New Settlement Case

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It's common in California to include, in settlement agreements that will be paid over time, a stipulated judgment that can be filed if the party making the payments defaults before all payments have been made. The party who will file a stipulated judgment needs to be careful to make sure that the amount of the stipulated judgment is not considered a penalty, because that can render the judgment void and unenforceable. Last month, the Second District Court of Appeal published a decision addressing the issue of whether a stipulated judgment for $251,200.13, that could be filed if the defendant failed to pay $30,000 in 24 consecutive monthly payments of $1,250, constituted a penalty. A video discussing the case is above and my summary of the case is below.

New Settlement Decision  

Creditors Adjustment Bureau v. Imani (2022) _ Cal.App.5th _ , 2022 WL 3210462: The Court of Appeal affirmed the trial court's order denying defendant's motion to vacate a stipulated judgment entered against him for $251,200.13 after he failed to pay $30,000 as required pursuant to a stipulation for entry of judgment. Defendant argued the trial court erred because the judgment was an unenforceable penalty and therefore void. The Court of Appeal disagreed. Defendant was sued for breach of a lease. On the first day of trial the parties entered into a settlement agreement that including a stipulation for entry of judgment. The settlement agreement provided that defendant could fully satisfy his obligation by paying $30,000 in 24 consecutive monthly payments of $1,250 starting April 1, 2015. In the stipulated judgment defendant agreed that he owed $251,200.13 and if he defaulted in making the monthly payments a stipulated judgment could be entered against defendant in the sum of $251,200.13  together with reasonable attorneys fees in favor of plaintiff and against defendant, less any sums received by plaintiff. The stipulated judgment that defendant agreed to accept was the exact amount of damages suffered by plaintiff. Although defendant characterized the stipulated damages as a penalty and/or liquidated damage provision, it was not. (C.A. 2nd, August 9, 2022.)

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I help attorneys and their clients as a mediator, arbitrator and referee at ADR Services, Inc., handling cases in the areas of business, employment, insurance bad faith, insurance coverage, legal malpractice, medical malpractice, personal injury, real property and wrongful death. I conduct Zoom hearings throughout California and also in-person services. When you need an experienced, effective neutral who knows CA law, to schedule a matter please contact my case manager at ADR services, Haward Cho, [email protected], (213) 683-1600.  
 

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Best regards,
Monty A. McIntyre, Esq.
California Case Summaries™
Mediator, Arbitrator & Referee
Master Lawyer Mentoring™
CA Civil Trial Attorney Since 1980
ABOTA Member Since 1995
Past President San Diego County Bar Assn., SD ABOTA Chapter
Phone: (619) 990-4312.
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