This case was last updated from Los Angeles County Superior Courts on 05/05/2020 at 22:36:14 (UTC).

MCGRATH FAMILY TRUST VS HARTMAN GROUP INC

Case Summary

On 06/10/2002 MCGRATH FAMILY TRUST filed a Contract - Debt Collection lawsuit against HARTMAN GROUP INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ELIZABETH ALLEN WHITE, ADR NEUTRAL, MATTHEW ST. GEORGE, BRUCE MITCHELL, KENNETH R. FREEMAN, MURRAY GROSS, DANIEL J. BUCKLEY and EDWARD B. MORETON. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****5446

  • Filing Date:

    06/10/2002

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Debt Collection

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

ELIZABETH ALLEN WHITE

ADR NEUTRAL

MATTHEW ST. GEORGE

BRUCE MITCHELL

KENNETH R. FREEMAN

MURRAY GROSS

DANIEL J. BUCKLEY

EDWARD B. MORETON

 

Party Details

Plaintiffs and Cross Defendants

MCGRATH ALAN G.

MCGRATH DEBRA L.

MCGRATH FAMILY TRUST THE

THE MCGRATH FAMILY TRUST

MCGRATH DEBRA L

MCGRATH ALAN

THE MCGRATH FAMILY TRUST A TRUST

Defendants and Cross Plaintiffs

HARKHAM DAVID

HARTMAN GROUP INC.

HARTMAN GROUP INC

HARKAM DAVID

Assignees

ASHEN ROBERT M.

SMITH ROBERT L. DBA COMMERCIAL JUDGMENT RECOVERY

Attorney/Law Firm Details

Plaintiff Attorneys

HERZLICH ALLAN ESQ.

DHILLON ASHA

Defendant and Cross Plaintiff Attorneys

GAUMER CHRISTIE ESQ.

GAUMER CHRISTIE

Assignee Attorney

DEWBERRY ROBERT H.

 

Court Documents

Objection - Objection To Declaration In Support of Opposition to Claim of Exemption

2/20/2019: Objection - Objection To Declaration In Support of Opposition to Claim of Exemption

Assignment of Judgment

3/4/2019: Assignment of Judgment

Order - ORDER GRANTING CLAIM OF EXEMPTION AS TO AMERIPRISE FINANCIAL

3/19/2019: Order - ORDER GRANTING CLAIM OF EXEMPTION AS TO AMERIPRISE FINANCIAL

Substitution of Attorney

4/29/2019: Substitution of Attorney

Proof of Service (not Summons and Complaint)

8/19/2019: Proof of Service (not Summons and Complaint)

Assignment of Judgment

11/13/2019: Assignment of Judgment

Proof of Service -

10/6/2011: Proof of Service -

ANENDED NOTICE OF MOTION FOR ORDER FURTHER EXTENDING CRAP LIEN PURSUANT TO C.C.P. ? 708.110(D)

7/15/2013: ANENDED NOTICE OF MOTION FOR ORDER FURTHER EXTENDING CRAP LIEN PURSUANT TO C.C.P. ? 708.110(D)

MEMO OF COSTS AFTER JUDGEMENT, ACKNOWLEDGEMENT OF CREDIT AND DECLARATION OF ACCRUED INTEREST -

7/16/2013: MEMO OF COSTS AFTER JUDGEMENT, ACKNOWLEDGEMENT OF CREDIT AND DECLARATION OF ACCRUED INTEREST -

ORDER FURTHER EXTENDING ORAP LIEN. C.C.P. ?708.110(D) [PROPOSED]

8/26/2013: ORDER FURTHER EXTENDING ORAP LIEN. C.C.P. ?708.110(D) [PROPOSED]

ORDER DETERMINING AND DENYING CLAIM OF EXEMPTION OF JUDGMENT DEBTOR DAVID HARKHAM RE WELLS FARGO BANK DEPOSIT ACCOUNT LEVYW

9/20/2013: ORDER DETERMINING AND DENYING CLAIM OF EXEMPTION OF JUDGMENT DEBTOR DAVID HARKHAM RE WELLS FARGO BANK DEPOSIT ACCOUNT LEVYW

PROOF OF SERVICE

11/14/2013: PROOF OF SERVICE

APPL. & ORDER FOR APPEARANCE AND EXAM. (ATT.-ENF OF JUDGEMENT) -

3/27/2015: APPL. & ORDER FOR APPEARANCE AND EXAM. (ATT.-ENF OF JUDGEMENT) -

APPLICATION FOR AND RENEWAL OF JUDGMENT

11/16/2015: APPLICATION FOR AND RENEWAL OF JUDGMENT

127 More Documents Available

 

Docket Entries

  • 06/25/2020
  • Hearing06/25/2020 at 15:30 PM in Department 48 at 111 North Hill Street, Los Angeles, CA 90012; Status Conference

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  • 04/15/2020
  • DocketCertificate of Mailing for ([Notice of Continuance Due to COVID-19 State of Emergency Declarations]); Filed by Clerk

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  • 04/15/2020
  • DocketNotice of Continuance Due to COVID-19 State of Emergency Declarations; Filed by Clerk

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  • 04/14/2020
  • Docketat 08:30 AM in Department 48, Elizabeth Allen White, Presiding; Status Conference - Not Held - Advanced and Continued - by Court

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  • 03/26/2020
  • DocketNotice (of Continuance of Status Conference); Filed by The McGrath Family Trust, a trust (Plaintiff); Debra L. McGrath (Plaintiff)

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  • 03/20/2020
  • DocketNotice Re: Continuance of Hearing and Order; Filed by Clerk

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  • 03/20/2020
  • DocketCertificate of Mailing for ([Notice Re: Continuance of Hearing and Order]); Filed by Clerk

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  • 02/14/2020
  • Docketat 08:30 AM in Department 48, Elizabeth Allen White, Presiding; Hearing on Motion to Set Aside/Vacate Judgment (CCP 473) - Held - Motion Granted

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  • 02/14/2020
  • DocketCertificate of Mailing for ((Hearing on Motion by Defendant (David Harkham), to Set Aside/...) of 02/14/2020); Filed by Clerk

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  • 02/14/2020
  • DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore (Name: Adra L. Pittman, License No: 13298 - Telephone Number: 310-941-8500); Filed by The McGrath Family Trust, a trust (Plaintiff); The McGrath Family Trust (Plaintiff); Alan McGrath (Plaintiff) et al.

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553 More Docket Entries
  • 12/03/2002
  • Docketat 08:15 AM in Department 64; Initial Status Conference (Initial Status Conference; Continued by Plaintiff) -

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  • 12/03/2002
  • DocketMinute Order

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  • 10/10/2002
  • Docketat 08:15 AM in Department 64; Initial Status Conference (Initial Status Conference; Continued by Court) -

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  • 10/10/2002
  • DocketMinute Order

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  • 10/10/2002
  • DocketMinute order entered: 2002-10-10 00:00:00; Filed by Clerk

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  • 08/01/2002
  • DocketNotice of Status Conference filed; Filed by null

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  • 08/01/2002
  • DocketNOTICE OF STATUS CONFERENCE

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  • 07/29/2002
  • DocketMinute Order

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  • 06/10/2002
  • DocketCOMPLAINT FOR DAMAGES; ETC.

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  • 06/10/2002
  • DocketComplaint; Filed by The McGrath Family Trust, a trust (Plaintiff); Alan G. McGrath (Plaintiff); Debra L. McGrath (Plaintiff)

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Tentative Rulings

Case Number: BC275446    Hearing Date: December 05, 2019    Dept: 48

MOTION TO SET ASIDE JUDGMENT

MOVING PARTY: Defendant/Judgment Debtor David Harkham, in pro per

RESPONDING PARTY(S): Plaintiffs/Judgment Creditors The McGrath Family Trust, a trust; Alan G. McGrath, and Debra L. McGrath

PROOF OF SERVICE:

ANALYSIS

Motion to Set Aside Judgment

Request for Judicial Notice

Defendant’s request that the Court take judicial notice of various court records filed in the bankruptcy case, In re David Harkham and Isarela Harkham, Case NO. SV05-30098-AA, Adv. No. AD05-02555-AA and in this action is GRANTED per Evid Code § 452(d)(court records).

Discussion

Judgment debtor David Harkham moves pursuant to CCP § 473(d) to set aside the judgment in this action as void because it is unreasonably punitive in amount. Alternatively, Defendant requests that a new and different judgment not containing the penalty amount be entered.

A void judgment may be set aside at any time:

There is a wealth of California authority for the proposition that a void judgment is vulnerable to direct or collateral attack “‘“at any time.”’” (Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249 [25 Cal. Rptr. 3d 372], italics added, quoting People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660 [16 Cal. Rptr. 3d 76, 93 P.3d 1020].) For example, in Gorham, supra, 186 Cal.App.4th 1215, the Court of Appeal held that the failure to vacate a void judgment entered nearly 10 years earlier was an abuse of discretion.

Rockefeller Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd. (2018) 24 Cal.App.5th 115, 135-36 (bold emphasis and underlining added).

Defendant argues that the damages to Plaintiff flowing from his failure to pay the full $192,000 sum set forth in the parties’ settlement agreement is not the full $2,100,000 value of the promissory less payments made plus interest from the date of the note. Defendant argues that the stipulation that entry of judgment of the full amount of the promissory note, etc. upon breach of the settlement agreement is an unenforceable liquidated damages clause which constitutes a penalty.

Vitatech Internat., Inc. v. Sporn (2017) 16 Cal.App.5th 796, upon which Defendant relies, appears to support his position:

“California law has … long recognized that a provision for liquidation of damages for contractual breach … can under some circumstances be designed as, and operate as, a contractual forfeiture. To prevent such operation, our laws place limits on liquidated damages clauses. Under the 1872 Civil Code, a provision by which damages for a breach of contract were determined in anticipation of breach was enforceable only if determining actual damages was impracticable or extremely difficult. (1872 Civ. Code, §§ 1670, 1671.) As amended in 1977, the code continues to apply that strict standard to liquidated damages clauses in certain contracts (consumer goods and services, and leases of residential real property (§ 1671, subds. (c), (d)), but somewhat liberalizes the rule as to other contracts: ‘[A] provision in a contract liquidating the damages for breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.’ (§ 1671, subd. (b) … .)” (Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 976–977 [73 Cal. Rptr. 2d 378, 953 P.2d 484] (Ridgley); see Krechuniak v. Noorzoy (2017) 11 Cal.App.5th 713, 720 [217 Cal. Rptr. 3d 740] (Krechuniak).)

“A liquidated damages clause will generally be considered unreasonable, and hence unenforceable under section 1671(b), if it bears no reasonable [*806]  relationship to the range of actual damages that the parties could have anticipated would flow from a breach. The amount set as liquidated damages ‘must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.’ [Citation.] In the absence of such relationship, a contractual clause purporting to predetermine damages ‘must be construed as a penalty.’” (Ridgley, supra, 17 Cal.4th at p. 977.) “‘The validity of the liquidated damages provision depends upon its reasonableness at the time the contract was made and not as it appears in retrospect. Accordingly, the amount of damages actually suffered has no bearing on the validity of the liquidated damages provision.’” (Krechuniak, supra, 11 Cal.App.5th at p. 721.)

“‘A penalty provision operates to compel performance of an act [citation] and usually becomes effective only in the event of default [citation] upon which a forfeiture is compelled without regard to the damages sustained by the party aggrieved by the breach [citation]. The characteristic feature of a penalty is its lack of proportional relation to the damages which may actually flow from failure to perform under a contract.’” (Ridgley, supra, 17 Cal.4th at p. 977.)

“In short, ‘[a]n amount disproportionate to the anticipated damages is termed a “penalty.” A contractual provision imposing a “penalty” is ineffective, and the wronged party can collect only the actual damages sustained.’” (Ridgley, supra, 17 Cal.4th at p. 977; see Purcell v. Schweitzer (2014) 224 Cal.App.4th 969, 974 [169 Cal. Rptr. 3d 90] (Purcell) [“‘Absent a relationship between the liquidated damages and the damages the parties anticipated would result from a breach, a liquidated damages clause will be construed as an unenforceable penalty’”].)

“A liquidated damages provision is not invalid merely because it is intended to encourage a party to perform, so long as it represents a reasonable attempt to anticipate the losses to be suffered. [Citation.] A court will interpret a liquidated damages clause according to its substance, and if it is otherwise valid, will uphold it even if the parties have referred to it as a penalty.” (Weber, Lipshie & Co. v. Christian (1997) 52 Cal.App.4th 645, 656 [60 Cal. Rptr. 2d 677] (Weber); see Ridgley, supra, 17 Cal.4th at p. 979 [“‘We have consistently ignored form and sought out the substance of arrangements which purport to legitimate penalties and forfeitures’”]; Greentree, supra, 163 Cal.App.4th at p. 499.)

Based on section 1671(b)'s presumption that liquidated damage provisions in nonconsumer contracts are valid, the party challenging the provision bears the burden to show the provision was unreasonable under the circumstances existing when the parties entered into the contract. (Krechuniak, supra, 11 Cal.App.5th at p. 721; see Weber, supra, 52 Cal.App.4th at p. 654.)

Vitatech contends the trial court lacked authority to grant Appellants' motion because they improperly brought it under section 473(d). According to Vitatech, the stipulated judgment's alleged violation of section 1671(b) at most rendered the judgment voidable, but section 473(d) only authorizes a court to vacate a void judgment. Vitatech misconstrues the legal impact of a contract provision violating section 1671(b)'s prohibition on unlawful penalties.

A court's statutory authority to vacate a judgment or order under section 473(d) is limited to void judgments and orders. (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 495–496 [52 Cal. Rptr. 3d 862].) And as Vitatech points out, our Supreme Court has repeatedly observed that jurisdictional errors in rendering a judgment or order generally fall into two categories: “A court can lack fundamental authority over the subject matter, question presented, or party, making its judgment void, or it can merely act in excess of its jurisdiction or defined power, rendering the judgment voidable.” (In re Marriage of Goddard (2004) 33 Cal.4th 49, 56 [14 Cal. Rptr. 3d 50, 90 P.3d 1209].) Here, Vitatech contends the court's judgment in its favor is at most voidable because no one disputes the trial court had fundamental authority over the subject matter, the questions presented, and the parties.

Vitatech, however, fails to recognize that a liquidated damages provision lacking a reasonable relationship to the range of damages the parties reasonably could have anticipated is unenforceable and void as against public policy. (Civ. Code, § 1599 [“Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest”]; Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 900 [143 Cal. Rptr. 306] (Sybron) [“Under California law liquidated damages not reasonably related to actual damages are unenforceable and void as penalties”].) “[A] court cannot validly enter a judgment or order which is void even if the parties agree to it.” (Plaza Hollister Ltd. Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 13 [84 Cal. Rptr. 2d 715].)

Accordingly, a stipulated judgment that includes an unlawful liquidated damages provision is void and may be vacated under section 473(d). Any other rule effectively would insulate such provisions from challenge and render the prohibition against them meaningless.

Vitatech Internat., Inc. v. Sporn (2017) 16 Cal.App.5th 796, 805-14 (italics, bold emphasis, and underlining added).

It is apparent that the stipulated amount to be entered upon Defendant’s default under the settlement agreement, $2,100,000, lacks a reasonable relationship to the range of damages the parties could have anticipated arising out of Defendant’s breach of the settlement agreement, not the underlying loan repayment obligation. As the Vitatech Internat. Court opined, such anticipated damages would be interest and costs of enforcing the settlement agreement. The $2,100,000 judgment amount would appear to be an unenforceable liquidated damages provision because it is a penalty, thereby rending the judgment void.

The key, however, is whether Defendant admitted liability as part of the settlement agreement which was read into the record. Because the terms of the settlement agreement were read into the record at the June 16, 2003 Mandatory Settlement Conference, it would be a judgment void on its face because it would not require the Court to look outside the record or the judgment roll:

An order is considered void on its face only when the invalidity is apparent from an inspection of the judgment roll or court record without consideration of extrinsic evidence. (OC Interior Services, supra, 7 Cal.App.5th at p. 1327 [“[t]o prove that the judgment is void [on its face], the party challenging the judgment is limited to the judgment roll, i.e., no extrinsic evidence is allowed”]; see also Tearlach Resources Limited v. Western States Internat., Inc. (2013) 219 Cal.App.4th 773, 779 [162 Cal. Rptr. 3d 110].) There is no time limit to attack a judgment void on its face. (OC Interior Services, at p. 1327; Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1440 [168 Cal. Rptr. 3d 114] (Ramos); Plaza Hollister Ltd. Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 19 [84 Cal. Rptr. 2d 715].) If the invalidity can be shown only through consideration of extrinsic evidence, such as declarations or testimony, the order is not void on its face. Such an order must be challenged within the six-month time limit prescribed by section 473, subdivision (b), or by an independent action in equity. (OC Interior Services, at p. 1328; Ramos, at p. 1440; Plaza Hollister Ltd. Partnership, at p. 19.)

Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009, 1021 (bold emphasis added).

The Court notes that the Judgment entered in this case on October 27, 2006 does not address whether Defendant admitted liability. Likewise, the June 16, 2003 minute order in this case merely indicates that the terms of the settlement were recited in chambers as fully reflected in the notes of the official court reporter which are incorporated by reference. Per the Declaration of Plaintiff’s attorney, Catherine L. Dellecker, ¶ 2, her office was not able to obtain a copy of the Reporter’s Transcript of the June 16, 2003 Mandatory Settlement Conference because the stenographic notes have been destroyed. Dellecker Decl., ¶ 2.

The Court will give Plaintiffs an opportunity to locate a copy of the Reporter’s Transcript if the June 16, 2003 Mandatory Settlement Conference. However, absent a showing that Defendant admitted liability and the amount of damages, or that sufficient evidence was presented at the mandatory settlement conference as to Defendant’s liability and amount of damages, it appears that Vitatech Internat. requires that the judgment be vacated as void as a matter of law, because the facts are susceptible of only one reasonable interpretation—that the $2,100,000 stipulated judgment amount is a void and unenforceable penalty. Vitatech Internat., supra, 16 Cal.App.5th at 808.

Moreover, it would appear that Vitatech Internat. would require invalidation of the judgment entered on October 27, 2006 because case law has retroactive effect, unless the parties relied upon a settled rule that was changed by decision:

“‘Although as a general rule judicial decisions are to be given retroactive effect [citation], there is a recognized exception when a judicial decision changes a settled rule on which the parties below have relied. [Citations.] “[C]onsiderations of fairness and public policy may require that a decision be given only prospective application. [Citations.] Particular considerations relevant to the retroactivity determination include the reasonableness of the parties' reliance on the former rule, the nature of the change as substantive or procedural, retroactivity's effect on the administration of justice, and the purposes to be served by the new rule.”’” (Claxton v. Waters (2004) 34 Cal.4th 367, 378–379 [18 Cal. Rptr. 3d 246, 96 P.3d 496].)

Williams & Fickett v. County of Fresno (2017) 2 Cal.5th 1258, 1282 (bold emphasis and underlining added).

The rule that an unreasonable liquidated damages clause is an unenforceable penalty was established by statute and case law long before the parties entered into the Settlement Agreement in 2003. See, e.g., Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 976-78. On the other hand Plaintiffs fail to cite any statutory or case law setting forth a settled rule upon which the parties relied which was changed by Vitatech Internat. or the cases it relied upon. Although Plaintiffs suggest it was a common practice to include a stipulation with the default amount of judgment being the amount of the prayer of the complaint (Opp. Page 13:12-14,) A common practice is not the equivalent of a settled rule.

Accordingly, the hearing on the motion to vacate the judgment is CONTINUED to February 4, 2020. Plaintiffs are to submit a copy of the Reporter’s Transcript if the June 16, 2003 Mandatory Settlement Conference, however they can obtain such a copy. The Court will consider any photocopy of the Reporter’s Transcript, subject to evidentiary objections. a Copy of the Reporter’s Transcript to be filed and served by January 27, 2020.

Needless to say, there is no basis to impose CCP § 128.7 sanctions against Defendant. Plaintiffs’ request for sanctions against Defendant is DENIED.