Aspire General Insurance Company vs. Rico, Joey Garcia

Case No.: VCL204982 Date: September 10, 2026 Time: 8:30 A.M. Dept. 1-The Honorable David C. Mathias Motion: Motion to Enforce Settlement Tentative Ruling: To grant the motion and enter judgment in the amount of $2,464.

Facts In this subrogation matter, the complaint alleges Plaintiff has paid its insured the sum of $24,382.01 and seeks to recover this sum from Defendant.

The parties filed a settlement agreement on January 3, 2024 indicating judgment may be entered forthwith in favor of Plaintiff and against said Defendant for damages in the principal sum of $24,382.07 plus interest from December 16, 2022 (date of the filing of this complaint) and court costs, pursuant to the following: (a) The sum of $10,000.00 shall be paid by General Insurance Company on or before November 30, 2023; (b) The sum of $400.00 shall be paid 30 days of receipt of the settlement agreement; (c) The sum of $150.00 shall be paid on or before the 30th of each month from December 30, 2023 to November 30, 2025.

The Agreement notes these payments total $14,000.

Further, that "The amount being paid under this agreement is a negotiated amount, and does not reflect the amount actually owed by DEFENDANT, but is merely a negotiated settlement entered into for financial reasons only. DEFENDANT acknowledges that the amount set forth in paragraph 1, including interest and costs is the actual amount due and owing."

On January 25, 2024, the Court dismissed the matter pursuant to the settlement agreement and expressly retained jurisdiction pursuant to Code of Civil Procedure section 664.6.

Plaintiff indicates Defendant has made payments totaling $2,050.00 and that Defendant's "unpaid installment balance" is $1,950.

Plaintiff seeks entry of judgment in the amount of $21,523.41 consisting of the amount of $24,382.07, plus interest thereon at the rate of 10% per annum from December 16, 2022 through July 7, 2026, in the amount of $8,677.34 (and continuing to accrue thereafter at the rate of $6.68 per day until paid), less a credit of $12,050.00 for all payments received prior to default, together with court costs of $514.00.

Section 664.6 (a) states: "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."

"The court's retention of jurisdiction under section 664.6 includes jurisdiction over both the parties and the case itself, that is, both personal and subject matter jurisdiction." (Lofton v. Wells Fargo Home Mortgage (2014) 230 Cal.App.4 th 1050, 1061.)

"Section 664.6 permits the trial court judge to enter judgment on a settlement agreement without the need for a new lawsuit." (Osumi v. Sutton (2007) 151 Cal.App.4 th 1355, 1360.)

As indicated above, the Court has retained jurisdiction over the parties and this matter and therefore is prepared to "enter judgment pursuant to the terms of the settlement."

Greentree The initial issue for the Court is whether the judgment amount sought of $24,382.07 is an unenforceable penalty in light of the settlement with this Defendant for what is effectively $4,000 and where Defendant has paid $2,050 of that amount.

The Court noted above a term of the stipulation purporting to "voluntarily disclaim and waive any rights or benefits under the holding in Greentree Financial Group, Inc., v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495, and any other similar law, which states in essence that an acceleration clause seeking a judgment amount that exceeds the damages arising strictly from a breach of the minimum payment stream called for herein may be deemed an unenforceable penalty."

However, Civil Code section 1671 renders contractual penalties or forfeitures illegal and unenforceable as against public policy if they bear no reasonable relationship to the actual damages caused by the breach that triggered them. (Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 976-977); Purcell v. Schweitzer (2014) 224 Cal.App.4th 969, 974-975.)

In the Court's view, the public policy expressed in that code section may not be waived or circumvented by language in the settlement agreement, as even an express waiver of the right to appeal or the right to contest a stipulated judgment on any ground will not prevent a party from challenging a penalty or forfeiture included in the stipulated judgment. (Purcell, supra, 224 Cal.App.4th at 972, 975; see Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 902, fn. 3.)

The law cannot prevent a party from challenging an illegal term in a contract simply because the party agreed to the illegal term.

In Greentree, the plaintiff sued defendant for breach of contract for failure to pay $45,000 due under the contract. (Id. at 498.)

The parties resolved this dispute via stipulation for entry of judgment providing that defendant would pay $20,000 in two installments of $15,000 and $5,000. (Id.)

Further, if the defendant defaulted on either installment, the plaintiff would be entitled to have judgment entered for the amount prayed for in the complaint, plus interest, attorney fees and costs, less any amounts already paid. (Id. at 498.)

The defendant defaulted on the first payment, and the plaintiff sought entry of judgment pursuant to the stipulation. (Id.)

The trial court entered judgment in the amount of $61,232.50, consisting of the $45,000 prayed for in the complaint, plus $13,912.50 in prejudgment interest, $2,000 in attorney fees, and $320 in costs. (Id.)

The defendant argued at the appellate level that the judgment of $61,232.50 for failure to make a $15,000 payment constitutes enforcement of an illegal penalty. (Id. at 498-499.)

The appellate court, agreeing with the defendant, interpreted the stipulation as an unenforceable liquidated damages clause that effectively imposed $61,232.50 in liquidated damages for breach of the defendant's obligation to pay $15,000 as follows: "Greentree and ESI did not attempt to anticipate the damages that might flow from a breach of the stipulation. Rather, they simply selected the amount Greentree had claimed as damages in the underlying lawsuit, plus prejudgment interest, attorney fees, and costs.

But the appellate record contains nothing showing Greentree's chances of complete success on the merits of its case--the record contains only the complaint, the answer, and the stipulation. In the stipulation, '[e]ach party disclaims any admission of wrongdoing, fault, liability, or violation of law.' The lack of a guarantee of success at trial may explain, at least in part, why Greentree was willing to accept in settlement less than half the amount demanded in the complaint. Also, the $ 61,232.50 amount in the judgment bears no reasonable relationship to the range of actual damages the parties could have anticipated from a breach of the stipulation to settle the dispute for $20,000. '[D]amages for the withholding of money are easily determinable--i.e., interest at prevailing rates...' [citation omitted.]

The amount of the judgment, however, was more than triple the amount for which the parties agreed to settle the case." (Id. at 499-500.)

The court in Greentree noted that the validity of a liquidated damages provision is governed by section 1671, subdivision (b) and that "'A liquidated damages clause will generally be considered unreasonable, and hence unenforceable under section 1671[, subdivision] (b), if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.'" (Id. at 499.)

Damages for failing to pay money are "'easily determinable'" and are limited to "'interest at [the] prevailing rate[]'" and (perhaps) "reasonable costs [incurred] in pursuing the payment." (Id. at 500.)

Last, the court in Greentree concluded that: "The stipulation does not contain any provision for an award of attorney fees or prejudgment interest, although the judgment included $ 2,000 in attorney fees and $ 13,912.50 in prejudgment interest. The $20,000 settlement sum in the stipulation is unallocated, and may or may not have included Greentree's claimed attorney fees and prejudgment interest. We find no basis for awarding Greentree its attorney fees and prejudgment interest in addition to the stipulated settlement sum. Greentree is entitled to recover its costs in the trial court (Code Civ. Proc., Sec. 1032), and postjudgment interest." (Id. at 502.)

Vitatech International, Inc. v Sporn (2017) 16 Cal.App.5th 796 is also instructional here.

In that case, the parties settled before trial for payment of $75,000 although plaintiff was seeking $166,000 in its complaint.

Like this case, there was an agreement to "forbear" collection if Defendant paid the lesser sum.

Defendant defaulted, and Plaintiff sought and obtained a judgment of over $300,000, including compensatory damages, prejudgment interest, attorney's fees and costs.

In that case, plaintiff also argued that it sought damages that were no more than it could have recovered at trial and that all parties expressly accepted the amount that would be paid on default.

The appellate court focused on the damages that could have flowed from the breach of the stipulation, not the amount claimed in the complaint: "We reversed because "[the parties] did not attempt to anticipate the damages that might flow from a breach of the stipulation. Rather, they simply selected the amount [the plaintiff] had claimed as damages in the underlying lawsuit, plus prejudgment interest, attorney fees, and costs. But the appellate record contains nothing showing [the plaintiff's] chances of complete success on the merits of its case .... [P.] Also, the ....... amount in the judgment bears no reasonable relationship to the range of actual damages the parties could have anticipated from a breach of the stipulation to settle the dispute..." (Id. at 809)

Here, the Court does not find the principal amount of $24,382.07. claimed by Plaintiff were damages that might flow from breach of the stipulation, but rather the amount Plaintiff claimed in the underlying lawsuit, plus interest and costs.

Plaintiff urges the court to order the full amount claimed to be due as it is not in dispute, and was agreed to in the stipulations of the parties.

The Court, however, sees the essential question from the cases noted above as to what the relationship is between the stipulated amount and the damages that flow from the breach.

The total amount sought is five times the amount Defendant owed under the settlement agreement.

The Court, therefore, sets the principal amount at $4,000.

As to the prejudgment interest, as in Greentree, the $4,000 settlement sum as to Defendant is unallocated and does not appear to contain prejudgment interest.

As to the costs, the Court will award the $514 requested.

Therefore, the Court grants the motion and will enter judgment in the amount of $2,464, consisting of the $4,000 in principal, less the $2,050 in credits, plus $514 in costs.

If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary.

The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order.

Court reporters are usually not available for law and motion matters in the civil division.

The parties and counsel must provide their own reporter if they want a transcript of the proceedings.

Re: Asman, Bruce E. et al vs. Ponce, Cipriano et al