On 02/22/2018 LAURIE BURNETT filed a Contract - Other Contract lawsuit against CRISTINA MARIE DAM. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are HOLLY E. KENDIG and ELAINE LU. The case status is Pending - Other Pending.
Pending - Other Pending
Stanley Mosk Courthouse
Los Angeles, California
HOLLY E. KENDIG
DOES 1 TO 100
DAM CRISTINA MARIE
LIBERATE HOLLYWOOD INC
DIBA KASEY ESQ.
SICHI MATTHEW M.
DALEY & SACKS LAW RLLP
BOWLES DAVID KAY
4/20/2018: ANSWER OF CRISTTNA MARIE DAM, LIBERATE HOLLYWOOD INC, AND LIBERATION INC. TO COMPLAINT
2/22/2018: COMPLAINT FOR: (1) BREACH OF CONTRACT ;ETC
10/19/2018: Memorandum of Points & Authorities
10/30/2018: Memorandum of Points & Authorities
10/31/2018: Notice of Ruling
12/7/2018: Notice of Case Reassignment and Order for Plaintiff to Give Notice
6/29/2018: NOTICE OF CASE MANAGEMENT CONFERENCE
6/29/2018: CASE MANAGEMENT STATEMENT
7/2/2018: NOTICE OF POSTING JURY FEES
7/2/2018: CIVIL DEPOSIT
3/27/2018: PROOF OF SERVICE OF SUMMONS
3/27/2018: PROOF OF SERVICE OF SUMMONS
3/2/2018: NOTICE OF CASE MANAGEMENT CONFERENCE & OSC RE PROOF OF SERVICE
Minute Order ( (Order to Show Cause Re: Dismissal (Settlement))); Filed by ClerkRead MoreRead Less
at 08:30 AM in Department 26, Elaine Lu, Presiding; Hearing on Motion to Compel Further Discovery Responses - Not Held - Taken Off Calendar by PartyRead MoreRead Less
at 08:16 AM in Department 26, Elaine Lu, Presiding; Non-Appearance Case ReviewRead MoreRead Less
Minute Order ( (Non-Appearance Case Review)); Filed by ClerkRead MoreRead Less
Certificate of Mailing for (Minute Order (Non-Appearance Case Review) of 03/01/2019); Filed by ClerkRead MoreRead Less
Notice of Settlement; Filed by Laurie Burnett (Plaintiff)Read MoreRead Less
at 08:30 AM in Department 26, Elaine Lu, Presiding; Hearing on Application for Writ of Attachment (CCP 484.040)Read MoreRead Less
at 09:30 AM in Department 86; Hearing on Application for Writ of Attachment (CCP 484.040) - Not Held - Rescheduled by CourtRead MoreRead Less
Notice (Notice of Case Reassignment and Order for Plaintiff to Give Notice); Filed by Laurie Burnett (Plaintiff)Read MoreRead Less
at 09:30 AM in Department 86; Hearing on Application for Writ of Attachment (CCP 484.040) - Held - Motion DeniedRead MoreRead Less
Proof-Service/Summons; Filed by Laurie Burnett (Plaintiff)Read MoreRead Less
PROOF OF SERVICE OF SUMMONSRead MoreRead Less
Proof-Service/Summons; Filed by Laurie Burnett (Plaintiff)Read MoreRead Less
PROOF OF SERVICE OF SUMMONSRead MoreRead Less
PROOF OF SERVICE OF SUMMONSRead MoreRead Less
Notice of Case Management Conference; Filed by ClerkRead MoreRead Less
NOTICE OF CASE MANAGEMENT CONFERENCE & OSC RE PROOF OF SERVICERead MoreRead Less
SUMMONSRead MoreRead Less
Complaint; Filed by Laurie Burnett (Plaintiff)Read MoreRead Less
COMPLAINT FOR: (1) BREACH OF CONTRACT ;ETCRead MoreRead Less
Case Number: BC695435 Hearing Date: July 22, 2020 Dept: 26
IN ORDER TO IMPLEMENT PHYSICAL DISTANCING AND UNTIL FURTHER NOTICE, THE COURT STRONGLY ENCOURAGES ALL COUNSEL AND ALL PARTIES TO APPEAR REMOTELY FOR NON-TRIAL AND NON-EVIDENTIARY MATTERS, INCLUDING THIS MOTION.
cristina marie dam, et al.,
Case No.: BC695435
Hearing Date: July 22, 2020
[TENTATIVE] order RE:
plaintiffs’ motion to enforce settlement
On August 1, 2019, plaintiff Laurie Burnett (“Plaintiff”) and defendants Cristina Marie Dam, Liberate Hollywood, Inc., and Liberation, Inc. (collectively “Defendants”) filed a settlement agreement and a dismissal of this action with the court to maintain jurisdiction pursuant to Code of Civil Procedure section 664.6.
On May 14, 2020, Plaintiff filed the instant motion for entry of judgment pursuant to the settlement agreement. On July 8, 2020, Defendants filed an opposition. On July 15, 2020, Plaintiff filed a reply.
Code of Civil Procedure section 664.6 provides that “[i]f parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement.” In ruling on a motion to enter judgment the trial court acts as a trier of fact. It must determine whether the parties entered into a valid and binding settlement. To do so it may receive oral testimony in addition to declarations. (Kohn v. Jaymar-Ruby, Inc. (1994) 23 Cal.App.4th 1530, 1533.)
Plaintiff and Defendants settled this matter and reduced their settlement into writing as the Confidential Settlement Agreement (“Settlement Agreement”)and General Release of All Claims. Defendants signed the Settlement Agreement on March 20, 2019, and Plaintiff signed the Settlement Agreement on March 25, 2019. (Sichi Decl. Ex. A.) On August 1, 2019, the parties filed a stipulation and order for dismissal of the action with prejudice and for the court to maintain jurisdiction pursuant to Code of Civil Procedures section 664.6 for enforcement of settlement. Pursuant to the parties’ stipulation, the court ordered this action dismissed on August 1, 2019 but retained jurisdiction pursuant to Code of Civil Procedure section 664.6 to enforce the full terms of the Settlement Agreement. (Sichi Decl. Ex. B.)
Plaintiff provides evidence that Defendants have failed to make all payments as agreed in the Settlement Agreement. Defendants failed to make the payment due March 4, 2020. (Sichi Decl., ¶ 7.) On March 9, 2020, Plaintiff contacted Defense Counsel to inquire into the lack of payment. (Id. ¶ 7, Ex. E.) On March 10, 2020, Defense Counsel indicated he would check with his client. (Id. ¶ 7, Ex. F.) Plaintiff then proceeded by issuing a Notice of Default on Defendants. (Id. ¶ 7, Ex. G.) In light of the COVID-19 pandemic, Plaintiff agreed to extend the period for Defendants to cure their nonpayments to March 20, 2020. (Id. ¶ 8, Ex. H.) On March 20, 2020, Defense Counsel notified Plaintiff that Defendants would not be able to make that month’s payment due to loss of revenue as a result of the COVID-19 pandemic and due to Defendants’ inability to obtain a loan in time to make the payment. (Id. ¶ 9, Ex. H.) Plaintiff now seeks to enforce the terms of the settlement and enter judgment against Defendants for Defendants’ failure to comply with the settlement terms.
Here, all parties signed the stipulation, which clearly and unequivocally states: “On March 20, 2019, the parties entered into a Settlement Agreement and Release (Hereinafter “Settlement Agreement”). The Settlement Agreement requires certain payments to be made in settlement by Defendants to Plaintiff. This Stipulation for Judgment is entered to fulfill the terms of that Settlement Agreement. The parties agree that if Defendants default without cure, under the terms set forth herein and in the Settlement Agreement, this Stipulation for Judgment will be immediately enforceable.” (Sichi Decl. Ex. B at ¶ 1.) The Parties further stipulated that “Defendants hereby waive any right to notice and hearing on the entry of judgment and any and all notices of the entry of judgment, but plaintiff will promptly serve on Defendants any judgment entered and any payments made prior to the entry of the judgment shall be credited against the amount of the judgment.” (Id. at ¶ 5(a).) Plaintiff is entitled to attorney fees incurred in the collection, and Plaintiff shall recover interest at 10% per annum from the date the Settlement Agreement is executed. (Id. at ¶¶ 7-8.)
The parties agreed to “settle this matter for payment by DEFENDANTS to PLAINTIFF in the total amount of one hundred twenty-five thousand dollars ($125,00.00) (the “Settlement Sum”). (Id. at ¶ 1A.) The parties further agreed that if Defendants paid Plaintiff a total of $100,000 pursuant to a stipulated schedule of five payments, Defendants would be released from the Stipulated Judgment of $125,000. (Id. at ¶ 1C.)
As of Plaintiff’s filing of the moving papers, Defendants had paid only a total of $63,000.00. Plaintiff seeks costs and attorney fees totaling $1,251.67 [Hourly rate $275 x 4.33 hours +$60.00 filing fees]. Plaintiff also seeks interest of $7,151.23 based on 10% of the unpaid remainder as of filing and an addition $16.99 per day until judgment is filed.
Defendants oppose stating that they have been able to borrow funds and to catch up on the payments.
In reply, Plaintiff states that Defendants have paid an additional $20,000.00, for a total of $83,000.00 in payments thus far.
Defendants contend that the amount of the judgment that Plaintiff seeks incorporates an unenforceable penalty clause.
Specifically, Defendants assert that because the settlement agreement allowed for payment of only $100,000.00 with no interest, (Sichi Decl. Ex. A.), Plaintiff’s proposed judgment amount of $125,000.00 with attorney fees, costs, and interests constitutes an unenforceable liquidated damages clause.
Under Civil Code section 1671, subdivision (b), “a provision in a contract liquidating the damages for the 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.” A liquidated damages clause will generally be considered unreasonable if it “bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.” (Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 977.) This standard applies to stipulated settlement agreements. (See e.g. Red & White Distribution, LLC v. Osteroid Enterprises, LLC (2019) 38 Cal.App.5th 582 [finding a stipulated judgment amount of $2,800,000.00 minus payments made contained within a settlement agreement that included a stipulation to settlement payments totaling $2,100,000.00 to be an unenforceable liquidated damages penalty of $700,000.00.]; Greentree Financial Group, Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495 [finding a stipulated judgment amount of $45,000.00 minus payments made contained within a settlement agreement that included a stipulation to settlement payments totaling $20,000.00 to be an unenforceable liquidated damages penalty of $25,000.00]; Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896 [in contract for payment of $72,000 in 12 equal monthly installments, clause allowing creditor to obtain stipulated judgment for $100,000 upon any default, including late installment penalty, was unenforceable as an unreasonable attempt to liquidate damages for breach.].)
In Greentree Financial Group, Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495, the complaint alleged that the Defendant had failed to pay $45,000 due under a contract. (Greentree, 163 Cal.App.4th at 498.) The parties settled pursuant to a stipulation for entry of judgment. (Id. See CCP §664.6.) The parties agreed that Defendant would pay Plaintiff $20,000 in installments. (163 Cal.App.4th at 498.) The parties further agreed that in the event of default, the creditor Greentree would be entitled to “immediately have Judgment entered against [ESI] for all amounts prayed as set forth in [Greentree]'s Complaint in the above-entitled action, including interest, attorney fees and costs, less any amounts already paid by [ESI].” Id. Defendant defaulted, and Plaintiff submitted a proposed judgment for $61,232.50, consisting of $45,000 in damages, $13,912.50 in prejudgment interest, $2,000 in attorney fees and $320 in costs, which was entered. Id.
On appeal, the court found that the judgment constituted enforcement of an illegal penalty and rejected Plaintiff’s contention that it was a valid liquidated damages provision in a contract between the parties. Id. at 499, 502. The Greentree court reasoned that (1) to be valid and enforceable, a liquidated damages clause in a settlement agreement must bear a reasonable relationship to the actual damages that the parties could have anticipated would flow from a breach of the stipulation, not from the underlying contract, (2) the stipulation at issue did not include any admission of fault by the defendant, and (3) the amount of the $61,232.50 judgment had no reasonable relationship to the range of actual damages that the parties could have anticipated from a breach of the stipulation to settle the case for $20,000 because money damages are easily determinable by the prevailing interest rate. Id. at 499-500.
The Greentree court noted that “the judgment would have been enforceable if it had been designed to encourage [Defendant] to make its settlement payments on time, and to compensate [Plaintiff] for its loss of use of the money plus its reasonable costs in pursuing the payment.” Id. at 500. However, on the facts before the court in Greentree, the court concluded that the judgment of $40,000 more than the settlement amount had no reasonable relationship to damages incurred by the plaintiff from the defendant’s failure to make settlement payments. Id. at 499-501. Finally, the Greentree court vacated the award of attorney fees and prejudgment interest in the judgment because the stipulation did not contain any provision for attorney fees or prejudgment interest, and it was unclear whether the $20,000 settlement amount included compensation for attorney fees and prejudgment interest. Id. at 502.
Purcell v. Schweitzer (2014) 224 Cal.App.4th 969, clarified that it is not the words in the settlement agreement, but rather the actual facts existing at the time of execution of the settlement agreement, that govern whether the provision is a valid liquidated damages provision or an unenforceable penalty. (2014) 224 Cal.App.4th 969, 975. In Purcell, the parties settled the action for $38,000. The parties further agreed that upon a default in payment, a judgment for the full amount of the defendant’s original liability of $85,000 could be entered against him, which the parties agreed was the “amount of monies actually owed, jointly and severally, by the Defendant . . . to the Plaintiff and is neither a penalty nor is it a forfeiture.” Id. at 972. The Purcell court rejected Plaintiff’s attempt to distinguish Greentree on the basis that the settlement agreement included an “express waiver” of any challenges to the stipulated judgment, which the parties agreed reflected the economics of proceeding further with the matter. Id. at 975. In doing so, the Purcell Court held that “the public policy expressed in Civil Code sections 1670 and 1671 may not be circumvented by words used in a contract.” Id. at 975. Thus, notwithstanding the express stipulations in the settlement agreement that the defendant actually owed $85,000 and that $85,000 was not a penalty or forfeiture, the Purcell court concluded that the amount due upon breach had “no reasonable relationship to the range of actual damages that would flow from the breach” of the settlement agreement and did not “represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.” Id. at 974-75.
In Jade Fashion & Co. v. Harkham Industries (2014) 229 Cal.App.4th 635, 648-49, the agreement at issue required the defendant to make weekly payments of $25,000 towards $341,628.77, which was the amount that the defendant acknowledged it owed the plaintiff for purchased goods. The agreement provided that if the defendant timely made each installment payment when due, then the defendant could deduct $17,500 from the final installment due, but if the defendant failed to make full and timely payment of any installment due, the defendant would not be entitled to the $17,500 discount, and the remaining balance due by the defendant would become immediately due and payable. 229 Cal.App.4th at 639-40. The agreement was structured as a forbearance. Id. at 640. On appeal, the court held that the agreement at issue did not run afoul of Greentree because (1) the $17,500 was part of the $341,628.77 debt which the defendant specifically admitted that it owed to Plaintiff in the agreement; (2) the agreement was not one to settle or compromise a disputed claim, but rather, an agreement to forbear on collection of a debt that was admittedly owed as long as timely installment payments were made; and (3) the express language of the agreement established that the $17,500 discount was neither liquidated damages for a breach of contract nor an additional payment over and above any debt that was owed. (2014) 229 Cal.App.4th 635, 648-49. The Jade Fashion court distinguished Greentree and Purcell on the grounds that the plain language of the stipulation in Jade Fashion made clear that the parties did not enter into an agreement to compromise the original debt for a lesser amount subject to a penalty for a late payment. Instead, the parties specifically agreed the defendant continued to owe the original balance of $341,628.77, and the $17,500 discount would not become available or apply until the final installment payment. Id at 649.
In the instant case, Plaintiff does not argue that the stipulated judgment amount of $125,000 is not a liquidated damages clause. Instead, Plaintiff contends that the $125,000.00 sought was a reasonable estimation of Plaintiff’s damages maintained throughout the pendency of the underlying litigation. To support this contention, Plaintiff refers to an application for writ of attachment where Plaintiff requested an attachment in the total amount of $131,050.00. Plaintiff fails to cite any legal authority holding that a liquidated damages clause in a stipulated judgment is reasonable if it correlates with the prayer for damages in the complaint. Instead, Greentree, Purcell, and Jade Fashion, cited above refer to the parties’ reasonable estimate of Plaintiff’s damages stemming from a breach of the parties’ settlement agreement.
Nor is the court aware of any authority that upholds the enforceability of a liquidated damages clause based on its correlation with amounts sought in the complaint or during the pendency of the litigation. In fact, the authority is clear that “[t]he 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.’” (Ridgley, supra, 17 Cal.4th at p.977 [describing an unenforceable penalty provision as one that “‘operates to compel performance of an act and usually becomes effective only in the event of default upon which a forfeiture is compelled without regard to the damages sustained by the party aggrieved by the breach. 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.’”] [italics added].)
In this case, the stipulated judgment amount of $125,000.00 -- $25,000 in excess of the $100,000 of payments to which the parties stipulated -- bears no reasonable relationship to the range of actual damages the parties could have reasonably anticipated from a breach of the stipulated schedule of payments totaling $100,000.00. Rather, ““[d]amages for the withholding of money are easily determinable—i.e., interest at prevailing rates ....” (Sybron, supra, 76 Cal.App.3d at p.900.)
Plaintiff also contends that the $100,000.00 amount was an incentive to make timely payments. The court disagrees.
In Red & White Distribution, the court directly addressed this issue as follows: “if the parties stipulate that the debt is a certain number, they may agree that it may be discharged for that number minus some amount. They may also agree that in the event the debtor does not timely make the agreed payments, a stipulated judgment may be entered for the full amount.” (Id. at p.589.) However, the court found that the parties failed to expressly so state, and therefore, the court found the clause to be an unenforceable penalty clause. (Ibid, [“Had the parties intended to settle for $2.8 million, but apply a discount for timely payments, they could have done so expressly. The parties could have, but did not, include terms in the agreement stating [the defendant] is liable to pay the [plaintiff] $2.8 million, but so long as all payments are timely made in accordance with the payment schedule, the amount due shall be discounted to $2.1 million.”].)
Similarly, here the agreement never expressly states that Defendants are liable to Plaintiff for $125,000.00. Instead, the Settlement Agreement refers to the $125,000.00 as a “Settlement Sum” and as the amount of the Stipulated Judgment to be entered unless Defendants are “released from said Stipulated Judgment” by virtue of timely making the payments due totaling $100,000. (Sichi Decl. Ex. B ¶ 1A, 1B, 1C.) Nor does the agreement ever state that if all payments are made timely, the amount due shall be discounted to $100,000.00. Rather, the Settlement Agreement provides that Defendants shall be “released” from the stipulated judgment upon making timely payments totaling $100,000. (Sichi Decl. Ex. B.)
Accordingly, the court finds the additional $25,000.00 to be an unenforceable penalty. Therefore, interest must also not be based on this amount.
The court finds that the parties entered into an enforceable settlement agreement and stipulation for judgment in the event of a default. The court retained jurisdiction to enforce the agreement under Code of Civil Procedure section 664.6. Based on Defendant’s failure to perform as required by the Stipulation, Plaintiff’s motion is granted as modified below pursuant to Code of Civil Procedure section 664.6.
Conclusion and order
Plaintiff Laurie Burnett’s Motion to Enter Judgment Pursuant to Stipulation for Entry of Judgment is GRANTED as modified.
The dismissal entered on August 1, 2019 is set aside. Judgment is entered in Plaintiff’s favor against Defendants Cristina Marie Dam, Liberate Hollywood, Inc., and Liberation, Inc. in the principal amount of $17,000.00 (stipulated judgment of $100,000.00 without the unenforceable penalty less credit for $83,000.00 paid), interest of $4,916.44, and court costs and attorney fees of $1,251.67, for a total judgment of $23,168.11.
Plaintiff is ordered to provide notice of this order and file proof of service of such.
DATED: July 22, 2020 ___________________________
Judge of the Superior Court
 Plaintiff is correct that the point in time on which the court should focus its inquiry is when the Settlement Agreement was entered into -- not any exceptional circumstances that occurred afterwards. (Civ. Code § 1671(b).)