FIRST AMENDMENT TO SETTLEMENT STANDSTILL AGREEMENT
In re Estate of Teodoro R. Fonseca, Deceased
Los Angeles County Superior Court, Probate Division Case No. 22STPB09714
Dated: October 28, 2023
This FIRST AMENDMENT TO SETTLEMENT STANDSTILL AGREEMENT (this "First Amendment") is made and entered into as of October 28, 2023, by and among the following parties:
MARGUERITE D. FONSECA ("Petitioner"), an individual residing at 1847 Coldwater Canyon Drive, Beverly Hills, California 90210, the surviving spouse of decedent Teodoro R. Fonseca;
and
RAFAEL T. FONSECA, an individual residing at 502 Olive Avenue, Unit 3, Burbank, California 91502;
ISABELA C. FONSECA-GREER, an individual residing at 78 Eucalyptus Lane, Santa Monica, California 90402; and
NICOLÁS R. FONSECA, an individual residing at 1190 Elm Street, Apt. 4B, Palo Alto, California 94301.
Rafael T. Fonseca, Isabela C. Fonseca-Greer, and Nicolás R. Fonseca are collectively referred to herein as the "Contestants." Petitioner and Contestants are collectively referred to herein as the "Parties" and individually as a "Party."
RECITALS
A. The Underlying Proceeding. There is presently pending before the Los Angeles County Superior Court, Probate Division, a contested probate proceeding captioned In re Estate of Teodoro R. Fonseca, Deceased, Case No. 22STPB09714 (the "Proceeding"). Teodoro R. Fonseca died intestate on September 3, 2022, in Los Angeles County, California. On October 5, 2022, Petitioner filed a Petition for Letters of Administration seeking appointment as administrator of the Estate of Teodoro R. Fonseca (the "Estate"). On November 14, 2022, Contestants filed their initial objection to the Petition for Letters of Administration, challenging the appointment of Petitioner as administrator and raising claims regarding the distribution of the Estate. Contestants subsequently filed an Amended Objection on January 9, 2023, expanding upon the grounds set forth in their initial objection and asserting additional claims related to the characterization of certain assets of the Estate.
B. The Original Standstill Agreement. On April 28, 2023, the Parties executed that certain Settlement Standstill Agreement (the "Original Agreement"), pursuant to which the Parties agreed, among other things, to: (i) toll all litigation deadlines in the Proceeding, including but not limited to deadlines for the filing of motions, responses, replies, and discovery requests; (ii) refrain from filing any new motions, petitions, or discovery in the Proceeding during the standstill period; (iii) provide for the continued neutral administration of the Estate by Ashford Fiduciary Services Inc. ("Ashford"), whose principal officer is Gerald Whitmore, located at 600 Wilshire Boulevard, Suite 1450, Los Angeles, California 90017, at a monthly administration fee of Eight Thousand Five Hundred Dollars ($8,500.00), plus fifteen basis points (0.15%) of assets under administration per annum, with such costs shared equally between Petitioner (paying Four Thousand Two Hundred Fifty Dollars ($4,250.00) per month) and Contestants collectively (paying Four Thousand Two Hundred Fifty Dollars ($4,250.00) per month); (iv) permit either Party to terminate the Original Agreement upon thirty (30) days' prior written notice to the other Party; (v) impose confidentiality restrictions on all settlement discussions conducted during the standstill period, consistent with California Evidence Code Section 1152 and the mediation confidentiality provisions of California Evidence Code Sections 1115 through 1128; and (vi) provide that the Original Agreement would be renewable in additional six-month increments by the mutual written consent of the Parties.
C. Expiration of Initial Term. The initial term of the Original Agreement is set to expire on October 28, 2023, being six (6) calendar months from the date of execution of the Original Agreement on April 28, 2023. Absent this First Amendment, the standstill and all related provisions of the Original Agreement would terminate on such date, and the Proceeding would resume its ordinary course. The Parties have determined that it is in their mutual interest to extend the term of the Original Agreement for one additional six-month period to permit continued settlement discussions and to avoid the expense, delay, and uncertainty of resumed active litigation.
D. Mediation Context. On March 10, 2023, the Parties stipulated to the appointment of the Honorable Constance Adler (Ret.) of Westside Dispute Resolution Center, located at 11400 West Olympic Boulevard, Suite 550, Los Angeles, California 90064, as mediator in the Proceeding. A first mediation session ("Mediation Session #1") was held on April 12, 2023, but did not result in resolution of the dispute among the Parties. Notwithstanding the lack of resolution at Mediation Session #1, the Parties have continued to engage in productive informal settlement discussions and exchange of relevant financial and estate-related information in good faith. The Parties wish to preserve the standstill environment established by the Original Agreement in order to facilitate the continuation of such discussions without the pressure, cost, and distraction of active litigation, and to allow sufficient time for the potential scheduling of additional mediation sessions before Judge Adler (Ret.) if and when the Parties determine that such sessions would be beneficial.
E. Counsel. Petitioner is represented in the Proceeding by the law firm of Calderwood & Harkness LLP, located at 350 South Grand Avenue, Suite 4800, Los Angeles, California 90071, with Howard Quinn serving as Responsible Partner. Contestants are represented in the Proceeding by the law firm of Brennan, Ortega & Saldívar LLP, located at 1900 Avenue of the Stars, Suite 2100, Los Angeles, California 90067, with Damian R. Ortega serving as Lead Attorney. Each Party's respective counsel has reviewed this First Amendment and has advised his or her client regarding the terms and implications hereof.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
AGREEMENT
Section 1. Defined Terms.
All capitalized terms used but not otherwise defined in this First Amendment shall have the meanings ascribed to such terms in the Original Agreement. In addition to the terms defined elsewhere in this First Amendment, the following definitions shall apply:
(a) "Original Agreement" means the Settlement Standstill Agreement dated April 28, 2023, executed by and among the Parties.
(b) "First Amendment" means this First Amendment to Settlement Standstill Agreement, dated October 28, 2023.
(c) "Extended Expiration Date" means April 28, 2024.
(d) "Effective Date" means October 28, 2023, the date on which this First Amendment is executed by all Parties.
To the extent any term defined in this First Amendment conflicts with the definition of such term in the Original Agreement, the definition set forth in this First Amendment shall control solely with respect to the provisions of this First Amendment.
Section 2. Amendment of Term; Extension.
(a) Amendment of Expiration Date. Section 4.1 of the Original Agreement (the "Term" provision) is hereby amended to delete the reference to the original expiration date of October 28, 2023, and to replace it in its entirety with a reference to the Extended Expiration Date of April 28, 2024. All references in the Original Agreement to the expiration date of the standstill period shall be deemed to refer to the Extended Expiration Date as set forth herein.
(b) Extended Standstill Period. The standstill period established under the Original Agreement is hereby extended for an additional period of six (6) months, commencing on October 28, 2023, and continuing through and including April 28, 2024 (the "Extended Standstill Period"). During the Extended Standstill Period, all obligations, restrictions, and rights of the Parties under the Original Agreement shall remain in full force and effect as though the Extended Standstill Period were part of the original term of the Original Agreement.
(c) Further Renewal. Subject to and in accordance with the further renewal provisions set forth in the Original Agreement, the Original Agreement, as amended by this First Amendment, shall expire on April 28, 2024, unless further extended by mutual written consent of all Parties executed in accordance with the renewal procedures specified in the Original Agreement. Nothing in this First Amendment shall be construed to obligate any Party to consent to any further extension or renewal of the standstill period beyond the Extended Expiration Date.
Section 3. Continuation of All Other Terms.
Except as expressly modified by this First Amendment, all terms, conditions, provisions, covenants, representations, and warranties of the Original Agreement shall remain in full force and effect and are hereby ratified, confirmed, and reaffirmed in all respects. The Original Agreement, as amended by this First Amendment, is and shall continue to be in full force and effect and is hereby ratified and confirmed in all respects.
Without limiting the generality of the foregoing, the Parties expressly confirm and acknowledge that each of the following provisions of the Original Agreement continues in full force and effect during the Extended Standstill Period without modification or amendment:
(a) Tolling of Litigation Deadlines. All litigation deadlines in Case No. 22STPB09714, including but not limited to deadlines for filing motions, responses, replies, discovery requests, discovery responses, depositions, and any other procedural deadlines established by the Court or by applicable California law, shall remain tolled during the Extended Standstill Period.
(b) Prohibition on New Filings. The prohibition on the filing of new motions, petitions, or discovery requests by any Party in the Proceeding shall continue during the Extended Standstill Period. No Party shall initiate any new proceedings or file any new papers in the Proceeding without first providing thirty (30) days' prior written notice of termination of the standstill as provided in the Original Agreement, or obtaining the prior written consent of all other Parties.
(c) Neutral Administration by Ashford Fiduciary Services Inc. The Estate shall continue to be administered on a neutral basis by Ashford Fiduciary Services Inc., under the direction of Gerald Whitmore as principal officer, at the monthly administration fee of Eight Thousand Five Hundred Dollars ($8,500.00), plus fifteen basis points (0.15%) of assets under administration per annum, as set forth in the Original Agreement.
(d) Equal Cost-Sharing of Administration Fees. The costs of Ashford's administration of the Estate shall continue to be shared equally between the Parties, with Petitioner paying Four Thousand Two Hundred Fifty Dollars ($4,250.00) per month and Contestants collectively paying Four Thousand Two Hundred Fifty Dollars ($4,250.00) per month, in each case within the time periods and in the manner specified in the Original Agreement.
(e) Right of Termination. The right of either Party (Petitioner on one hand, or Contestants collectively on the other hand) to terminate the standstill upon thirty (30) days' prior written notice to the other Party shall remain in effect during the Extended Standstill Period, subject to the terms and conditions specified in the Original Agreement.
(f) Confidentiality of Settlement Discussions. All confidentiality provisions of the Original Agreement applicable to settlement discussions, including but not limited to the protections afforded by California Evidence Code Sections 1152 and 1115 through 1128, shall continue in full force and effect during the Extended Standstill Period and thereafter as specified in the Original Agreement.
(g) Renewability. The provision of the Original Agreement permitting further renewal of the standstill period in additional six-month increments by mutual written consent of all Parties shall continue to apply following the Extended Expiration Date.
Section 4. Representations and Confirmations.
Each Party hereby represents, warrants, and confirms to the other Parties as follows:
(a) Authority. Each Party represents and warrants that he or she has full legal capacity and authority to enter into this First Amendment, and that this First Amendment has been duly executed and delivered by such Party and constitutes a valid and binding obligation of such Party enforceable against such Party in accordance with its terms.
(b) No Default or Breach. Each Party confirms that, as of the date hereof, no event of default, breach, or violation of any provision of the Original Agreement has occurred or is continuing, whether by act, omission, or otherwise. Each Party further confirms that he or she is not aware of any facts or circumstances that would constitute, or with the passage of time or the giving of notice or both would constitute, an event of default or breach under the Original Agreement.
(c) No Notice of Termination. Each Party confirms that, as of the date hereof, no written notice of termination has been delivered by any Party under the Original Agreement, and no Party has expressed an intention to deliver any such notice of termination.
(d) No Pending Actions. Each Party confirms that, as of the date hereof, no Party has filed or caused to be filed any new motions, petitions, discovery requests, or other papers in the Proceeding in violation of the Original Agreement.
Section 5. Governing Law.
This First Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of California, without giving effect to any choice-of-law or conflict-of-law rules or provisions that would cause the application of the laws of any jurisdiction other than the State of California. Any dispute, claim, or controversy arising out of, relating to, or in connection with this First Amendment, including but not limited to the interpretation, validity, or enforceability of any provision hereof, shall be subject to the exclusive jurisdiction of the Los Angeles County Superior Court, Probate Division, in connection with Case No. 22STPB09714, or such other division of the Los Angeles County Superior Court as may have jurisdiction over such matters.
Section 6. Counterparts.
This First Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this First Amendment by facsimile, electronic mail (including portable document format (.pdf)), or other electronic transmission shall be effective as delivery of a manually executed counterpart of this First Amendment. Facsimile and electronic signatures shall be deemed original signatures for all purposes, including without limitation for purposes of the California Uniform Electronic Transactions Act (Cal. Civ. Code §§ 1633.1–1633.17).
Section 7. Entire Agreement.
The Original Agreement, as amended by this First Amendment, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous understandings, agreements, negotiations, representations, and warranties, whether oral or written, relating to such subject matter. No amendment, modification, or waiver of any provision of this First Amendment shall be effective unless made in writing and signed by all Parties. In the event of any conflict or inconsistency between the provisions of this First Amendment and the provisions of the Original Agreement, the provisions of this First Amendment shall prevail and control.
Section 8. Notices.
All notices, requests, demands, consents, and other communications required or permitted to be given under this First Amendment shall be delivered in accordance with the notice provisions set forth in the Original Agreement, to the addresses set forth therein or as subsequently updated by written notice delivered in accordance with such provisions. For the avoidance of doubt, as of the date hereof, the current notice addresses are as follows:
If to Petitioner:
Marguerite D. Fonseca c/o Calderwood & Harkness LLP 350 South Grand Avenue, Suite 4800 Los Angeles, California 90071
Attn: Howard Quinn, Responsible Partner
If to Contestants:
Rafael T. Fonseca, Isabela C. Fonseca-Greer, and Nicolás R. Fonseca c/o Brennan, Ortega & Saldívar LLP 1900 Avenue of the Stars, Suite 2100 Los Angeles, California 90067
Attn: Damian R. Ortega, Lead Attorney
Any Party may change its notice address by providing written notice of such change to all other Parties in accordance with the notice provisions of the Original Agreement.
IN WITNESS WHEREOF, the Parties have executed this First Amendment to Settlement Standstill Agreement as of the date first written above.
PETITIONER:
MARGUERITE D. FONSECA
By: ________
Name: Marguerite D. Fonseca
Date: October 28, 2023
CONTESTANTS:
RAFAEL T. FONSECA
By: ________
Name: Rafael T. Fonseca
Date: October 28, 2023
ISABELA C. FONSECA-GREER
By: ________
Name: Isabela C. Fonseca-Greer
Date: October 28, 2023
NICOLÁS R. FONSECA
By: ________
Name: Nicolás R. Fonseca
Date: October 28, 2023
COUNSEL FOR PETITIONER:
CALDERWOOD & HARKNESS LLP
By: ________
Name: Howard Quinn
Title: Responsible Partner
Address: 350 South Grand Avenue, Suite 4800
Los Angeles, California 90071
Date: October 28, 2023
COUNSEL FOR CONTESTANTS:
BRENNAN, ORTEGA & SALDÍVAR LLP
By: ________
Name: Damian R. Ortega
Title: Partner
Address: 1900 Avenue of the Stars, Suite 2100
Los Angeles, California 90067
Date: October 28, 2023