Plaintiff entered into a settlement agreement under which defendant stipulated to a $300,000 judgment, but plaintiff agreed not to file the judgment if defendant made a one-time $75,000 payment by a specified date. When that date passed without payment, plaintiff filed the judgment. Relying heavily on Greentree Financial Group, Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495, this opinion holds that the trial court erred in denying defendant’s motion to vacate the stipulated judgment since it was an unenforceable penalty, setting a sum four times the amount for which plaintiff agreed to settle its claims without any showing that plaintiff would suffer damages of anywhere close to $225,000 as a result of the default in payment of $75,000. When assessing whether the stipulated judgment amount was a reasonable assessment of damages, the relevant inquiry is the damage flowing from failure to pay the agreed settlement sum, not damage from the wrong for which the plaintiff originally sued. Furthermore, the stipulation for entry of judgment did not recite that defendant admitted liability or that a third party had determined that the evidence shown him proved plaintiff was entitled to a $300,000 judgment on the underlying claim.
California Court of Appeal, Fourth District, Division Three (Aronson, J.); September 29, 2017 (modified October 30, 2017); 2017 WL 4876175.