Judge: Peter A. Hernandez, Case: KC070042, Date: 2022-09-19 Tentative Ruling
Case Number: KC070042 Hearing Date: September 19, 2022 Dept: O
Defendants Prakash Patel’s and Hardika Patel’s Motion to
Enforce Settlement Agreement is DENIED.
Background
Plaintiffs Bharat Patel (“Bharat”) and Dinesh Patel (“Dinesh”) allege as follows:
Bharat
and Dinesh are brothers and are the uncles of Prakash Patel (“Prakash”).
Beginning in April 2007, Bharat and Dinesh agreed to make a series of loans to
Prakash. The total amount of these loans, which were secured by a deed of trust
on Prakash’s personal residence, was $1,095,000.00, with an additional
$983,978.25 in interest owed as of July 2016. On July 6, 2015, a “Judgment
Based on Sister-State Judgment” and a “Corrected Judgment Based on Sister-State
Judgment” were entered in favor of First National Bank (“FNB”) and against
Prakash in case styled First National Bank v. Sachin, LLC, Case No.
BS155273 (the “Sachin Matter”). FSB then filed case styled First
National Bank v. Patel, Case No. BC616377 (the “Patel Matter”)
against Prakash, Bharat and Dinesh because FNB was contesting the validity of
Bharat’s and Dinesh’s deed of trust. In or around July 2016, the parties to the
Sachin and Patel Matters entered into a settlement agreement. As
part of that settlement agreement, Prakash acknowledged that he was indebted to
Bharat and Dinesh in the amount of $2,078,978.23. Prakash was required, within
180 days of the execution of the settlement agreement, to reimburse Bharat and
Dinesh $10,000.00 in attorneys’ fees incurred in connection with the Sachin
and Patel Matters. Prakash was also obligated to enter into a written
agreement with Bharat and Dinesh regarding a repayment plan; if he failed to do
so, then Bharat and Dinesh would be entitled to have judgment entered against
him in the amount of $2,078.978.23. Bharat and Dinesh have been unable to get Prakash
to establish a repayment plan. Prakash has also failed to reimburse Bharat and
Dinesh for the attorneys’ fees as per the settlement agreement.
On February 14, 2018, Bharat and Dinesh filed a complaint, asserting causes of action against Prakash and Does 1-10 for:
1.
Breach
of Settlement Agreement
2.
Fraud
On May 2, 2019, Bharat and Dinesh filed a “Notice of Settlement.” On December 10, 2019, Bharat and Dinesh dismissed their lawsuit, with prejudice.
On June 19, 2020, a “Stipulation of Counsel to Vacate Dismissal and Reopen Case and to Consolidate Defendant’s Complaint; Order Thereon” was filed, wherein the dismissal in Case No. KC070042 was vacated, Case Nos. KC070042 and 20STCV10801 were consolidated and Case No. KC070042 was designated the lead case.
On April 1, 2021, an “Order on Motion to Enforce Settlement” was filed.
The Final Status Conference is set for May 9, 2023. Trial is set for May 23, 2023.
Case No. 20STCV10801
Plaintiffs Prakash and Hardika allege as follows: On July 6, 2015, a “Judgment Based on Sister-State Judgment” and a “Corrected Judgment Based on Sister-State Judgment” were entered in favor of FNB and against Prakash and Hardika in the Sachin Matter. FNB pursued collection efforts to enforce the judgment by applying for an order for the sale of Prakash’s and Hardika’s personal residence located at 2838 Bentley Way, Diamond Bar, CA 91765 (the “Bentley Residence”) and their real property located at 1271 S. Lemon Ave., Walnut, CA 91789 (the “Lemon Property”). Parkash and Hardika challenged the validity of the judgment in the Sachin Matter. FNB then filed the Patel Matter. The Sachin and Patel Matters were settled on or about June 30, 2016 by and between FNB, on the one hand, and Prakash, Hardika, Bharat and Dinesh, on the other hand (“First Settlement Agreement”). The First Settlement Agreement stated that Prakash and Hardika received $1,095,000.00 in loans from Bharat and Dinesh and that the total interest owed was $983,970.25, for a total amount owed of $2,078,970.25. The First Settlement Agreement further stated that in the event the Bentley Residence was sold, $1,095,000.00 or more out of the proceeds would first be paid to Bharat and Dinesh. The amount was false and inflated to defraud FNB, which Prakash, Hardika, Bharat and Dinesh all knew; the true amount of principal and interest owed was approximately $1.3 million. Bharat and Dinesh agreed with Prakash and Hardika to put in the false amount so that with FNB paying Bharat and Dinesh first, FNB would receive less money in the event the Bentley Property was sold. They agreed that after the settlement with FNB was completed, Bharat and Dinesh would abide by the correct amount of $1.3 million to be paid to them by Prakash and Hardika. After FNB settled and was paid on its judgment, Bharat and Dinesh attempted to enforce the agreement for the false inflated amount. When Prakash and Hardika refused to pay, Bharat and Dinesh filed Case No. KC070042 but sued Prakash only, even though Hardika owns half of the Bentley Residence and the Lemon Property. Case No. KC070042 was thereafter allegedly settled per a “Stipulation for Settlement and Mutual Release of Claims” signed on or about November 9, 2018 (“Second Settlement Agreement”), which was not “binding and enforceable” but was to be thereafter memorialized in a “Settlement Agreement and Mutual Release” allegedly executed on or about November 26, 2018 (“Third Settlement Agreement”). In the Third Settlement Agreement, it was stated that Bharat and Dinesh would buy the Bentley Residence from Prakash for $1.9 million. An escrow was opened but Prakash and Hardika have refused to complete the transaction based on Bharat’s and Dinesh’s fraud. The First, Second, and Third Settlement Agreements are based on fraud and thus illegal and void.
1.
Voiding
and Rescission of First Settlement Agreement
2.
Voiding
and Recission of Second Settlement Agreement
3.
Voiding
and Rescission of Third Settlement Agreement
4.
Fraud
[Misrepresentation]
5.
Fraud
[False Promise]
6.
Fraud
[Concealment]
7.
Negligent
Misrepresentation
8.
Voiding
and Rescission of First Settlement Agreement [Fraud]
9.
Voiding
and Rescission of Second Settlement Agreement [Fraud]
10.
Voiding
and Rescission of Third Settlement Agreement [Fraud]
On June 23, 2020, Case Nos. KC070042 and 20STCV10801 were consolidated; Case No. KC070042 was designated the lead case.
On August 26, 2020, Bharat and Dinesh filed a First Amended Cross-Complaint (“FACC”) i.e., as to Case No. 20STCV10801), asserting causes of action against Prakash, Hardika Patel (“Hardika”) and Roes 1-20 for:
1.
Breach
of Settlement Agreement (Contract)
2.
Fraud
(Misrepresentation)
3.
Fraud
(Concealment)
4.
Unjust
Enrichment
5.
Conspiracy
to Commit Fraud
6.
Declaratory
Relief
On April 14, 2022, an “Order Granting Defendants’ Motion for Summary Judgment” was filed as to Prakash and Hardika’s complaint in Case No. 20STCV10801.
Legal Standard
“If parties to pending litigation stipulate, in a writing signed by the parties outside of 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, subd. (a).)
“For purposes of this section, a writing is
signed by a party if it is signed by any of the following:
(1) The party. (2) An attorney who represents
the party. (3) If the party is an insurer, an agent
who is authorized in writing by the insurer
to sign on the insurer’s behalf.” (Code Civ. Proc., §
664.6, subd. (b).) “In addition to any
available civil remedies, an attorney who signs a writing on
behalf of a party pursuant to subdivision (b) without the
party's express authorization shall,
absent good cause, be subject to professional discipline.”
(Code Civ. Proc., § 664.6, subd. (d).)
Discussion
Prakash and Hardika move the court for an order to enforce the settlement agreement.
The motion was originally scheduled for hearing on June 2, 2022; on that date, the court continued the hearing and instructed the parties to file supplemental briefing focused on the issue of whether the April 1, 2021 “Order on Motion to Enforce Settlement” affected the viability of the FACC and, in turn, how this impacted the instant motion. On August 5, 2022, supplemental briefs were filed and exchanged.
The motion is denied. On November 6, 2020, Bharat and Dinesh filed a Motion to Compel Compliance with Settlement Agreement with respect to the November 9, 2018 agreement (known as the “Second Settlement Agreement”) and November 26, 2018 agreement (known as the Third Settlement Agreement). One of the arguments raised by Prakash and Hardika in opposition was that the aforesaid agreements were not signed by Hardika and that Hardika owned the Bentley Way residence as a joint tenant with Prakash. (Motion, Exh. B.) On April 1, 2021, an “Order on Motion to Enforce Settlement” was filed, wherein Prakash was ordered to convey his ½ interest in the Bentley Way Property to Bharat and Dinesh and Hardika to be responsible for half the fixed costs of the Bentley Way Property. (Id., Exh. C.)
Prakash and Hardika now seek a dismissal of Case No. KC070042 with prejudice. The court declines to do so. On August 26, 2020, Bharat and Dinesh filed a FACC against Prakash and Hardika, alleging therein that Prakash breached the terms of, and committed fraud with respect to, the Second Settlement Agreement and that Prakash and Hardika conspired to commit fraud with respect to same. Bharat and Dinesh agree that the subject settlement agreement must be enforced, but object to Prakash’s and Hardika’s characterization that all material terms of the agreement have been complied with.
Per the April 1, 2021 “Order on Motion to Enforce Settlement,” Prakash was ordered to convey his ½ interest in the Bentley Way Property to Bharat and Dinesh. The Second and Third Settlement Agreements, however, state that “Plaintiffs will agree to purchase, and Defendant will agree to sell with clear title except for the Wells Fargo and Amalgamated Bank loans” the Bentley Way Property for $1.9 million. Nowhere does it state or mention that Bharat and Dinesh were to purchase only Prakash’s ½ interest in the Bentley Way Property. Prakash’s and Hardika’s request for a dismissal, then, is premature at this juncture.