the burden shifts to the opposing "cross-complainant to show that a triable issue of one or more material facts exists as to" the cause of action or defense, by "set[ting] forth the specific facts" necessary to make the showing. (Code Civ. Proc., § 437c, subd. (p)(2).) In determining whether each party has met its burden, we view the evidence in a light most favorable to the opposing cross-complainant. (County of Los Angeles v. Superior Court (2009) 181 Cal.App.4th 218, 226.) "`A motion for summary adjudication proceeds in all procedural respects as a motion for summary judgment.'" (Maria D. v. Westec Residential Security, Inc., supra, 85 Cal.App.4th at p. 133.) As applicable to a motion for summary judgment, "in those circumstances in which the [cross-complainant] would have the burden of proof by a preponderance of the evidence, the [moving cross-defendant] must present evidence that would preclude a reasonable trier of fact from finding that it was more likely than not that the material fact was true [citation], or the [cross-defendant] must establish that an element of the claim cannot be established, by presenting evidence that the [cross-complainant] `does not possess and cannot reasonably obtain, needed evidence.' [Citation.]" (Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003, quoting from Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854.)
On appeal, the Noland parties challenge the trial court's determinations that their causes of action were barred by the compulsory cross-complaint statute and lacked evidentiary support. In conducting a de novo review, however, we evaluate the judgment and not the analysis by which the trial court arrived at its decision. (See O'Byrne v. Santa Monica-UCLA Medical Center (2001) 94 Cal.App.4th 797, 804-805.)
In their opening brief, the Noland parties acknowledge that the general release is included in the settlement agreement but claim it is of no force or effect. They assert that the settlement agreement must be rescinded, in that the Rigo parties engaged in fraud to induce the Noland parties to enter into the agreement. They also claim that they were unaware the general release was part of the agreement. The evidence does not support their claims.
In their separate statement of facts submitted in opposition to the motion, for example, the Noland parties did not dispute the fact that Noland always reads contracts before she signs them, from which fact it can be inferred that Noland read the settlement agreement and, thus, was aware of the general release before she signed it. Another undisputed fact was that the settlement agreement stated that Noland was not relying on statements made by Ma or any other person when she signed the agreement.
The Noland parties claim that the Rigo parties willfully misrepresented to them that PTMG was losing money under Noland's management and the losses had reached $800,000. The Noland parties assert that the truth was that PTMG was succeeding and, but for the fraudulent misrepresentations, the Noland parties would not have entered into the settlement agreement. Evidence shows that the Rigo parties' representations were accurate, rather than fraudulent.
In his declaration, Jamil Perweez, the controller for Rigo, stated that Rigo provided the accounting for PTMG. Perweez stated he prepared basic profit and loss and other financial summaries or statements and shared them in meetings with Ma and Noland on at least a monthly basis. According to Perweez's calculations, PTMG lost more than $800,000 while Noland was at PTMG. Ma confirmed these matters in his declaration.
By her own conduct, Noland confirmed she was aware of the losses. Included in the record is an email from Noland to Ma and other Rigo personnel, stating that PTMG was "in the hole $800,000." The date on the email is May 14, 2004, well before the January 1, 2005 effective date of the settlement agreement. Truth negates willful misrepresentation as an element of fraud.
The Noland parties imply that they were coerced into signing the settlement agreement, in that Rigo and Ma required them to execute the settlement agreement before Rigo and Ma would make the S&M loan. They offer no evidence, however, that they had no choice but to obtain the S&M loan and, therefore, no choice but to sign the settlement agreement. They provide no basis to differentiate their decision to enter into the settlement agreement in order to obtain capital for operating a business unrelated to PTMG from any other business decision. They may have decided afterward that it was not a very good business decision, but that does not qualify as evidence of fraud or duress sufficient to warrant rescission of the agreement. (Civ. Code, §§ 1569 & 1689, subd. (b)(1); see Tarpy v. County of San Diego (2003) 110 Cal.App.4th 267, 277 [economic duress as grounds for rescission where person had no reasonable alternative but to enter into unfavorable contract]; see also Webb v. Saunders (1947) 79 Cal.App.2d 863, 871 [unsound business judgment insufficient grounds for rescission].)
We conclude that the Noland parties did not provide evidence sufficient to raise a triable issue of fact as to whether any fraud by Rigo or Ma induced them to execute the settlement agreement. Therefore, there is no merit to their cause of action for rescission of the settlement agreement on the basis of fraud. Rather, the agreement, including the general release, is enforceable.
The Noland parties maintain that, even if the general release is enforceable, it is available as an affirmative defense only as to Noland, Inc. and not as to Noland. They point out that a party may not benefit from a release unless the party has specifically pled the release as an affirmative defense. As they explain, at the time the trial court granted the motion for summary adjudication against Noland, the Rigo parties had not pled the release as an affirmative defense; they did not amend their answer to plead the defense until after the ruling as to Noland. This procedural distinction is insufficient to render the release unavailable as to Noland for the purposes of our review.
We are conducting a de novo review, and as such, are evaluating the judgment and not the analysis by which the trial court arrived at its decision. (See O'Byrne v. Santa Monica-UCLA Medical Center, supra, 94 Cal.App.4th at pp. 804-805.) A judgment may not be set aside for defects in pleading or procedure unless it results in a miscarriage of justice. (Cal. Const., art. VI, § 13.)
Had the trial court not granted summary adjudication to Noland on the basis of the compulsory cross-complaint statute (Code Civ. Proc., §426.30), Noland would have been in the same procedural posture that Noland, Inc. was in when the Rigo parties brought the second summary adjudication motion based upon lack of evidentiary support. Reversing the judgment as to Noland and remanding to repeat the process would require the expenditure of judicial resources, in addition to delay and expense to the parties, but would not yield a different result. There would be no prejudice to any of the parties by deeming the amended pleading to apply to Noland, in that the record reveals no evidentiary basis for reaching a different determination on the motion for Noland than the decision reached with respect to Noland, Inc. We conclude there would be no miscarriage of justice by applying the affirmative defense of the general release to Noland just as it was applied to Noland, Inc. (Cal. Const., art. VI, § 13.)
The Noland parties further contend that, even if the general release is in effect, there is a triable issue of fact as to the scope and identity of the parties released. To evaluate the contention, we must apply the principles of contract interpretation. "The goal of contractual interpretation is to give effect to the mutual intention of the parties." (Maxconn Inc. v. Truck Ins. Exchange (1999) 74 Cal.App.4th 1267, 1273; see also Civ. Code, § 1636.) The parties' mutual intention "is determined by objective manifestations of the parties' intent, including the words used in the agreement." (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 474.) The language must be construed according to its "ordinary and popular" meaning. (Civ. Code, § 1644; Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1265.) Generally, "if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning." (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822.)
The Noland parties claim that the general release does not apply to Ma, Rigo or Flat Top, in that they were not parties to the settlement agreement. We disagree.
All of the Noland parties' contentions with regard to Flat Top are moot. The only cause of action against Flat Top was the sixth cause of action, which the Noland parties voluntarily dismissed.
The scope of the general release is broad enough to apply to Rigo and Ma as well as PTMG.
The Noland parties cite Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337 as support for their contention, but it is inapposite. The Neverkovec case concerned whether a general release executed by an automobile accident victim with respect to a specifically named tortfeasor was also effective to release an unnamed second tortfeasor. (Id. at p. 341.) When the victim sued the second tortfeasor after the general release was executed, the tortfeasor raised the release as a defense in his summary judgment motion. The victim claimed the release did not apply, in that the second tortfeasor was not named in the release. The tortfeasor cited language in the release about its global applicability. Expressly limiting its holding to the facts presented, the court reversed the grant of summary judgment, in that the global language regarding the coverage of the release, taken together with another provision indicating that the victim could recover in the future from persons other than the named tortfeasor, created a triable issue of fact as to whether the parties intended the release to cover and benefit the unnamed second tortfeasor. (Id. at pp. 352-353.) In the instant case, the general release does not contain comparable provisions. Rather, the general release lists specific categories of persons with certain relationships to PTMG as being persons released from claims by the Noland parties. Undisputed evidence shows that Ma and Rigo qualify as members of one or more of the categories. There is no triable issue with regard to the mutual intent of the parties to include PTMG-related persons such as Rigo and Ma as persons benefited by the release.
The Noland parties claim that none of the conduct alleged in their causes of action comes within the scope of the general release, in that the conduct was not referenced in the settlement agreement. By its express provision, the general release applies to all claims "relating to PTMG or its activities, assets, liabilities, or partners." Thus, all of the alleged conduct falls within these parameters.
The Noland parties submitted Noland's declaration that she did not intend, on behalf of herself or Noland, Inc., to waive or release any claims for things that she did not know about when she signed the settlement agreement, she did not know that she had given any such release, and she did not know the facts amounting to the fraud, misrepresentations and breach of fiduciary duty at the time she signed.
For the foregoing reasons, the general release was effective to eliminate liability of the Rigo parties for the conduct alleged in the causes of action. Thus, the Rigo parties met their burden to show that none of the causes of action had merit, but the Noland parties failed to meet their burden to provide evidence raising any triable issue of material fact. We conclude that the showing by the Rigo parties satisfies the requirements for granting a motion of summary adjudication against the Noland parties, and the trial court properly entered the judgment in favor of the Rigo parties. (Code Civ. Proc., § 437c, subd. (p)(2); Kahn v. East Side Union High School Dist., supra, 31 Cal.4th at p. 1003; Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 854.) Having resolved the appeal on the foregoing bases, we need not consider the claims about compulsory cross-complaint issues or other contentions raised by the Noland parties.
The judgment is affirmed. The cross-defendants shall recover their costs on appeal.
We concur:
WOODS, Acting P. J.
ZELON, J.
