Civil Case No.: B158797

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

MICO MAG CO., INC. dba GOURMET EDITIONS, a California Corporation,

Plaintiff/Appellant,

vs.

WORLD NEWS, INC., a California corporation; LOOT, INC., a California corporation; PARLIAMENT NEWS, INC., a California corporation; AMERICAN ART ENTERPRISES, INC., a California corporation; MARLOW SALES, INC., a California corporation; MERIDIAN EXPORTS, INC., a California corporation; RITA GROSSMAN, an Individual; RITA GROSSMAN, as Trustee of the Paul Wisner and Rita Grossman Trust; RITA GROSSMAN, as Administrator of the Estate of Paul Wisner; DOES 1-50, inclusive,

Defendants/Respondents

APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTYTHE HONORABLE IRVING S. FEFFER, PRESIDING

L.A.S.C. CASE NUMBER: BC 258 832

APPELLANT’S OPENING BRIEF

H. Scott Leviant (Bar No. 200834)STANBURY FISHELMAN & WISNER, INC.9200 Sunset Boulevard, Penthouse 30Los Angeles, CA 90069-3601Telephone: (310) 278-1800Fax: (310) 278-1802

Attorneys for Appellant

TABLE OF CONTENTS

TABLE OF AUTHORITIES........................................................................iv

I. INTRODUCTION.................................................................................1

II. CASE SUMMARY...............................................................................3

A. PROCEDURAL HISTORY..........................................................3

B. STATEMENT OF FACTS...........................................................6

C. STATEMENT OF CONTENTIONS..........................................11

III. STATEMENT OF APPEALABILITY...............................................13

IV. STANDARD OF REVIEW.................................................................14

DISCUSSION..................................................................................................16

V. THE TRIAL COURT ERRED WHEN IT FOUND THAT THE SETTLEMENT AGREEMENT IN Wisner v. Loot, Inc., et al. PRECLUDED MICO MAG’S CLAIMS AGAINST DEFENDANTS..............................................................................................................16

A. The Settlement Agreements, Such As That From Wisner v. Loot, Inc., et al. Are Construed, As A Matter Of Law, Using Basic Principles Of Contract Interpretation..........................................17

1. The Settlement Agreement From Wisner v. Loot, Inc., et al. Must Be Strictly Construed................................................19

2. The Specific Provisions Of The Wisner v. Loot, Inc., et al. Settlement Agreement Control Its General Provisions.......20

a) Settlement Terms Relating To Mico Mag..................21

b) Other Specific Terms In The Settlement Agreement Support The Conclusion That MICO MAG Did Not Release Claims Against Defendants..........................23

c) Conveyances Of Party-Owned Interests In Various Businesses..................................................................24

i

3. Where The Settlement Agreement Mentioned Certain Provisions In A Class, The Trial Court Erred When It Added Additional, Implied Provisions In That Class.........25

4. Defendants’ Conduct Provides Evidence Of Intent............27

5. Because MICO MAG Was Not A Party In Wisner v. Loot, Inc., et al., It Is Not Subject To The Provisions Of The Settlement Agreement Therein...........................................29

B. Defendants Did Not Offer Competent, Extrinsic Evidence Of Either Ambiguity Or Intent.........................................................30

1. Attorney Assertion Is Of No Evidentiary Value.................31

2. Defendants Offered No Evidence Showing That The Settlement Language Was Reasonably Susceptible To The Meaning Ascribed By Defendants......................................32

C. Alec Wisner, The Plaintiff In Wisner v. Loot, Inc., et al., Possessed No Intention Of Releasing MICO MAG’s Claims... .33

VI. PLAINTIFF-APPELLANT MICO MAG’S LAWSUIT IS UNRELATED TO ANY PRIOR LITIGATION................................34

A. The Claims Of MICO MAG Differ From Those Raised By Mr. Wisner In Wisner v. Loot, Inc., et al...........................................35

B. Defendants’ “Privity” Argument Misapplies The Law Of Privity In Res Judicata Analysis.............................................................36

VII. THE TRIAL COURT ERRED WHEN IT DISMISSED MICO MAG’S CLAIMS AGAINST DEFENDANTS MARLOW AND MERIDIAN, NEITHER OF WHICH WERE PARTIES TO THE SETTLEMENT AGREEMENT IN Wisner v. Loot, Inc., et al...........38

VIII.THE TRIAL COURT ERRED WHEN IT GRANTED DEFENDANTS’ MOTION BECAUSE THE SETTLEMENT AGREEMENT COULD NOT HAVE DISPOSED OF POST-SETTLEMENT DAMAGES CAUSED BY DEFENDANTS............38

ii

A. The Trial Court Erred When It Dismissed Mico Mag’s Claims Arising From Fraudulent, Unlawful And Intentional Conduct Occurring After The Date Of The Settlement Agreement In Wisner v. Loot, Inc., et al............................................................39

B. The Trial Court Erred When It Dismissed Mico Mag’s Claims Arising From Negligent Conduct Occurring After The Date Of The Settlement Agreement In Wisner v. Loot, Inc., et al. Because The Settlement Agreement Did Not Specify Any Intention To Release Claims For Future Injuries.............................................40

C. Because Mico Mag Was A Third-Party Beneficiary Under The Settlement Agreement In Wisner v. Loot, Inc., et al., It Was Clear Error To Permit Defendants To Avoid Liability For Damages Caused By Their Violation Its Terms.........................41

IX. CONCLUSION...................................................................................43

iii

TABLE OF AUTHORITIES

CALIFORNIA CITATIONS

Agarwal v. Johnson (1979) 25 Cal.3d 932..................................................36

Allen v. Smith (2002) 94 Cal.App.4th 1270................................................32

Alpha Therapeutic Corp. v. County of Los Angeles

(1986) 179 Cal.App.3d 265......................................................................14

Appleton v. Waessil (1994) 27 Cal.App.4th 551.........................................32

Baker Pacific Corp. v. Suttles (1990) 220 Cal.App.3d 1148................40, 41

Blank v. Kirwan (1985) 39 Cal.3d 311........................................................16

Bodle v. Bodle (1978) 76 Cal.App.3d 758..................................................19

Chauncey v. Niems (1986) 182 Cal.App.3d 967.........................................14

Citizens for Open Access Etc. Tide, Inc. v. Seadrift Assn.

(1988) 60 Cal. App. 4th 1053.............................................................35, 36

City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc.

(1998) 68 Cal.App.4th 445, 474, mod. on den. of reh’g, rev. den...........18

City of Orange v. San Diego County Employees Retirement Assn. 

(2002) 103 Cal.App.4th 45.........................................................................1

Coon v. Joseph (1987) 192 Cal.App.3d 1269.............................................16

CPI Builders, Inc. v. Impco Technologies, Inc.

(2001) 94 Cal.App.4th 1167.....................................................................15

iv

Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744........................28

Diamond Benefits Life Ins. Co. v. Troll (1998) 66 Cal.App.4th 1...............15

Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668........20

Frankel v. Board of Dental Examiners

(1996) 46 Cal.App.4th 534...........................................................17, 25, 26

General Motors Corp. v. Superior Court

(1993) 12 Cal.App.4th 435...........................................................18, 32, 33

Ghirardo v. Antonioli (1994) 8 Cal.4th 791................................................15

Halliday v. Greene (1966) 244 Cal.App.2d 482.........................................39

Hernandez v. Badger Construction Equipment Co.

(1994) 28 Cal.App.4th 1791.....................................................................18

Hofland v. Gustafson (1955) 132 Cal.App.2d Supp. 907............................18

International Engine Parts, Inc. v. Feddersen & Co.

(1995) 9 Cal.4th 606.................................................................................16

Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494......................................15

McNeely v. Claremont Management Co. (1962) 210 Cal.App.2d 749.......21

Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425..................13

Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co.

(1968) 69 Cal.2d 33..................................................................................32

Pang v. Beverly Hosp., Inc. (2000) 79 Cal.App.4th 986.............................14

Parsons v. Bristol Develop. Co. (1965) 62 Cal.2d 861...............................15

People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415......15

v

People v. Ham (1970) 7 Cal.App.3d 768....................................................32

Perkins v. Superior Court of Los Angeles County

(1981) 171 Cal.App.3d 1..........................................................................35

Reed v. Wilson (1999) 73 Cal.App.4th 439.................................................20

Sanserino v. Shamberger (1966) 245 Cal.App.2d 630................................21

Sharpe v. Arabian Am. Oil Co. (1952) 111 Cal.App.2d 99.........................27

Southern Cal. Edison Co. v. Superior Court

(1995) 37 Cal.App.4th 839.......................................................................18

Sproul v. Cuddy (1955) 131 Cal.App.2d 85................................................20

Stockton Newspapers, Inc. v. Redevelopment Agency

(1985) 171 Cal.App.3d 95........................................................................16

Stonehocker v. Cassano (1957) 154 Cal.App.2d 732..................................39

U. S. Leasing Corp. v. duPont (1968) 69 Cal.2d 275..................................15

U.S. Building & Loan Ass’n of Los Angeles v. Salisbury

(1933) 217 Cal. 35....................................................................................27

Universal Sales Corp. v. Cal, etc. Mfg. Co. (1942) 20 Cal.2d 751.............18

Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680...............19

Vernon v. Great Western Bank (1996) 51 Cal.App.4th 1007......................14

Victa v. Merle Norman Cosmetics, Inc. (1993) 19 Cal.App.4th 454..........37

Villa v. Cole (1992) 4 Cal.App.4th 1327.......................................................1

Wells Fargo Bank v. California Ins. Guar. Ass'n

(1995) 38 Cal.App.4th 936.......................................................................13

vi

Wilder v. Wilder (1956) 138 Cal.App.2d 152.............................................22

Winet v. Price (1992) 4 Cal.App.4th 1159...........................................passim

STATUTES

Civil Code section 1656....................................................................3, 26, 27

Civil Code section 1668..............................................................................39

Civil Code sections 1635 - 1656..................................................................18

Code of Civil Procedure section 581d........................................................14

Code of Civil Procedure section 1859.........................................................20

Code of Civil Procedure sections 1859 - 1861, 1864..................................18

TREATISES

1 Witkin, Summary of Cal. Law, (9th ed. 1987) Contracts, § 688-689......18

1 Witkin, Summary of Cal. Law, (9th ed. 1987) Contracts, § 689..............28

1 Witkin, Summary of Cal. Law, (9th ed. 1987) Contracts, § 695..............20

Rest.2d, Contracts, § 203(c)........................................................................20

vii

APPELLANT’S OPENING BRIEF

I. INTRODUCTION

The considerations attendant upon contracts generally are doubly

present when those contracts are in settlement of litigation. Certainty,

completeness, definiteness: these attributes (and others) essential to all

contracts resound with even greater urgency in settlement agreements.

Critical, too, are the legal principles utilized to interpret and construe

settlement agreements. The manner in which such contracts are enforced

has consequences that reach well beyond the parties to any one lawsuit.

Construe too narrowly, and the public policy favoring settlements is

undermined, as parties fear that a settlement will afford them too little

certain protection.1 But construe too broadly, and parties will rightly fear

the unintended consequences of settlement agreements that extinguish

claims for which no consideration was contemplated or obtained. Like

Scylla and Charybdis, they are equally dreadful choices. So it is to the

courts that parties look for assurance that settlement agreements will be

applied with equanimity and temperance. It is to this Court that Plaintiff-

Appellant now looks for relief from the Trial Court’s error of extending too

far the terms of a Settlement Agreement from a different lawsuit.

1 Many courts have addressed the “well-established public policy in this state that settlements of litigation are favored and should be encouraged. [Citations.]” (City of Orange v. San Diego County Employees Retirement Assn. (2002) 103 Cal.App.4th 45, 55, citing Villa v. Cole (1992) 4 Cal.App.4th 1327, 1338.)

1

Plaintiff-Appellant Mico Mag Co., Inc. dba Gourmet Editions

(“MICO MAG”) is owed more than $6 million by just one of many

Defendants, Defendant WORLD NEWS, INC.2 Defendant AMERICAN

ART ENTERPIRSES, INC. owes MICO MAG at least $200,000;

Defendant PARLIAMENT NEWS, INC. owes at least $20,000.3 And

while PAUL WISNER was alive and dominating the operations of MICO

MAG (with the active participation of his wife, RITA GROSSMAN,

who was also a director and managing officer of MICO MAG at all

pertinent times), he embezzled cash payments made by certain MICO

MAG customers, including a $71,796.00 customer payment.4 The list of

damages suffered by MICO MAG goes on at length, but MICO MAG has

been unjustly denied its right to recoup those damages.5

In direct contravention of Civil Code section 1656, the Trial Court

denied MICO MAG its day in court on the sole ground that a Settlement

Agreement from another lawsuit, filed by a different plaintiff, precluded all

2 That $6 million debt includes improper adjustments to MICO MAG’s trial balance sheet, an account stated of more than $5 million, and loan debt. (See, Clerk’s Transcript [hereinafter referred to as “CLERK’S TRANS.”] at 46-47, 51-52.) An Order of the Superior Court was required before Defendant RITA GROSSMAN produced MICO MAG’s records revealing these and other debts owed to MICO MAG. (See, infra, Parts II.B and V.A.4.)

3 CLERK’S TRANS., at 48.

4 CLERK’S TRANS., at 55-56.

5 See, generally, CLERK’S TRANS., at 46-68.

2

of MICO MAG’s claims. In effect, new terms for that Settlement

Agreement were manufactured out of whole cloth and then appended to the

Settlement Agreement as though part of the original. But the existing,

specific terms of that Settlement Agreement control the vague, general

language to which Defendants cite. The Settlement Agreement cannot

withstand the interpretation accepted by the Trial Court. Now, this Court

must reverse the Trial Court’s Judgment of Dismissal and permit MICO

MAG to proceed on its claims that are both independent and factually

distinct from any claims settled in Wisner v. Loot, Inc., et al.

II. CASE SUMMARY

A. PROCEDURAL HISTORY

Plaintiff-Appellant Mico Mag Co., Inc. dba Gourmet Editions

(“MICO MAG”) filed suit in the Los Angeles County Superior Court

against six Defendants. (See, CLERK’S TRANS., at 5-32.) MICO MAG then

filed a First Amended Complaint, naming three additional Defendants, for a

total of nine. (CLERK’S TRANS., at 38-73.) Those nine Defendants are

WORLD NEWS, INC. (“WORLD”); LOOT, INC. (“LOOT”);

PARLIAMENT NEWS, INC. (“PARLIAMENT”); AMERICAN ART

ENTERPRISES, INC. (“AMERICAN”); MARLOW SALES, INC.

(“MARLOW”); MERIDIAN EXPORTS, INC. (“MERIDIAN”); RITA

3

GROSSMAN, an Individual; RITA GROSSMAN, as Trustee of the Paul

Wisner and Rita Grossman Trust (“TRUST”); and RITA GROSSMAN, as

Administrator of the Estate of Paul Wisner (“ESTATE”). (Ibid.)

Soon thereafter, an Involuntary Bankruptcy Petition under Chapter 7

was filed against WORLD NEWS, INC., dba PACIFIC NEWS in the

Central District of California, San Fernando Valley Division, as Case No.

SV 02-11332 GM. (See, Plaintiff-Appellant MICO MAG’s Motion to

Augment the Record [hereinafter referred to as “AUGMENTED TRANS.], at

768-770.)6 The filing of that petition stayed further proceedings against

Defendant WORLD NEWS, INC. before the Superior Court.

Defendants LOOT, PARLIAMENT, AMERICAN, MARLOW, and

MERIDIAN then filed a Motion for Judgment on the Pleadings, claiming

that a Settlement Agreement from another lawsuit (Wisner v. Loot, Inc., et

al.; L.A.S.C. Case No. BC 226919) involving a different plaintiff precluded

Plaintiff-Appellant MICO MAG’s claims in this matter. Three Defendants

were still contesting service of process, and all matters affecting WORLD

NEWS, INC. were stayed as a result of the bankruptcy petition. The

Superior Court granted Defendants’ Motion, dismissed MICO MAG’s suit

6 Plaintiff-Appellant filed a Motion to Augment the Record on November 27, 2002. Plaintiff-Appellant’s Opening Brief must refer to items attached thereto as Exhibits without knowing the final determination of Plaintiff-Appellant’s Motion to Augment the Record.

4

as to the moving parties, and issued a Judgment in their favor.

(AUGMENTED TRANS., at 762-766 and 783-787.)7

After the entry of the Judgment of Dismissal, Plaintiff-Appellant and

Defendants stipulated that the Judgment of Dismissal would also

encompass Defendants RITA GROSSMAN, the TRUST, and the ESTATE,

while Plaintiff-Appellant would retain any appellate rights. The Court

issued an Order based on the Stipulation of the Parties. (AUGMENTED

TRANS., at 759-767.)

In July 2002, the bankruptcy stay affecting Defendant WORLD was

lifted as to this litigation. (AUGMENTED TRANS., at 768-771.) Plaintiff-

Appellant and Defendants stipulated that the Judgment of Dismissal would

also include Defendant WORLD, while Plaintiff-Appellant would retain

any appellate rights. The Court issued an Order based on the Stipulation of

the Parties. (AUGMENTED TRANS., at 772-787.)8

7 After a review of the Clerk’s Transcript, it appears that the Order Granting Motion For Judgment On The Pleadings And Entry Of Judgment Of Dismissal, though not identified by the Clerk of the Superior Court as missing, was not included therein. Two copies of that entered Order are contained within the proposed augmentation of the record as attachments to Stipulations related to that Order.

8 Plaintiff-Appellant’s Motion to Augment the Record more fully describes the circumstances surrounding the second Stipulation affecting Defendant WORLD and the inability to locate a conformed copy of that entered Order by either the Clerk of the Superior Court or counsel in this matter. The Clerk’s Transcript at page 1, listing all documents filed, indicates the filing of that Stipulation and Order on August 19, 2002.

5

Plaintiff-Appellant is now appealing the issuance of the Judgment of

Dismissal, as twice modified to include all nine Defendants.

B. STATEMENT OF FACTS

MICO MAG is a publisher and distributor of adult magazines.

(CLERK’S TRANS., at 512:21-23.) Prior to a February 2001 Settlement

Agreement in the matter of Wisner v. Loot, Inc., et al., MICO MAG was

owned by RITA GROSSMAN and Alec Wisner. (CLERK’S TRANS., at

510:11-13.) However, RITA GROSSMAN and PAUL WISNER (Alec

Wisner’s father) dominated and controlled MICO MAG throughout the

1990’s. (CLERK’S TRANS., at 49-54.) They took advantage of their

complete domination over MICO MAG to, inter alia, advantage other

companies that they controlled and divert cash payments from MICO

MAG’s customers for their own use, while falsifying the books and records

of MICO MAG to conceal their asset diversions. (Ibid.)

Because RITA GROSSMAN and PAUL WISNER also controlled

LOOT and its subsidiaries (WORLD and AMERICAN, among others),

they successfully prevented those companies from paying debts owed to

MICO MAG. (CLERK’S TRANS., at 50:16-21.) MICO MAG is now owed

more than $6 million by WORLD alone.

In addition to controlling LOOT and its subsidiaries, during the late

1990’s PAUL WISNER and RITA GROSSMAN also owned and/or

6

dominated other corporations unrelated to LOOT, including:

PARLIAMENT, MARLOW, and MERIDIAN. (CLERK’S TRANS., at 49:24

– 50:6.) They exercised their positions of control at these companies to

prevent payment of debts owed to MICO MAG or divert assets belonging

to MICO MAG to themselves and to the companies they controlled.

(CLERK’S TRANS., at 51:7 – 53:23.) But because they also dominated

MICO MAG, their wrongful conduct went undiscovered for many years.

WORLD was and remains a wholesale distributor of adult novelty

products and adult magazines. (CLERK’S TRANS., at 560:3-5.)

During the 1990’s, AMERICAN provided graphic layout and design

services for the printing of adult magazines. (CLERK’S TRANS., at 543:6-

13.) AMERICAN also made arrangement for publishers to acquire content

(i.e., photo acquisition). (CLERK’S TRANS., at 512:10-11.)

MERIDIAN was established by PAUL WISNER for the purpose of

separating his other companies from any export sale liability. Companies

such as MICO MAG and WORLD provided merchandise to MERIDIAN,

which, in turn, exported novelties and magazines to such places as

Germany and South America. (CLERK’S TRANS., at 527:1-3, 532:4-6.)

PARLIAMENT was originally a publisher like MICO MAG.

(CLERK’S TRANS., at 531:6-10; 532:1-6.) PAUL WISNER transferred sole

ownership of PARLIAMENT to RITA GROSSMAN’s daughter for the

7

purpose of creating a fallback company into which assets could be shifted if

governmental or civil liabilities ever threatened his other companies.

MARLOW was an independent mail order corporation originally

owned by PAUL WISNER and Mel Friedman, both now deceased.

However, MARLOW has been operated for many years by RITA

GROSSMAN and her daughter. MARLOW purchased merchandise from

WORLD, PARLIAMENT and MICO MAG. RITA GROSSMAN utilized

her control position at both MARLOW and MICO MAG to prevent the

payment of monies owed by MARLOW to MICO MAG. Instead, RITA

GROSSMAN fabricated return records that, when reconciled, purported to

show that MARLOW returned more merchandise to MICO MAG, for

credit, in one lump return than it had received in many years of regular

orders. (CLERK’S TRANS., at 52:18 – 53:2.)

In mid-2001, new management at MICO MAG discovered evidence

of financial misconduct that occurred while Defendant RITA GROSSMAN,

and her husband, PAUL WISNER, were in complete control of MICO

MAG. (CLERK’S TRANS., at 57:2 – 58:10, 64:9-10.) That misconduct

included evidence that Defendant RITA GROSSMAN and PAUL WISNER

had diverted MICO MAG’s assets to their personal use, while falsifying

business records to conceal the diversions. (CLERK’S TRANS., at 49-58.)

The new management at MICO MAG also discovered that enormous debts

were owed to MICO MAG by companies controlled by Defendant RITA

8

GROSSMAN and PAUL WISNER. (Ibid.) MICO MAG filed suit to,

among other things, recover diverted assets, collect debts, set aside

fraudulent conveyances, and obtain recompense for fraudulent conduct.

Defendants then asserted that MICO MAG’s claims were precluded by a

Settlement Agreement from another lawsuit, entitled Wisner v. Loot, Inc., et

al. Despite the fact that MICO MAG was not a party to that lawsuit, MICO

MAG’s suit was subsequently dismissed by the Trial Court, based solely

upon its interpretation of that Agreement.

In that other action, Wisner v. Loot, Inc. et al., Alec Wisner filed

suit against various defendants on March 22, 2000.9 At all relevant

times therein, LOOT, acting as a holding company, owned 100% of the

stock in WORLD, AMERICAN and LONDON; these four companies

were collectively referred to in that action as the “LOOT ENTITIES”.

(First Amended Verified Complaint in Wisner v. Loot, Inc., et al.,

CLERK’S TRANS., at 388, ¶ 9.)

The gravamen of Alec Wisner’s complaint was for the dissolution

of LOOT and damages resulting from his disparate treatment as a LOOT

9 Those defendants were RITA GROSSMAN (individually and on behalf of the TRUST and the ESTATE), Eugenia Watkins, Max Watkins, LOOT, WORLD, AMERICAN, London Press, Inc. (“LONDON”), and PARLIAMENT. Many of those defendants are also Defendants here.

The Defendants in this action are: RITA GROSSMAN, the TRUST, the ESTATE, WORLD, LOOT, AMERICAN, PARLIAMENT, MARLOW, and MERIDIAN.

9

shareholder.10 (CLERK’S TRANS., at 402-412.) Paul Wisner (Alec

Wisner’s father) and GROSSMAN had secretly agreed to divert assets

from the LOOT ENTITIES to their personal use, to other businesses

they controlled and to GROSSMAN’s family members and businesses.

They also actively conspired to prevent Alec Wisner from controlling or

monitoring the activities of the companies that they controlled. On

February 27, 2001, with the release of large volumes of Defendants’

bank account records imminent, the parties therein settled that action.

As part of the value offered in settlement of Wisner v. Loot, Inc.,

et al., GROSSMAN conveyed her stock in MICO MAG to Alec Wisner.

(Reporters’ Appellate Transcript [hereinafter “REPORTERS’ APP.

TRANS.”], at 4:8.) The defendants in Wisner v. Loot, Inc., et al., also

provided warranties that MICO MAG owed no monies to defendants

and owed de minimis debt to third parties. (REPORTERS’ APP. TRANS.,

at 4:8-13.) Those defendants also promised to turn over MICO MAG’s

property and records to Alec Wisner (REPORTERS’ APP. TRANS., at 8:17-

21.); the parties provided no other warranties concerning MICO MAG.

But GROSSMAN later refused to turn over much of MICO MAG’s

property. (CLERK’S TRANS., at 58:1-10.)

On June 11, 2001, the Hon. S. James Otero Ordered those

10 Alec Wisner owned 45% of the shares of LOOT. After the death of Paul Wisner (Alec Wisner’s father) in 1999, GROSSMAN controlled or owned 55% of the shares of LOOT.

10

defendants to turn over MICO MAG’s books and records ( ibid.); new

management only then discovered that millions of dollars were owed to

MICO MAG by Defendants (and others) or had been wrongfully

diverted to Defendants’ personal use. MICO MAG subsequently filed

this action to recover accounts stated and recoup diverted payments.

C. STATEMENT OF CONTENTIONS

The Trial Court erroneously construed the terms of a Settlement

Agreement from a lawsuit entitled Wisner v. Loot, Inc., et al. MICO

MAG’s entire lawsuit was dismissed on the solitary ground that MICO

MAG was precluded from pursuing its claims against all Defendants by

action of that Settlement Agreement.

Settlement Agreements are construed using the same legal principles

that apply to contracts generally. Because MICO MAG was never a party

to Wisner v. Loot, Inc., et al., it could not have issued a general release in

favor of Defendants in that action.

General releases are not presumed absent specific language

manifesting intent to release all claims. Assuming that it was possible for

MICO MAG to have released any claims against Defendants, the specific

language of that Settlement Agreement would have to indicate a clear

intention by the parties to accomplish such a release. But the language of

the Settlement Agreement shows a contrary intention. The defendants in

11

Wisner v. Loot, Inc., et al., offered a special warranty to plaintiff Alec

Wisner that MICO MAG did not owe any debts to those defendants. Had

the parties intended a mutual release of all claims, the special warranty

concerning debts owed to MICO MAG would not have been necessary,

given that a complete general release would subsume any debt claims.

While a general release can include both known and unknown

claims, those claims must have their genesis in events occurring prior to

issuance of a general release. Wrongful conduct occurring after the

issuance of a general release will not be insulated by that release. The Trial

Court erred when it dismissed MICO MAG’s claims that arose from

Defendants’ post-settlement misconduct.

Defendants MARLOW and MERIDIAN were not parties in Wisner

v. Loot, Inc., et al. The Trial Court erred when it dismissed MICO MAG’s

claims against Defendants MARLOW and MERIDIAN on the ground that

claims against those two Defendants were precluded by the Settlement

Agreement from Wisner v. Loot, Inc., et al.

MICO MAG prays that this Court will reverse the Trial Court’s

entry of a Judgment of Dismissal as to all Defendants and remand this

matter for further proceedings before the Superior Court.

12

III. STATEMENT OF APPEALABILITY

The Trial Court dismissed MICO MAG’s suit in full as to

Defendants LOOT, PARLIAMENT, AMERICAN, MARLOW and

MERIDIAN after ruling on their Motion for Judgment on the Pleadings.

(AUGMENTED TRANS., at 762-766 and 783-787.) In multiparty actions, a

judgment or order that leaves no issue remaining to be determined as to a

party is considered final as to that party and thus appealable. (Wells Fargo

Bank v. California Ins. Guar. Ass'n (1995) 38 Cal.App.4th 936, 941-942;

Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425, 430.) Thus,

the signed Judgment as to the initial moving Defendants is appealable.

Further Stipulations and Orders thereon included all remaining

Defendants in that Judgment of Dismissal. (AUGMENTED TRANS., at 759-

767, 772-787.) An order of dismissal is an appealable “judgment” if it is

(1) in writing, (2) signed by the court, and (3) filed in the action. (Code

Civ. Proc., § 581d; Chauncey v. Niems (1986) 182 Cal.App.3d 967, 971;

Vernon v. Great Western Bank (1996) 51 Cal.App.4th 1007, 1011.)

Because the Stipulations and Orders including all remaining Defendants

were in writing, were signed by the court, and were filed, the dismissal of

MICO MAG’s suit against all remaining Defendants constitutes “a final

determination of the matter in difference between the parties in the

13

particular proceeding in which it was rendered.”11 (Alpha Therapeutic

Corp. v. County of Los Angeles (1986) 179 Cal.App.3d 265, 268-269.)

IV. STANDARD OF REVIEW

This appeal presents pure questions of law. Appeals raising

questions of law that do not involve resolution of disputed facts are subject

to the de novo review standard; the appellate court gives no deference to the

trial court’s decision or the reasons for its decision, but instead decides the

matter independently. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799;

Diamond Benefits Life Ins. Co. v. Troll (1998) 66 Cal.App.4th 1, 5.)

One primary issue raised in this appeal relates to the interpretation of

a written instrument. Where the words of a release or settlement agreement

are unambiguous, the construction of the agreement is a question of law for

the court. (U. S. Leasing Corp. v. duPont (1968) 69 Cal.2d 275, 284; CPI

11 In Pang v. Beverly Hosp., Inc. (2000) 79 Cal.App.4th 986, 989, this Court said:

“In order to ensure that there was truly one final judgment for purposes of appealability, we asked for and received supplemental briefs from the parties, stating that there was no agreement to permit revival of the two dismissed claims after this appeal was decided.”

No such remedy is necessary in this appeal in that the parties have agreed by Stipulation, confirmed by Order of the Trial Court, to include all Defendants in the Judgment of Dismissal, irrespective of the correctness of that Judgment. It is the parties’ intention that the questions raised by Plaintiff-Appellant MICO MAG as to all Defendants will be conclusively determined by this appeal.

14

Builders, Inc. v. Impco Technologies, Inc. (2001) 94 Cal.App.4th 1167,

1172.) This Court may independently interpret written instruments except

where the parties presented conflicting extrinsic evidence. (Winet v. Price

(1992) 4 Cal.App.4th 1159, 1165-1166, citing Parsons v. Bristol Develop.

Co. (1965) 62 Cal.2d 861, 865-866.) As described, infra, conflicting

extrinsic evidence was not before the Trial Court.

This Court may also independently determine the proper

interpretation of a statute; it is not bound by evidence or by the Trial

Court’s interpretation. (People ex rel. Lockyer v. Shamrock Foods Co.

(2000) 24 Cal.4th 415, 432; Lazar v. Hertz Corp. (1999) 69 Cal.App.4th

1494, 1502.) Likewise, application of a statute to undisputed facts presents

a question of law subject to independent appellate review. (International

Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 611.)

On appeal from a judgment of dismissal after a demurrer is sustained

without leave to amend, this Court must assume the truth of all facts

properly pleaded by Plaintiff-Appellant. (Blank v. Kirwan (1985) 39

Cal.3d 311, 318; Coon v. Joseph (1987) 192 Cal.App.3d 1269, 1272.) This

rule also applies on appeal from a judgment on the pleadings. (Stockton

Newspapers, Inc. v. Redevelopment Agency (1985) 171 Cal.App.3d 95, 99.)

DISCUSSION

15

For the reasons that follow, Plaintiff-Appellant MICO MAG

requests this Court to hold that the Trial Court erred when it entered

Judgment of Dismissal after granting a Motion brought pursuant to

Code of Civil Procedure section 438. MICO MAG contends that it was

error to preclude its claims herein, based upon the terms of a Settlement

Agreement from another lawsuit, entitled Wisner v. Loot, Inc., et al.,

where MICO MAG was not a party thereto. MICO MAG further

contends that the Trial Court compounded the error by precluding post-

settlement claims and dismissing Defendants that were not parties in

Wisner v. Loot, Inc., et al.

V. THE TRIAL COURT ERRED WHEN IT FOUND THAT THE

SETTLEMENT AGREEMENT IN Wisner v. Loot, Inc., et al.

PRECLUDED MICO MAG’S CLAIMS AGAINST DEFENDANTS.

The Trial Court reviewed the effect of terms from the Settlement

Agreement from Wisner v. Loot, Inc., et al. on the validity of MICO

MAG’s claims. To do so, the Trial Court was obligated to determine the

mutual intention of the parties at the time the Settlement Agreement was

entered. If the Trial Court could not determine mutual intent due to

ambiguity, it was then obligated to resolve the ambiguity by examining the

surrounding circumstances and applying legal precepts of contractual

interpretation. One Court, describing those obligations, held:

16

“The stipulation must be ‘ “interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” The intention of the parties must be first determined from the language of the contract itself. However, where the language of the contract is ambiguous, it is the duty of the court to resolve the ambiguity by taking into account all the facts, circumstances and conditions surrounding the execution of the contract.’ (Floystrup v. City of Berkeley Rent Stabilization Bd. (1990) 219 Cal.App.3d 1309, 1317-1318, 268 Cal.Rptr. 898, citations omitted.)”

(Frankel v. Board of Dental Examiners (1996) 46 Cal.App.4th 534,

544.) The Trial Court erred in its analysis when, in variance with

principles of contractual interpretation, it inserted new terms into the

Settlement Agreement that precluded MICO MAG’s right to recover.

A. The Settlement Agreements, Such As That From Wisner v.

Loot, Inc., et al. Are Construed, As A Matter Of Law, Using

Basic Principles Of Contract Interpretation.

Under California law, “the interpretation of a release or

settlement agreement is governed by the same principles applicable to

any other contractual agreement.” (General Motors Corp. v. Superior

Court (1993) 12 Cal.App.4th 435, 439, citing Winet v. Price (1992) 4

Cal.App.4th 1159, 1165.) To determine the legal effect of a release or

settlement agreement, “one must look to the instrument itself to

determine the intent of the parties.” (Hofland v. Gustafson (1955) 132

17

Cal.App.2d Supp. 907, 909.) Intent may be ascertained not only from

the agreement itself, but also through extrinsic evidence of objective

matters and the subsequent acts and conduct of the parties. (City of

Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68

Cal.App.4th 445, 474, mod. on den. of reh’g, rev. den.)12 And “[w]here

a formal contract has been prepared by persons learned in the law, the

words should be given their ordinary legal import.” (Bodle v. Bodle

(1978) 76 Cal.App.3d 758, 764.) As discussed, infra, the clear language

of the Settlement Agreement is not susceptible to the interpretation

accepted by the Trial Court.

1. The Settlement Agreement From Wisner v. Loot, Inc.,

et al. Must Be Strictly Construed.

Given their significance, settlement agreements are strictly

scrutinized so as to avoid giving greater effect to the agreement than

was intended by all parties. Their application is typically limited to

issues raised by pleadings, unless a clear agreement of all parties

indicates otherwise. (Vaillette v. Fireman’s Fund Ins. Co. (1993) 18

12 Citing Civil Code §§ 1635 - 1656; Code of Civil Procedure §§ 1859 - 1861, 1864; Universal Sales Corp. v. Cal, etc. Mfg. Co. (1942) 20 Cal.2d 751, 761; Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 851; Hernandez v. Badger Construction Equipment Co. (1994) 28 Cal.App.4th 1791, 1814; 1 Witkin, Summary of Cal. Law, (9th ed. 1987) Contracts, § 688-689, pp. 621-623, and others.

18

Cal.App.4th 680, 688.) The California Supreme Court held:

“Compromise agreements are, of course, ‘governed by the legal principles applicable to contracts generally.’ (Ibid.) They ‘regulate and settle only such matters and differences as appear clearly to be comprehended in them by the intention of the parties and the necessary consequences thereof, and do not extend to matters which the parties never intended to include therein, although existing at the time.’ (Lemm v. Stillwater Land & Cattle Co. (1933) 217 Cal. 474, 482, 19 P.2d 785; accord, Armstrong v. Sacramento Valley R. Co., supra, 179 Cal. at p. 651, 178 P. 546.) Thus they ordinarily conclude all matters put in issue by the pleadings—that is, questions that otherwise would have been resolved at trial. (See, e.g., Ellena v. State of California (1977) 69 Cal.App.3d 245, 260, 138 Cal.Rptr. 110.) They do not, however (absent affirmative agreement of the parties), conclude matters incident to the judgment that were no part of the cause of the action.”

(Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668,

677; see also, Reed v. Wilson (1999) 73 Cal.App.4th 439, 445.)

The mere fact that a settlement is achieved does not create a

presumption that other matters are settled. Further, seemingly broad

language in exculpatory provisions will not be isolated from its context

and will be read with due regard to maxims of strict construction.

(Sproul v. Cuddy (1955) 131 Cal.App.2d 85, 95.) The Trial Court

disregarded this principle of construction.13

13 Moreover, Defendants should be estopped from asserting a liberal reading of the Settlement Agreement. When it has suited their purpose, Defendants’ unequivocally advocated the strictest and most literal possible reading of the Settlement Agreement of February 27, 2001. (AUGMENTED TRANS., at 664.) In their Motion, Defendants reversed position and sought the insertion of wholly new and improper terms into the Settlement Agreement.

19

2. The Specific Provisions Of The Wisner v. Loot, Inc., et

al. Settlement Agreement Control Its General Provisions.

Where general and specific provisions in a contract are

inconsistent, the specific provision control over the general. (Code Civ.

Proc., § 1859; 1 Witkin, Summary of Cal. Law, (9th ed. 1987)

Contracts, § 695, p. 628; Rest.2d, Contracts, § 203(c) [“specific terms

and exact terms are given greater weight than general language”];

McNeely v. Claremont Management Co. (1962) 210 Cal.App.2d 749,

753; Sanserino v. Shamberger (1966) 245 Cal.App.2d 630, 635.) Here,

the specific provisions superseded the vague, general language upon

which Defendants’ relied. Courts have properly considered the

inclusion of specific language on certain issues, with one Court noting:

“[I]t is significant that the parties were able to, and did, fashion language memorializing their agreement to preserve identified claims from the operation of the release when such was their intention, specifically, the Canoga Storage Partners, Ltd. malpractice claim exclusion.”

(Winet v. Price (1992) 4 Cal.App.4th 1159, 1168.) As discussed below,

analysis of the specific provisions in the Settlement Agreement compels

the finding that MICO MAG’s action was improperly dismissed.

a) Settlement Terms Relating To MICO MAG.

The first provision of the Settlement Agreement relating to MICO

20

MAG concerned the application of $30,000 of funds in a MICO MAG

checking account towards the total $750,000 cash down payment

offered by defendants in settlement. (REPORTERS’ APP. TRANS., at A-

2:23 – A-3:14) It is clear from this term that the only subject matter

contemplated is the disposition of funds in a MICO MAG bank account.

The second provision of the Agreement relating to MICO MAG

reads as follows:

“As a condition of the settlement, the Defendants will give up an assign to Mr. Wisner any company and all remaining interest in Micomag, M-I-C-O-M-A-G. The Defendants have represented that there is either no or de minimis debt that the company owes to third-party creditors. And the Defendants have also represented that Micomag does not owe any moneys to any of the named Defendants. If moneys are owed, then moneys owed by Micomag are given up and waived if any moneys are owed to the named Defendants.”

(REPORTERS’ APP. TRANS., at A-4:6-15.) It is clear that all shares of

MICO MAG were to be transferred to Alec Wisner. It is also clear that

MICO MAG is not releasing claims against the named defendants;

rather, the named defendants are providing specific warranties about

debt obligations owed by MICO MAG to Defendants (and third-parties).

Had the Settlement Agreement contained a mutual release provision

between MICO MAG and the named defendants, the specific warranty

about debts owed to Defendants (and a waiver thereof) would not have

been necessary. Wilder v. Wilder (1956) 138 Cal.App.2d 152 provides

21

an example of the application of this principle. In Wilder, the parties

generally agreed to settle “all” property rights in introductory clauses of

their agreement, but because the agreement later set forth 24 specific

provisions, the trial court properly held that only the specifically listed

bills would be paid under the agreement. (Wilder, supra, at 158.) Here,

the specific debt warranty controls over the vague, general language,

relied upon by Defendants, that “the parties are attempting to achieve a

global settlement of all claims.”14 (REPORTERS’ APP. TRANS., at A-7:3-

4, (emphasis added).)

The third provision concerns the promise by defendants that they

would “cooperate” in turning over inventory and corporate books and

records of MICO MAG to Alec Wisner. (REPORTERS’ APP. TRANS., at

A-8:17-21.) Again, it is clear from this term that the named parties have

explicitly specified their MICO MAG obligations (here, the promise to

cooperate in turning over materials, which Defendants did not do).

b) Other Specific Terms In The Settlement

Agreement Support The Conclusion That MICO

MAG Did Not Release Claims Against Defendants.

Other specific terms of the Settlement Agreement, not directly

14 It bears repeating that “the parties” in that action do not include MICO MAG.

22

related to MICO MAG, nevertheless reveal the error in the dismissal of

MICO MAG’s lawsuit. For example, the parties in Wisner v. Loot, Inc.,

et al., agreed to settle the $1 million judgment obtained against certain

defendants in C.G.G.W. Development Co. v. London Press, Inc., et al.

(REPORTERS’ APP. TRANS., at A-5:11-14.) C.G.G.W. was a partnership

in which Alec Wisner, his wife, his sister, RITA GROSSMAN, and

third-party Marino Giammarco all owned interests. After RITA

GROSSMAN conveyed her interest in C.G.G.W. to Alec Wisner, Alec

Wisner agreed to enter a satisfaction of judgment on the C.G.G.W.

matter, obtain Mr. Giammarco’s consent to that satisfaction and hold

defendants harmless if Mr. Giammarco objected. (REPORTERS’ APP.

TRANS., at A-5:9 – A-6:6.) The detail of these terms shows that if the

settlement had included a mutual release of claims by MICO MAG (a

third-party to that settlement) and named defendants, those terms would

have been clearly set forth.15

c) Conveyances Of Party-Owned Interests In

Various Businesses.

At the MSC, it was agreed that Alec Wisner would convey his

15 Extending the C.G.G.W. example, each matter settled in that Settlement Agreement was explicitly identified. Alec Wisner explicitly agreed to settle and dismiss his petition in the Ventura County Superior Court regarding probate issues. (REPORTERS’ APP. TRANS., at A-4:24-28.)

23

ownership interest in MARLOW to Defendant RITA GROSSMAN and

that Defendant RITA GROSSMAN would convey her ownership

interest in MICO MAG to him. (AUGMENTED TRANS., at 680, ¶ 12;

AUGMENTED TRANS., at 684, ¶ 7.) It was also agreed that Royce and

Mag Corp. were excluded from conveyances. (REPORTERS’ APP.

TRANS., at A-7:4-12.) In both Royce and Mag Corp., Alec Wisner and

Defendant RITA GROSSMAN are minority shareholders. Both Royce

and Mag Corp. were explicitly excluded from transfer recitals to prevent

confusion as to whether Alec Wisner or RITA GROSSMAN had

transferred or modified their respective ownership interests in those two

companies (also non-parties herein). (AUGMENTED TRANS., at 680, ¶

12; AUGMENTED TRANS., at 684, ¶ 7.) This explanation of the terms of

the Settlement Agreement is consistent in all respects.

3. Where The Settlement Agreement Mentioned Certain

Provisions In A Class, The Trial Court Erred When It

Added Additional, Implied Provisions In That Class.

The construction of a contract includes the authority to include

indispensable, implied provisions:

“’That which is necessarily implied in the language of a contract is as much a part of it as that which is expressed.’ (Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 611, 119 Cal.Rptr. 646, 11 Williston on Contracts (3d ed. 1968) § 1295, pp. 33-41.) ‘[A] contract includes not

24

only the promises set forth in express words, but, in addition, all such implied provisions as are indispensable to effectuate the intention of the parties and as arise from the language of the contract and the circumstances under which it was made....’ (Sacramento Navigation Co. v. Salz (1927) 273 U.S. 326, 329, 47 S.Ct. 368, 369, 71 L.Ed. 663, 665.)”

(Frankel v. Board of Dental Examiners (1996) 46 Cal.App.4th 534,

544-545.) However, in this matter, the Trial Court lacked that authority

by operation of statute. Civil Code section 1656 precludes the addition

of implied terms when the parties to an agreement have some elected to

include some, but not all, terms in a particular class:

“NECESSARY INCIDENTS IMPLIED. All things that in law or usage are considered as incidental to a contract, or as necessary to carry it into effect, are implied therefrom, unless some of them are expressly mentioned therein, when all other things of the same class are deemed to be excluded.

(Civ. Code, § 1656, emphasis added; see also, Frankel v. Board of

Dental Examiners (1996) 46 Cal.App.4th 534, 545, citing to the statue.)

Courts have long recognized this limitation, with one Court holding:

“If the parties have omitted from the agreement something that was so clearly a part of their understanding that the agreement would be unworkable without it, and which would have been incorporated without question if either party had requested it, the missing stipulation will be implied as a part of the agreement. But before this may be done justification, and the necessity for it, must be found in the agreement. Nothing may be added by way of implication except that which is necessary to carry out the intentions of the parties, as derived from the agreement itself and not merely from the circumstances under which it was made. If the agreement, as written, is complete as to

25

the matters which it purports to cover, and is workable, the court will not read into it any stipulation which would add to or detract from the respective burdens or privileges the parties have declared to be their agreement. And, in the construction of such an agreement it will be conclusively presumed that it expresses their entire understanding. These principles have been expounded too often to require further discussion. Foley v. Euless, 214 Cal. 506, 6 P.2d 956; Stockton Dry Goods Co. v. Girsh, 36 Cal.2d 677, 227 P.2d 1, 22 A.L.R.2d 1460; Cousins Inv. Co. v. Hastings Clothing Co., 45 Cal.App.2d 141, 113 P.2d 878; United States B. & L. Ass’n v. Salisbury, 217 Cal. 35, 17 P.2d 140; Gero v. Richey, 38 Cal.App. 21, 175 P. 91; Withers v. Moore, 140 Cal. 591-597, 74 P. 159; Sickelco v. Union Pac. R. Co., 9 Cir., 111 F.2d 746.”

(Sharpe v. Arabian Am. Oil Co. (1952) 111 Cal.App.2d 99, 102.)

Here, the application of Civil Code section 1656 precludes the

possibility that MICO MAG released Defendants. Defendants provided

a warranty as to debt owed by MICO MAG. (REPORTERS’ APP. TRANS.,

at A-4:6-15.) Because of the inclusion of that specific unilateral debt

warranty, Civil Code section 1656 precludes the implication of a term

that MICO MAG was releasing any debts or claims. Further, the parties

in Wisner v. Loot, Inc., et al. explicitly settled several matters, including

an outstanding judgment and a probate action. (REPORTERS’ APP.

TRANS., at A-4:24-28, A-5:9 – A-6:6.) Because certain matters were

explicitly settled, Civil Code section 1656 precludes the implication of a

term that settles MICO MAG’s claims against any Defendants.

Caution is mandated when Courts consider inserting additional

terms into a contract:

26

“Courts should proceed cautiously in supplying a provision by implication which the parties have omitted from their written contract. Foley v. Euless, 214 Cal. 506, 6 P.(2d) 956. Words should not be added where the omission may have been intentional.”

(U.S. Building & Loan Ass’n of Los Angeles v. Salisbury (1933) 217

Cal. 35, 39-40.) In this instance, caution was not exercised. Rather, in

violation of statute and precedent, improper terms were inserted into a

Settlement Agreement in Wisner v. Loot, Inc., et al.

4. Defendants’ Conduct Provides Evidence Of Intent.

The law imputes intent to a person that corresponds to the

reasonable meaning of his or her words and acts. “This rule of practical

construction is predicated on the common sense concept that ‘actions

speak louder than words.’” (1 Witkin, Summary of Cal. Law, (9th ed.

1987) Contracts, § 689, p. 622, citing Crestview Cemetery Assn. v.

Dieden (1960) 54 Cal.2d 744, 754, and others.) Thus, where a person’s

words or acts, judged by a reasonable standard, manifest an intent to

agree to a certain matter, that agreement is established, regardless of

unexpressed state of mind. (Winet, supra, at 1172.)

Defendants’ conduct provides extrinsic evidence that they did not

believe themselves to have been released of claims by MICO MAG. In

the February 27, 2001 Settlement Agreement, various Defendants

promised to cooperate in turning over MICO MAG’s business records to

27

Alec Wisner. But after the Settlement Agreement was entered, those

defendants and their counsel repeatedly denied having any of Mico

Mag’s remaining business records. (See, AUGMENTED TRANS., at 688-

690.) Several months later, Judge Otero issued an Order compelling

those defendants to turn over all property and records as promised.

Those defendants have never offered any reason for withholding MICO

MAG’s business records. The reasonable inference from this conduct is

that defendants sought to conceal evidence of misconduct related to

MICO MAG because they knew MICO MAG possessed viable claims

against them and other entities they controlled and/or owned.

Additionally, defendants’ conduct at the MSC is inconsistent with

even a subjective belief that Mico Mag and defendants had released

claims. Defendants’ affirmatively represented that Mico Mag owed no

debt to them. (REPORTERS’ APP. TRANS., at A-4:6-15.) That

representation would have been unnecessary had Mico Mag and

Defendants mutually released claims. Defendants’ inconsistent

conduct shows that the Settlement Agreement is not susceptible to the

interpretation urged by Defendants.

28

5. Because MICO MAG Was Not A Party In Wisner v.

Loot, Inc., et al., It Is Not Subject To The Provisions Of

The Settlement Agreement Therein.

The Settlement Agreement in Wisner v. Loot, Inc., et al. was

placed on the record by Hon. S. James Otero. On February 14, 2002,

Hon. S. James Otero was presented with Defendants’ contention that

MICO MAG was in violation of the terms of the Settlement Agreement

when it filed its lawsuit against them.16 Judge Otero denied Defendants’

Motion to enforce the Settlement Agreement, stating that “the party in

the case before Judge Feffer was not a party in the case before Judge

Otero.” 17 (AUGMENTED TRANS., at 668:9-10, emphasis added.) The

very Court which supervised the entry of the Settlement Agreement left

no doubt that MICO MAG was not a party to that action.

B. Defendants Did Not Offer Competent, Extrinsic Evidence Of

Either Ambiguity Or Intent.

A Release is subject to the same principles of interpretation as

16 Defendants’ contention was couched in the form of a Motion to enforce the Settlement Agreement.

17 Defendants falsely asserted that MICO MAG was “a party” to the Settlement Agreement. (CLERK’S TRANS., at 319:6.) Hon. S. James Otero flatly rejected that contention. The Settlement Agreement affected MICO MAG only to the extent that stock was conveyed and a promise was given by Defendants that they would cooperate in providing MICO MAG’s business records to the rightful management.

29

any other contract. (Winet, supra, at 1165.) Under those principles,

parol evidence is admissible only if terms are ambiguous. (Ibid.) The

threshold determination of ambiguity is a question of law. (Ibid.) To

determine whether release language is ambiguous, a Court will

provisionally admit credible parol evidence to determine whether the

language is reasonably susceptible to an interpretation urged. (Ibid.) If

the Court finds that the language is reasonably susceptible to that

interpretation, the Court will admit extrinsic evidence to aid

interpretation. (Ibid.) When parol evidence is not conflicting, or where

no parol evidence is introduced, construction is a question of law. (Id.,

at 1166.) Assuming that Defendants intended a Summary Motion

(given the reference to extrinsic materials outside the operative

pleading), Defendants did not offer any competent extrinsic evidence. 18

In contrast, Plaintiff-Appellant MICO MAG has established, supra, that

ordinary principles of contractual construction support MICO MAG’s

interpretation of the Settlement Agreement as a matter of law.

18 While Plaintiff-Appellant MICO MAG contends that the Trial Court improperly considered extrinsic evidence when ruling upon Defendants’ Motion for Judgment on the Pleadings, MICO MAG does not affirmatively raise that issue in this appeal. Rather, MICO MAG seeks definitive resolution of an issue that would simply repeat itself in a Motion for Summary Judgment if this matter were remanded on that ground alone.

30

1. Attorney Assertion Is Of No Evidentiary Value.

The attorney that prepared Defendants’ Motion for Judgment on

the Pleadings was not present for any portion of the MSC or entry of the

Settlement Agreement on the record. (AUGMENTED TRANS., at 678, ¶

7.) Despite this fact, Defendants’ counsel provided incompetent

attorney assertions in Defendants’ Motion regarding the intent of the

parties to the Settlement Agreement from Wisner v. Loot, Inc., et al.

(See, e.g., CLERK’S TRANS., at 317:21-22, 318:15-17, 319:1-6, 319:27-

28, 323:7-8, 323:23-25.) Where a point is merely asserted by counsel

without authority, it is deemed to be without foundation and requires no

discussion. (Allen v. Smith (2002) 94 Cal.App.4th 1270, 1281, citing

People v. Ham (1970) 7 Cal.App.3d 768, 783.) Based thereon,

counsel’s assertions do not provide a basis for a finding of ambiguity.

(See, General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th

435, 442 [discounting declaration of an attorney not present at

settlement negotiations as lacking personal knowledge].)

2. Defendants Offered No Evidence Showing That The

Settlement Language Was Reasonably Susceptible To The

Meaning Ascribed By Defendants.

Extrinsic evidence is admissible to explain the meaning of a

contract only where relevant to prove a meaning to which the language

31

of the instrument is reasonably susceptible. (Pacific Gas & E. Co. v. G.

W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37.)19 Here, that

inquiry is unnecessary. No Defendant provided competent evidence

showing that the Settlement Agreement language is “reasonably

susceptible” to the meaning asserted by them.20 And, unlike General

Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435, there is no

evidence here that would suggest plaintiff Alec Wisner’s counsel was

aware of potential claims held by MICO MAG.21 The record lacks any

evidence indicating that the Agreement is “reasonably susceptible” to

the meaning advocated by Defendants and applied by the Trial Court.

19 See, also, Appleton v. Waessil (1994) 27 Cal.App.4th 551, 555.

20 Defendants indirectly sought to introduce Declarations from another action under the guise of a Request for Judicial Notice. However, the Request for Judicial Notice is limited to recognition of the fact that a Declaration is contained within a Court file. The evidentiary content of any such Declaration cannot be the subject of a Request for Judicial Notice.

21 In General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435, 442, the Court said:

“Based on our review of the surrounding circumstances we can only presume that the parties did intend to release General Motors as well as all other tortfeasors. In this regard, the evidence shows that Ticich's attorneys were aware of a potential claim against General Motors, having sent Buick Motors Corp. a notice in December 1987, advising it of a possible products liability claim against it arising from this accident.”

32

C. Alec Wisner, The Plaintiff In Wisner v. Loot, Inc., et al.,

Possessed No Intention Of Releasing MICO MAG’s Claims.

Alec Wisner’s counsel sought the aid of Judge Otero in securing

the delivery of MICO MAG’s business records to him. (AUGMENTED

TRANS., at 679, ¶ 9; AUGMENTED TRANS., at 683, ¶ 5.) More

specifically, Defendants agreed that they would turn over all of MICO

MAG’s inventory and business records to Alec Wisner, and be

cooperative in that process. (Ibid.) The purpose of this requested term

was to help avoid another lawsuit to obtain those materials. (Ibid.) In

fact, six months of demands and an Order by Judge Otero were needed

to obtain most of the records of MICO MAG. (Ibid.)

Alec Wisner also required representations from Defendants that

MICO MAG did not owe any moneys to any of the named Defendants

and that there was de minimis debt owed by MICO MAG to third-

parties. (AUGMENTED TRANS., at 679, ¶ 10; AUGMENTED TRANS., at

683-684, ¶ 6.) Defendants’ representations were essential because

MICO MAG was not a party to the action and was not releasing any

claims against Defendants or third-parties. (Ibid.) Because Alec

Wisner did not have access to MICO MAG’s records as of the MSC, he

did not have any ability to evaluate the condition of the business. (Ibid.)

Neither Alec Wisner, nor his counsel offered any representations about

debts owed to MICO MAG. Nor did Alec Wisner agree to release any

33

of MICO MAG’s claims. (Ibid.)

VI. PLAINTIFF-APPELLANT MICO MAG’S LAWSUIT IS

UNRELATED TO ANY PRIOR LITIGATION.

In Defendants’ Motion for Judgment on the Pleadings,

Defendants cited to Citizens for Open Access Etc. Tide, Inc. v. Seadrift

Assn., 60 Cal. App. 4th 1053 (1988) for the proposition that identical

claims between identical parties, resolved to final judgment, cannot be

re-litigated. While a correct proposition in and of itself, the analysis

provided in Citizens for Open Access shows why MICO MAG’s lawsuit

is not barred by the doctrine of res judicata.

A. The Claims Of MICO MAG Differ From Those Raised By

Mr. Wisner In Wisner v. Loot, Inc., et al.

Defendants’ Motion rests upon the false proposition that MICO

MAG’s claims are identical to those brought by Mr. Wisner in Wisner v.

Loot, Inc., et al.22 The gravamen of Alec Wisner’s complaint was for

22 Defendants expended substantial time comparing the operative pleading in this matter to the Wisner v. Loot, Inc., et al lawsuit pleadings. (See, CLERK’S TRANS., at 296-307.) Plaintiff identified the inaccuracy and irrelevance of this argument in its Response to Defendants’ Comparison of Complaints. (See, AUGMENTED TRANS., at 698-703.) California is a notice-pleading jurisdiction. (Perkins v. Superior Court of Los Angeles County (1981) 171 Cal.App.3d 1, 6 [“What is important is that the complaint as a whole contain sufficient facts to appraise the defendant of the basis upon which the plaintiff is seeking relief.”].) The alter ego

34

dissolution of LOOT and damages resulting from his disparate treatment

as a LOOT shareholder. However, in MICO MAG’s lawsuit, the

primary claims arise from unpaid obligations (open book and account

stated), diversion of customer payments (breach of fiduciary, fraud and

fraudulent conveyances) and false manipulation of trial balances (breach

of fiduciary, fraud and fraudulent conveyances).

Unless the issue or cause of action in the two actions is identical,

the first judgment does not stand as a bar to the second suit. (Agarwal

v. Johnson (1979) 25 Cal.3d 932, 954.) In Citizens for Open Access, the

Court found that two suits filed to determine the “public right, title and

interest in and to the Bolinas Sandspit” were identical on a primary

rights analysis. (Citizens for Open Access, supra, at 1068.) A cause of

action is defined as: (1) a primary right possessed by the plaintiff; (2) a

corresponding primary duty devolving upon the defendant; and, (3) a

delict or wrong done by the defendant which consists in a breach of

such primary right and duty. (Id., at 1067.) Here, two separate entities

(Mr. Wisner and MICO MAG) each hold their own rights, are each

owed separate duties by Defendants, and were each wronged by separate

violations of those duties. Defendants asserted a false premise, to wit,

allegations provide the basis for asserting a claim against individuals misusing corporations, where adherence to the separation of corporation and individual would work an injustice. That different Plaintiffs harmed by the same Defendants would complain of the complete disregard of corporate formalities by Defendants in a similar manner is not surprising.

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that because two lawsuits state a few similarly entitled causes of action,

they are, ipso facto, assertions of the same primary right.

B. Defendants’ “Privity” Argument Misapplies The Law Of

Privity In Res Judicata Analysis.

After, and as a result of, the Settlement Agreement, Alec Wisner

owned all stock of MICO MAG. From that fact, Defendants asserted,

ipse dixit, that Alec Wisner is in privity with MICO MAG, and that any

claim asserted by MICO MAG is co-extant with any claim asserted by

Alec Wisner. But Defendants misconstrued “privity” as it applies to the

doctrine of res judicata. “’Due process requires that the nonparty have

had an identity or community of interest with, and adequate

representation by, the . . . party in the first action. [Citations.] The

circumstances must also have been such that the nonparty should

reasonably have expected to be bound by the prior adjudication. . . .’”

(Victa v. Merle Norman Cosmetics, Inc. (1993) 19 Cal.App.4th 454,

464.) Here, Alec Wisner could not have adequately represented the

interests of MICO MAG, lacking access to business records and

requiring a Court Order to obtain that access. Further, as held by

Defendants from Citizens for Open Access, privity for res judicata

purposes will not be found unless there exists a “mutual or successive

relationship to the same rights of property. . .” (Citizens for Open

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Access, supra, at 1069.) MICO MAG, a corporation and separate entity

under the law, possesses the right to the recover outstanding balances

and embezzled customer payments; that right is not Mr. Wisner’s.

VII. THE TRIAL COURT ERRED WHEN IT DISMISSED MICO

MAG’S CLAIMS AGAINST DEFENDANTS MARLOW AND

MERIDIAN, NEITHER OF WHICH WERE PARTIES TO THE

SETTLEMENT AGREEMENT IN Wisner v. Loot, Inc., et al.

Neither MARLOW nor MERIDIAN were defendants in Wisner v.

Loot, Inc., et al. (CLERK’S TRANS., at 386.) However, the Trial Court

dismissed MICO MAG’s claims against both of them. Thus, those two

Defendants utilized the Settlement Agreement from Wisner v. Loot,

Inc., et al., to avoid liability to MICO MAG, when neither MICO MAG

nor Defendants MARLOW and MERIDIAN were parties to that

Settlement Agreement. The resulting injustice is profound. The Trial

Court erred when it dismissed MICO MAG’s claims against MARLOW

and MERIDIAN.

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VIII. THE TRIAL COURT ERRED WHEN IT GRANTED

DEFENDANTS’ MOTION BECAUSE THE SETTLEMENT

AGREEMENT COULD NOT HAVE DISPOSED OF POST-

SETTLEMENT DAMAGES CAUSED BY DEFENDANTS.

The First Amended Complaint in this action includes allegations

of fraudulent, unlawful and intentional misconduct by Defendants,

which misconduct occurred after the entry of the February 27, 2001

Settlement Agreement in Wisner v. Loot, Inc. (CLERK’S TRANS., at 63-

66.) When the Trial Court granted Defendants’ Motion For Judgment

On The Pleadings, it also dismissed those claims that did not exist and

had not arisen as of the date of entry of the Settlement Agreement.

A. The Trial Court Erred When It Dismissed Mico Mag’s

Claims Arising From Fraudulent, Unlawful And Intentional

Conduct Occurring After The Date Of The Settlement

Agreement In Wisner v. Loot, Inc., et al.

The application of the Settlement Agreement to post-settlement

misconduct violates California’s codified public policy, which states:

“CERTAIN CONTRACTS UNLAWFUL. All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”

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(Civ. Code, § 1668.) “Public policy, as expressed in section 1668,

prohibits an agreement to relieve one of the consequences of his

violation of the law, and this whether the violation be [willful] or

negligent.” (Halliday v. Greene (1966) 244 Cal.App.2d 482, 488, citing

Stonehocker v. Cassano (1957) 154 Cal.App.2d 732, 736.) On the

limitations imposed by public policy, one Court said:

“ ‘Traditionally, the law has looked carefully and with some skepticism at those who attempt to contract away their legal liability for the commission of torts. This general policy of the common law found legislative expression early in California history with the enactment of Civil Code section 1668. This section made it clear a party could not contract away liability for his fraudulent or intentional acts or for his negligent violations of statutory law. However, a contract exempting from liability for ordinary negligence is valid where no public interest is involved and where no statute expressly prohibits it. (Gardner v. Downtown Porsche Audi (1986) 180 Cal.App.3d 713, 716-171 [225 Cal.Rptr. 757].)’ (Nunes Turfgrass, Inc. v. Vaughan-Jacklin Seed Co., Inc. (1988) 200 Cal.App.3d 1518, 1534, 246 Cal.Rptr. 823.)”

(Baker Pacific Corp. v. Suttles (1990) 220 Cal.App.3d 1148, 1153-

1154.) The Trial Court erred when it dismissed claims arising from

fraudulent and unlawful conduct, where those claims did not exist and

had not arisen as of the date of entry of the Settlement Agreement

(Causes of Action Seven and Eight; see, CLERK’S TRANS., at 63-65).

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B. The Trial Court Erred When It Dismissed MICO MAG’s

Claims Arising From Negligent Conduct Occurring After The

Date Of The Settlement Agreement In Wisner v. Loot, Inc., et al.

Because The Settlement Agreement Did Not Specify Any

Intention To Release Claims For Future Injuries.

Even an attempt to contract away liability for ordinary negligence

must meet strict requirements. Describing the stringent requirements

for the release of future liability, the Baker Court held:

“ ‘For it to be valid and enforceable, a written release exculpating a tortfeasor from liability for future negligence or misconduct must be clear, unambiguous and explicit in expressing the intent of the parties. If a tortfeasor is to be released from such liability the language used “must be clear, explicit and comprehensible in each of its essential details. Such an agreement, read as a whole, must clearly notify the prospective releasor or indemnitor of the effect of signing the agreement.” ‘ (Madison v. Superior Court (1988) 203 Cal.App.3d 589, 598, 250 Cal.Rptr. 299; citation omitted.) ‘Whether a contract provision is clear and unambiguous is a question of law, not of fact.’ (Ibid.)”

(Baker Pacific Corp., supra, 220 Cal.App.3d at 1153.) The Settlement

Agreement in Wisner v. Loot, Inc., et al. does not contain any “clear,

unambiguous and explicit in expressing the intent of the parties” to

exculpate the Loot defendants from “liability for future negligence or

misconduct”. (See, CLERK’S TRANS., at 122-141.) Without such

unambiguous language, it was error for the Trial Court to dismiss MICO

MAG’s claims arising from negligent conduct, where those claims did

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not exist and had not arisen as of the date of entry of the Settlement

Agreement (Cause of Action Nine; see, CLERK’S TRANS., at 66).

C. Because MICO MAG Was A Third-Party Beneficiary Under

The Settlement Agreement In Wisner v. Loot, Inc., et al., It Was

Clear Error To Permit Defendants To Avoid Liability For

Damages Caused By Their Violation Its Terms.

As part of the February 27, 2001 Settlement Agreement in Wisner v.

Loot, Inc., et al., the defendants in that action were required to deliver to

plaintiff Wisner “all remaining interest in MicoMag.” (REPORTERS’ APP.

TRANS., at 4:8.) In connection with the orderly transfer of “all remaining

interest in MicoMag” from the settling defendants to plaintiff Wisner,

“defendants have represented that they will reasonably cooperate in turning

over the inventory, including flats and magazines, as well as the corporate

books and records, and be cooperative in that process.” (REPORTERS’ APP.

TRANS., at 8:18-21.) Despite repeated demands for compliance with those

provisions of the Settlement Agreement, defendants did not comply with

those provisions until Ordered to do so by the Hon. S. James Otero.

The refusal of those defendants to comply with the terms of the

Settlement Agreement and turn over “the inventory, including flats and

magazines, as well as the corporate books and records” of MICO MAG

caused commercial injury to MICO MAG. If Defendants in this matter are

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permitted to escape liability for their post-settlement misconduct on the

theory that they have been released from such claims, the unjust result will

be that Defendants have escaped liability for misconduct that explicitly

breached the terms of the Settlement Agreement that they now hide behind.

In the face of such an unjust result, it was error for the Trial Court to

dismiss MICO MAG’s claims that did not exist and had not arisen as of the

date of entry of the Settlement Agreement (Cause of Action Seven, Eight

and Nine; see, CLERK’S TRANS., at 63-66).

If, arguendo, any of Defendants’ Motion had merit (which it does

not), Defendants’ Motion should not have been granted as to any post-

settlement claims for damages.

IX. CONCLUSION

For the foregoing reasons, Appellant respectfully requests that the

appeal be granted, that the Judgment of Dismissal be reversed with respect

to all Defendants, and that the matter be remanded forthwith to the Superior

Court for continued proceedings.

Dated this 8th day of May 2023. Respectfully submitted,

STANBURY FISHELMAN & WISNER, INC.9200 Sunset Boulevard, Penthouse 30West Hollywood, CA 90069-3601

By:

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H. Scott Leviant, Esq.,Attorneys for Plaintiff/AppellantMICO MAG CO., INC. dba GOURMET EDITIONS

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CERTIFICATION

Line Spacing: Appellants Brief was double spaced, except for

indented quotations and footnotes, which were all

single spaced.

Typeface and Size: The typeface selected for this Brief is 13 point Times

New Roman. The font used in the preparation of this

Brief is proportionately spaced.

Word Count: The word count for this Brief, excluding Table of

Contents, Table of Authorities, Proof of Service,

and this Certification is approximately 9,578 words.

This count was calculated utilizing the word count

feature of Microsoft Word 2002.

Dated this 8th day of May 2023. Respectfully submitted,

STANBURY FISHELMAN & WISNER, INC.9200 Sunset Boulevard, Penthouse 30West Hollywood, CA 90069-3601

By:H. Scott Leviant, Esq.,Attorneys for Plaintiff/AppellantMICO MAG CO., INC. dba GOURMET EDITIONS

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