Judge: Wesley L. Hsu, Case: KC070042, Date: 2023-05-03 Tentative Ruling
Case Number: KC070042 Hearing Date: May 3, 2023 Dept: L
Plaintiffs/Cross-Defendants Bharat Patel’s and Dinesh
Patel’s Motion to Enforce Settlement Agreement Pursuant to California Code of
Civil Procedure Section 664.6 and to Enter Judgment Against Prakash Patel 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.
On April 14, 2022, an
“Order Granting Defendants’ Motion for Summary Judgment” was filed (i.e., as to
Prakash and Hardika’s complaint in Case No. 20STCV10801).
On October 10, 2022,
Interlocutory Judgment was filed.
On March 13, 2023, Bharat
and Dinesh filed a Second Amended Cross-Complaint (“SACC”) (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. Conspiracy to Commit Fraud
5. Declaratory Relief
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.
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).)
Discussion
Bharat and Dinesh move the court for an order to enforce compliance with
the settlement agreement reached by the parties on November 9, 2018; more
specifically, they seek to enter judgment against Prakash in the amount of
$1,890,987.60, including: (1) damages, less punitive damages, in the amount of
$1,600,000.00; (2) interest on funds deposited in escrow, in the amount of
$103,220.00 (i.e., calculated on the amount of $753,500.00 deposited in escrow
from the time period between December 13, 2019 and April 26, 2021 at 10% interest);
(3) $500 escrow cancellation fee; (4) attorneys’ fees in the amount of
$180,040.00 and (5) litigation costs in the amount of $7,227.60.
Request for Judicial Notice
The court rules on Bharat’s and Dinesh’s Request for Judicial Notice
(“RJN”) as follows: Granted as to Exhibit A (i.e., Prakash’s and Hardika’s
complaint filed March 16, 2020 in Case No. 20STCV10801); Granted as to Exhibit
B (i.e., First Amended Cross-Complaint filed August 26, 2020 [i.e., as to Case
No. 20STCV10801]); Denied as to Exhibit C (i.e., March 2, 2021 tentative ruling
on Bharat’s and Dinesh’s Motion for Enforcement of Settlement Agreement);
Granted as to Exhibit D (i.e., “Order on Motion to Enforce Settlement” filed
April 1, 2021) and Granted as to Exhibit E (“Interlocutory Judgment” filed
October 10, 2022).
Merits
The motion is denied.
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.) The instant motion
appears to seek reconsideration of the court’s April 1, 2021 order without
complying with Code of Civil Procedure § 1008 requirements.