Judge: Mark C. Kim, Case: 19LBCV00492, Date: 2022-10-27 Tentative Ruling
Case Number: 19LBCV00492 Hearing Date: October 27, 2022 Dept: S27
Plaintiff, Duane Pate filed this
action against Defendant, Matrix Environmental, Inc. for damages arising out of
a failed business relationship. Defendant
has a cross-complaint against Plaintiff and his business entities.
a.
Settlement
On 7/31/22, the parties agreed to a
settlement of the entire action. Pursuant
to the settlement, Defendant would pay Plaintiff the total amount of $1,750,000
on dates certain.
¶2 of the parties’ agreement sets
forth the payment schedule. It requires
a $200,000 payment by 8/15/22, another $200,000 payment within sixty days
thereafter, and $56,250 payments ever month thereafter.
The parties’ agreement, at ¶5,
contains language stating, “In the event that Pate has not timely received a
payment…notice of non-payment must be sent to Matrix’s counsel, John Stephens,
via e-mail…No payment shall be in default until five (5) days after notice is
sent and if Matrix tenders payment within this five-day period, it shall not
incur any interest or penalties. In the
event any payment is not made in accordance with the schedule set forth above
and within the five-day period after notice, interest on the unpaid portions of
the Settlement Amount shall accrue at the legal rate from the due date of that
payment.”
Additionally, at ¶6, the parties’
agreement makes clear that the agreement is enforceable pursuant to CCP §664.6,
with the Court retaining jurisdiction to enforce the settlement agreement.
b.
Parties’ Positions
On 9/29/22, Plaintiff filed this
motion to enforce the settlement agreement, the initial payment was not paid in
full, despite a conversation re: nonpayment.
On 10/14/22, Defendant filed
opposition to the motion. Defendant provides
evidence that it ultimately paid the initial payment due, and paid all accrued
interest. Defendant contends (a) the payments
have been made, and (b) the Court cannot, in any event, enter the judgment sought
because the parties’ agreement permits only interest as a penalty but does not contain
an acceleration clause.
On 10/20/22, Plaintiff filed a
reply. Plaintiff contends Defendant has
failed to make the second $200,000 payment, such that this motion remains ripe
and judgment must be entered.
c. Analysis
The threshold issue before the Court
is whether it could ever enter judgment under the terms of the parties’
settlement agreement. Defendant argues
the Court cannot do so because the terms of the agreement require Defendant to
pay interest in the event a payment is late, but there is no acceleration clause. If that were the case, ¶6 of the agreement
would be entirely superfluous, as there would never be a circumstance under
which the Court could enter judgment per §664.6. Defendant could simply fail to pay forever,
and Plaintiff would have no recourse.
A more reasonable reading of the
parties’ agreement is that Defendant is in breach if it fails to timely make a
payment, Plaintiff then must give notice of the breach, at which time Defendant
has five days to cure the breach without penalty. If Defendant fails to do so, Plaintiff has
the right to make a motion for entry of judgment, which would include judgment for
any missed payments plus the parties’ agreed-upon interest.
The Court does, however, agree that
the agreement is ambiguous in this regard, and is not inclined to enter judgment
based on the missed first payment, as it has been paid in its entirety at this
time. The Court is also not inclined to
enter judgment based on the second missed payment, as Plaintiff has not
provided evidence that it gave the required notice per ¶5 of the agreement,
waited five days, and then sought relief.
The motion is denied. The Court finds it has jurisdiction to enforce
the settlement per the agreement’s terms, but finds Plaintiff has not complied with
the required notice provisions prior to seeking relief for failure to make the
second required payment.
Plaintiff is ordered to give
notice.
Parties who intend to submit
on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative as
directed by the instructions provided on the court website at www.lacourt.org. If the department
does not receive an email indicating the parties are submitting on the
tentative and there are no appearances at the hearing, the motion may be placed
off calendar. If a party submits on
the tentative, the party’s email must include the case number and must identify
the party submitting on the tentative. If any party does not submit on the
tentative, the party should make arrangements to appear remotely at the hearing
on this matter.