Judge Bruce G. Iwasaki, Case Number: 21SCV45800, Date: 2024-10-01 Tentative Ruling

Tentative Ruling: Defendant Ameriko, Inc.’s Motion to Enforce Settlement Agreement and Enter Judgment is denied.

On February 1, 2022, Plaintiff 3791 C-Store, Inc. f/k/a Sach Stores, Inc. (“Plaintiff”) filed the operative First Amended Complaint (“FAC”) against Defendant Ameriko, Inc. (“Defendant”) and DOES 1 through 10, alleging a sole cause for action for Breach of Contract.

On April 29, 2022, Defendant filed a Cross-Complaint against 3791 C-Store, Inc. f/k/a Sach Stores, Inc. (“Plaintiff”), Manmeet S. Sachdeva (“Sachdeva”) (collectively, “Cross-Defendants”), and ROES 1-10, inclusive for: (1) Breach of Lease and (2) Breach of Unconditional Guaranty of Lease.

On May 14, 2024, this Court dismissed the FAC and Cross-Complaint without prejudice, and retained jurisdiction to make orders to enforce any and all terms of settlement, including judgment pursuant to Code of Civil Procedure Section 664.6. (Min. Order, 5/14/24.)

On June 17, 2024, Defendant filed an Ex Parte Application to Enforce Settlement Agreement and Enter Judgement. The Court entered judgment in favor of Defendant against Plaintiff only for the principal sum of $475,000.00, costs and expenses of suit, and attorneys’ fees. (Judgment, 6/18/24.)

On August 16, 2024, Defendant filed the instant Motion to Enforce Settlement Agreement and Enter Judgment against Sachdeva. On September 18, 2024, Sachdeva filed an Opposition. No reply has been filed.

Pursuant the Code of Civil Procedure Section 664.6: “If 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. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.”¿¿(Code Civ. Proc., § 664.6 (emphasis added).)

“Because of its summary nature, strict compliance with the requirements of section 664.6 is prerequisite to invoking the power of the court to impose a settlement agreement.” (Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002) 103 Cal.App.4th 30, 37;Critzer v. Enos (2010) 187 Cal.App.4th 1242, 1262.) In ruling on a motion under Section 664.6, the trial judge may receive oral testimony, or may determine the motion upon declarations alone. (Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 994.) Where the agreement was reached at a court hearing, the court can resolve the dispute on the basis of its own notes or recollection of what was agreed to (as well as any transcripts of the proceedings). (Richardson v. Richardson (1986) 180 Cal.App.3d 91, 97.)¿¿

Generally, courts lose subject matter jurisdiction when an action is voluntarily dismissed. (Hagan Engineering, Inc. v. Mills (2003) 115 Cal.App.4th 1004, 1009.) Code of Civil Procedure Section 664.6 provides the authority for the Court the retention of personal jurisdiction to enforce the settlement “if requested by the parties.” The stipulation as to jurisdiction must conform to the same requirements necessary for enforcement of the settlement agreement. (Wackeen v. Malis (2002) 97 Cal.App.4th 429, 440.) It is not enough simply to provide for a retention of jurisdiction in the settlement agreement. (Mesa RHF Partners, L.P. v. City of Los Angeles (2019) 33 Cal.App.5th 913, 918.) Instead, the request to retain jurisdiction must be filed with the court: “the parties could have easily invoked section 664.6 by filing a stipulation and proposed order either attaching a copy of the settlement agreement and requesting that the trial court retain jurisdiction under section 664.6 or a stipulation and proposed order signed by the parties noting the settlement and requesting that the trial court retain jurisdiction under section 664.6. The process need not be complex. But strict compliance demands that the process be followed.” (Ibid.; see Sayta v. Chu (2017) 17 Cal.App.5th 960, 966-968 [no subject matter jurisdiction to enforce settlement per CCP § 664.6 because parties failed to ask court to retain jurisdiction before case dismissed].)¿¿

Defendant Ameriko, Inc. moves for an order enforcing settlement agreement and entering judgment on its Cross-Complaint against Cross-Defendant Sachdeva in the principal amount of $475,000, plus interest in the sum of $10,150.14 (10% per annum from and after 7/15/24 to 10/1/24) for a total of $485,150.14, costs, and attorneys’ fees.

Ameriko contends the parties reached the following settlement agreement on May 14, 2024: (1) on or before May 29, 2024, Cross-Defendants shall deliver the Letter of Credit in the amount of $475,000.00, which shall name Defendant Ameriko as beneficiary; and (2) Cross-Defendants shall pay Ameriko the sum of $475,000.00 on or before July 15, 2024. (Navarette Decl., ¶6, Ex. 3 – Reporter’s Transcript of Proceedings.) Furthermore, Ameriko contends the parties expressly agreed on the Court’s record during the Mandatory Settlement Conference (“MSC”) that the settlement agreement would be enforced pursuant to Code of Civil Procedure Section 664.6. (Min. Order, 5/14/24.) Ameriko also asserts Cross-Defendants breached the settlement agreement by failing and refusing to deliver the Letter of Credit to Ameriko on May 29, 2024 for which judgment was entered against Plaintiff/Cross-Defendant 3791 C-Store, Inc. on June 18, 2024. Ameriko now contends Cross-Defendants further breached the settlement agreement by failing and refusing to pay Ameriko the sum of $475,000.00 by July 15, 2024.

In opposition, Sachdeva argues the settlement obligations and resulting default at issue are the burden of Plaintiff/Cross-Defendant 3791 C-Store, Inc. alone to carry. More specifically, Sachdeva asserts the settlement agreement reached at the MSC was between Ameriko and Plaintiff/Cross-Defendant 3791 C-Store, Inc., not Sachdeva individually.

According to the Transcript of the MSC, the settlement agreement was recited on the Court’s record as follows:

THE PLAINTIFF, 3791 C-STORE, INC., SHALL PAY AMERIKO, INC., THE SUM OF $475,000 ON OR BEFORE JULY 15, 2024 VIA A WIRE TRANSFER;

THIS SETTLEMENT AMOUNT OF $475,000 COVERS THE OBLIGATIONS UNDER THE PARTIES’ LEASE AGREEMENT UP THROUGH AND INCLUDING APRIL 30TH OF 2024.

3791 C-STORE, INC. SHALL CONTINUE TO PAY RENT PURSUANT TO THE TERMS OF THE LEASE FROM MAY 2024 FORWARD.

3791 C-STORE, INC. SHALL PRESENT A STANDBY LETTER OF CREDIT FROM A REPUTABLE BANK APPROVED BY AMERIKO NO LATER THAN TEN BUSINESS TODAY FROM TODAY, WHICH IS MAY 29TH, 2024, TO SECURE PERFORMANCE OF 3791 C-STORE'S OBLIGATIONS TO PAY THE SETTLEMENT AMOUNT OF $475,000.

IF 3791 C-STORE DEFAULTS ON ITS OBLIGATIONS UNDER THIS SETTLEMENT, AMERIKO MAY DRAW DOWN ON THE LETTER OF CREDIT BASED UPON WRITTEN NOTICE TO THE ISSUING BANK THAT THE LETTER OF CREDIT -- THAT A DEFAULT UNDER THE LETTER OF CREDIT HAS OCCURRED.

AMERIKO, INC. SHALL BE THE BENEFICIARY UNDER THAT -- UNDER THAT STANDBY LETTER OF CREDIT.”

(Navarette Decl., ¶6, Ex. 3 – Reporter’s Transcript of Proceedings at 4:18-5:11.)

Although the moving papers frame the language of the settlement agreement as “3791 C-Store and Sachdeva” agreed to pay Ameriko $475,000.00 on or before July 15, 2024, from the plain reading of the settlement agreement, Sachdeva is not a party to the settlement in his individual capacity such that enforcing it and entering judgment against him would be permitted. “The trial court may not ‘create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.’” (Bowers v. Raymond J. Lucia Companies, Inc. (2012) 206 Cal.App.4th 724, 732.) The settlement agreement is expressly between Plaintiff/Cross-Defendant 3791 C-Store, Inc. and Ameriko. As noted above, the Court already entered judgment against Plaintiff/Cross-Defendant 3791 C-Store, Inc. in the amount of $475,000.00 pursuant to the settlement agreement.

Ameriko also contends the judgment of $475,000.00 entered against Plaintiff/Cross-Defendant 3791 C-Store, Inc. can be enforced against Sachdeva due to the Guaranty of the Lease. However, this is a noticed motion under Code of Civil Procedure Section 664.6, thus the Court merely retained jurisdiction to enforce the settlement agreement between Plaintiff/Cross-Defendant 3791 C-Store, Inc. and Ameriko. Moreover, Sachdeva did not enter into the Settlement Agreement as a guarantor.

Ameriko cites to no legal authority to support that a judgment can be enforced on a guarantor under Code of Civil Procedure Section 664.6 where the alleged guarantor was not a party to the settlement agreement. Therefore, to collect from Sachdeva, it cannot be based on the current Judgment. Ameriko may request that the Court reinstate its cross-complaint against Sachdeva, and if thatis granted, proceed on the Guaranty.

Finally, Sachdeva asserts the instant motion is improper in form and untimely because it is essentially a motion for reconsideration on Ameriko’s Ex Parte Application to Enforce Settlement Agreement and Enter Judgment filed on June 17, 2024. Sachdeva argues the crux of the prior ex parte was to to enforce the Settlement Agreement against Sachdeva because Plaintiff/Cross-Defendant 3791 C-Store, Inc. defaulted by failing to deliver the Letter of Credit to Ameriko on May 29, 2024. (Opp’n at 5:18-23.) On June 18, 2024, the Court enforced the Settlement Agreement and entered judgment against 3791 C-Store, Inc. only in the amount of $475,000.00 and struck Sachdeva’s name from the proposed judgment order. (Id. at 5:24-6:1-3.) To the extent this is a motion for reconsideration, the Court finds that it is untimely because it was filed past the 10-day statutory deadline under Code of Civil Procedure Section 1008, subdivision (a). Assuming arguendo that it was timely filed, such motion would still fail because it does not present any new or different facts from those argued in the previous ex parte application.

Based on the foregoing, Defendant Ameriko, Inc.’s Motion to Enforce Settlement Agreement and Enter Judgment is denied, without prejudice to any renewed proceeding on Ameriko’s cross-complaint on Sachdeva’s guaranty.

Department 58