Judge: Mark C. Kim, Case: 19LBCV00492, Date: 2023-01-05 Tentative Ruling
Case Number: 19LBCV00492 Hearing Date: January 5, 2023 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
Plaintiff filed this motion to
enforce the settlement agreement, contending Defendant failed to make the
second $200,000 payment and also failed to make the first $56,250 payment per
the parties’ agreement. Plaintiff seeks
entry of judgment in the amount of $1,550,000, plus interest, which is the full
amount of the parties’ settlement agreement (minus the $200,000 payment Matrix
previously made).
Defendant filed opposition to the motion. Defendant contends (a) the Court cannot enter
the judgment sought because the parties’ agreement permits only interest as a
penalty but does not contain an acceleration clause, and (b) the Court cannot
enter judgment against Jason McKeever because he is not a party to this action,
and §664.6 permits the Court to retain jurisdiction only over the parties to
the action.
Plaintiff, in reply, contends there
has been a breach of the parties’ contract and Plaintiff is entitled to judgment
in the full amount of the settlement agreement.
c. Analysis
The Court, in connection with
Plaintiff’s 10/27/22 motion to enforce judgment, ruled, in pertinent part, as
follows:
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 continues to find Plaintiff
can make a motion to enter judgment in the amount of any past due payment plus
interest. He has not, however, done so. He has, instead, made a motion to enter judgment
in the full amount of the parties’ settlement.
The Court has reviewed hundreds, if not thousands, of settlement
agreements, which are often, in this context, called stipulations for entry of judgment
upon default. A boilerplate term in
those agreements is that, upon default, all future payments become immediately
due and owing and the aggrieved party has the right to seek entry of judgment in
the full amount of the parties’ agreement.
Any such clause is glaringly absent from this settlement agreement. The Court, therefore, continues to find that
it cannot enter judgment in the full amount of the parties’ agreement, and can only
enter judgment in the amount of missed past-due payments and interest.
Because Plaintiff has not sought
the correct judgment, the motion is denied.
The Court notes that Plaintiff appears, in his moving papers, to be
seeking judgment against not just Matrix but also McKeever. Defendant correctly notes, in opposition to the
motion, that McKeever is not a party to this action. Plaintiff does not address this issue in the
reply papers. If Plaintiff seeks future
relief by way of §664.6, he must seek it against Matrix only and not against
McKeever.
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.