Opinion
B291092
06-11-2020
LEONID TEPLITSKY, Plaintiff and Respondent, v. RX INGREDIENTS, INC., et al., Defendants and Appellants.
Law Offices of Robert S. Gerstein, Robert S. Gerstein; Law Offices of Stanton Lee Phillips, Stanton Lee Phillips: Sigelman Law and Paul Sigelman for Defendants and Appellants. Raiskin & Revitz and Steven J. Revitz for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. LC076314) APPEAL from orders of the Superior Court of Los Angeles County, John J. Kralik, Judge. Affirmed. Law Offices of Robert S. Gerstein, Robert S. Gerstein; Law Offices of Stanton Lee Phillips, Stanton Lee Phillips: Sigelman Law and Paul Sigelman for Defendants and Appellants. Raiskin & Revitz and Steven J. Revitz for Plaintiff and Respondent.
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INTRODUCTION
This appeal arises from a garden-variety settlement agreement, stipulation for judgment, and judgment on breach of contract claims against a brother and sister by their former friend.
On appeal, appellants brother and sister, Stanley and Deanna Azrilyan (Azrilyans), and her company RX Ingredients, Inc., raise challenges not raised below. First, appellants now allege Stanley was never served in 2008 with a copy of the motion to enforce the settlement agreement and enter judgment. Second, they argue the trial court acted beyond its jurisdiction in entering judgment against him. Appellants also contend the settlement agreement includes an unenforceable penalty of $50,000 in the event of a breach, rendering the judgment void as to all parties.
We disagree in all respects and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Relevant Background Information
Respondent Leonid Teplitsky (Teplitsky) has personally known appellant Deanna Azrilyan (Deanna) for over a decade, as she married his childhood best friend, Jimmy Altshul. Teplitsky's friendship with Deanna's husband was the "primary reason" Teplitsky was "willing to invest" in RX Ingredients, Inc. (RXI), a "closed-door" pharmacy owned by Deanna, the majority shareholders.
Stanley Azrilyan (Stanley) is Deanna's brother.
In 2006, RXI was purchasing the assets of Medisco Health Care Pharmacy (Medisco), which Teplitsky managed. Teplitsky was invited by Deanna, her husband Jimmy Altshul, and Stanley to become a partner of RXI upon its purchase of Medisco's assets. Teplitsky maintains Stanley and Deanna told him Stanley was a "silent partner" in RXI and "primarily responsible for operating RXI's business."
Issues arose, however, while escrow was pending on Teplitsky's purchase of a 50 percent interest in RXI.
Teplitsky discovered Deanna and Stanley had "repeatedly lied" to him about RXI. Teplitsky discovered he was not an officer of RXI, despite being told otherwise by the Azrilyans. He also discovered they "substantially overstated" the financial status of RXI, as well as misrepresented the number and volume of accounts RXI had obtained from Medisco.
Teplitsky's breaking point was when he discovered Deanna had forged his signature on a $68,000 check; Deanna maintained otherwise. He notified the Azrilyans that he was no longer willing to purchase an interest in RXI and asked to be reimbursed the $600,000 he had advanced for the purchase.
In October 2006, to settle the dispute, Teplitsky entered into a written settlement agreement with RXI, wherein he agreed to relinquish his shares in RXI and, in return, RXI agreed to execute a secured promissory note in favor of Teplitsky for $325,000. The agreement also provided that Teplitsky was to receive a payment of $200,000 in addition to six monthly payments of $57,238.88. Finally, the agreement included a term pertaining to Stanley alone: RXI assumed responsibility to pay "$225,000 previously loaned in cash to [Stanley] for business purposes, which included various expenses related to the acquisition of" Medisco by RXI.
RXI never paid according to the agreement, prompting Teplitsky to file suit. B. Civil Complaint
On November 16, 2006, Teplitsky filed a complaint against RXI and the Azrilyans for breach of two promissory notes, breach of the settlement agreement, fraud, and conspiracy. The first promissory note was executed by RXI on August 1, 2006 for $600,000 and payments to Teplitsky were to commence on September 1, 2006. The second promissory note was executed by RXI on October 25, 2006 for $325,000, secured by two real properties located at 11451 Dona Cecilia Drive in Sherman Oaks and at 16739 La Maida Street in Encino. Teplitsky alleged RXI defaulted on both notes. He also alleged Stanley and Deanna were alter egos of RXI and should be held personally liable for the obligations incurred by RXI.
In January 2007, RXI and Deanna filed a demurrer to the complaint; the demurrer was sustained with leave to amend. Stanley filed no response and default was entered against him on January 12, 2007.
On February 13, 2007, Teplitsky filed a first amended complaint (FAC) for breach of the second promissory note (for $325,000), dissolution of corporation, and fraud, based on the same substantive allegations of his original complaint.
RXI and Deanna demurred to the FAC. The trial court sustained the demurrer in part, leaving intact only the breach of contract claim as to the $325,000 promissory note. RXI and Deanna then filed their Answers to the FAC, denying the allegations and asserting 32 affirmative defenses. Entry of default against Stanley on the original complaint was not challenged. C. New Settlement Agreement
On May 16, 2007, Teplitsky, Deanna, RXI, and their respective counsel attended mediation. Deanna and RXI were represented by the same attorney. On May 22, 2007, Teplitsky entered into 1) a written Settlement and Mutual Release Agreement (Settlement Agreement), and 2) a Stipulation for Entry of Judgment (Stipulation) with RXI, Deanna, and Stanley.
Under the Settlement Agreement, Teplitsky agreed to cancel the $600,000 and $325,000 promissory notes and to return all RXI stock certificates previously issued to him.
The Azrilyans and RXI acknowledged they were indebted to Teplitsky in the sum of $325,000, and stipulated to entry of judgment in favor of Teplitsky for that amount (less any payments received) if they failed to make timely payment. The Stipulation also provides appellants "may satisfy said judgment by paying . . . the sum of $275,000.00," payable $10,000 on the first of every month without interest, commencing June 1, 2007 until the entire sum is paid. (Italics added.) The Settlement Agreement similarly provides that if all payments from appellants are timely made, then Teplitsky "shall accept the sum of [$275,000] . . . without interest, as payment in full." (Italics added.)
The Stipulation and Settlement Agreement were both executed by Teplitsky, Deanna on behalf of RXI, Deanna individually, and Stanley individually; counsel for Teplitsky and counsel for RXI and Deanna also signed both documents.
A week later, on June 4 and 6, 2007, the parties filed notices of settlement of the entire case and attached a short form version of the settlement agreement, again signed by Teplitsky and his attorney, Deanna and RXI and their attorney, and Stanley. The short form agreement repeated the terms of the Stipulation and Settlement Agreement.
Teplitsky received the first 10 installment payments of $10,000—from June 1, 2007 until March 1, 2008. However, the check for the 11th installment due April 1, 2008 bounced. Teplitsky sent a letter offering appellants an opportunity to cure the breach, but he received no response and no payment. D. Judgment
Teplitsky filed a motion to enforce the Settlement Agreement pursuant to Code of Civil Procedure section 664.6, and to enter judgment against appellants in the amount of $225,000—the full amount of the $325,000 loan less credit for the 10 payments already made ($100,000)—in accord with the terms of the Stipulation. Teplitsky served the motion on counsel for Deanna and RXI only.
All further statutory references are to the Code of Civil Procedure, unless otherwise stated.
On June 5, 2008, the trial court granted the motion and entered judgment in the amount of $225,000 against RXI, Deanna, and Stanley, holding them jointly and severally liable. E. Renewal of Judgment
Eight years passed and neither Stanley, Deanna, nor RXI made payments on the judgment. On April 15, 2016, Teplitsky filed an Application for and Renewal of Judgment in the amount of $398,459.40—$225,000 less credit for $1,127.03 (amount levied by the sheriff) plus $174,556.43 in interest. On May 17, 2016, the trial court granted the application and renewed the judgment for an additional 10 years. F. Motions to Vacate Judgment and Renewal of Judgment
On September 5, 2017, Stanley "specially appeared" and filed a motion requesting to vacate the judgment and renewal of judgment. He alleged having "never been served with any document in this case." He claimed he learned about Teplitsky's lawsuit when a lawyer he knew saw his name in a court database and suggested he look into the matter. He then obtained documents from the court file; he told the court, "[that] is how I became aware of the judgment entered years ago, based on a summons and complaint that was never served and on a settlement agreement I never signed." The proof of service filed by Teplitsky on December 20, 2006 showed substituted service of the summons and complaint on Stanley at the La Maida address on December 11, 2006; Stanley denied ever having lived at that address and further provided, "no one lived there at the time." Although he confirmed his sister Deanna "at one time lived at the [La Maida] property, [she] eventually moved from it." According to Stanley, Teplitsky was fully aware that Stanley resided with his parents at the Dona Cecilia address, because Teplitsky had dined with Stanley at his home on many occasions.
A review of the case summary shows Teplitsky filed a total of 15 proofs of service and declarations of diligence in attempting to effectuate service on RXI and the Azrilyans in December 2006. The record, however, contains copies of only three proofs of service from that time period.
The three proofs of service/declaration of due diligence in the clerk's transcript provide us with the following information:
• A registered process server from Independent Attorney Service attempted to personally serve Stanley at the La Maida address at 11:00 a.m. on December 2, 2006, at 3:15 p.m. on December 3, 2006, and at 9:15 a.m. on December 5, 2006. No one answered the door during these attempts.
• The same registered process server served Stanley via substituted service at 9:40 a.m. on December 9, 2006, by leaving copies of the summons/complaint with Deanna, whom the process server described as the "co-occupant" of the La Maida address. The process server went so far as to describe Deanna's physical attributes in the proof of service as well.
• To effectuate substituted service, another employee from Independent Attorney Service served by mail a copy of the moving paperwork to Stanley on December 11, 2006 to the La Maida address.
Stanley further stated: "I myself observed the property to have been . . . a vacant lot, in 2006 . . . . No one was living at that address in December 2006, which is the reason that no one ever answered the process server at that location.
Stanley alleged he was never served with Teplitsky's request for entry of default. The proof of service shows the request for default was served on Stanley via first class mail to the La Maida address. Stanley alleged service of the request for default was "defective" because it did not "giv[e] notice to anyone."
Stanley finally claimed his signatures on the Stipulation, Settlement Agreement, and short form settlement agreement, upon which the 2008 judgment was entered, were forged. He also alleged he had never been a shareholder, officer, director, or employee of RXI and no person at RXI was authorized to accept any legal documents on his behalf.
On September 29, 2017, RXI and Deanna filed their respective motions to vacate the judgment and its renewal as a result of Stanley's forged signature. Both adopted the factual history and issues set out in Stanley's motion. They argued the Settlement Agreement was invalid as to all parties unless the actual signature of Stanley was obtained because "he was an essential party to the settlement agreements." G. Teplitsky's Opposition to the Motions to Vacate
On October 10, 2017, Teplitsky filed his opposition to the motions to vacate.
He submitted the declaration of Katherine Lipel, an attorney who previously represented RXI, Deanna, and Stanley in connection with Teplitsky's claims, but was not their counsel of record in the lawsuit. She stated: "I am personally aware that Stanley was aware of this lawsuit and was apprised of the details" until about February 13, 2007. Teplitsky also provided lengthy information and documentation about Stanley's numerous prior federal and state criminal convictions. He included several examples of what he characterized as fraudulent behavior by Stanley, including using funds from RXI accounts to purchase property which was titled in the name of his girlfriend, and prior sworn testimony indicating he knew about Teplitsky's lawsuit against him much earlier than he had alleged in his declaration.
As to Stanley's forgery claims, Teplitsky claimed he "had nothing to do" with obtaining Stanley's signature on the settlement Agreement. When the agreement was presented to him for signature, it had already been signed by Deanna, individually and on behalf of RXI, and purportedly by Stanley. Teplitsky posited that if Stanley's signature was forged as he claimed, "Deanna would have been the person who forged that signature," and reminded the court Deanna had previously forged Teplitsky's signature on a $68,000 check.
As to Stanley's claim that he was never served with the summons and complaint in 2006 and that "no one was living at that address in December 2006," Teplitsky had "no reason to believe [that] Stanley, who was approximately 34 years of age in 2008, resided with his parents" at the Dona Cecilia Property, as Stanley had claimed in his motion to vacate. Teplitsky stated he had personal knowledge that Deanna and Altshul resided at the La Maida address from 2004 to 2010 "because [he] would sometimes visit them at that property during those years."
And, finally, Teplitsky submitted the declaration of attorney Mark Rabinovich, who represented Teplitsky in the underlying lawsuit until after judgment was entered in 2008. Rabinovich stated that while he was Teplitsky's attorney, both "Deanna and Stanley acknowledged to [him] that Stanley was a principal and the true owner of RXI." Rabinovich stated Deanna "confirmed to [him] that, at the time the Summons and Complaint were served on Stanley by substituted service at the La Maida Address, Stanley resided there with Deanna and her husband."
Rabinovich also stated Stanley "was involved with the settlement" and he recalled Deanna "contacted Stanley by telephone during the Mediation and stated that Stanley indicated his acceptance of the terms of the settlement." Rabinovich recalled preparing and sending the Settlement Agreement to RXI and Deanna's counsel, who informed Rabinovich that "Stanley was participating in the decisions regarding the settlement." He had "agreed to obtain the signatures of Deanna and Stanley." Sometime later, Rabinovich received the Settlement Agreement from opposing counsel and it contained the purported signatures of Deanna and Stanley. Similarly, after Teplitsky, Deanna, RXI, and their counsel signed the Stipulation for Entry of Judgment, opposing counsel "agreed to obtain Stanley's signature" and after mediation, Rabinovich "obtained a counterpart of the Stipulation with Stanley's purported signature."
When Deanna later contacted Rabinovich about possibly representing her in other matters, he recalled Deanna "was upset that Stanley had not complied with the payment schedule provided in the Settlement Agreement and [because] he had left the burden to Deanna."
Rabinovich also stated he was contacted by Stanley "on several occasions" in 2012 or 2013 about possibly representing him as Stanley was "impressed" with Rabinovich's work for Teplitsky. Rabinovich recalled Stanley discussed the judgment and commented the judgment was not fair because Stanley "had made money for Teplitsky." Rabinovich declined to represent Stanley. H. Deanna's Declaration
On April 17, 2018, Deanna filed a declaration. She stated she lived with her husband at the La Maida address, but Stanley "never resided at that address." She confirmed attending the mediation in May 2007 with Teplitsky and counsel, but denied calling Stanley during mediation. According to Deanna, "Teplitsky already knew, as [she] had told him, that Stanley . . . would not be responsible for any payments, and that if [his] signature on the settlement document was necessary[,] [Teplitsky] would have to find a way to obtain it." I. The Trial Court's Ruling on the Motions to Vacate
On April 23, 2018, the trial court denied appellants' motions to vacate the judgment and renewal of judgment. The court found "the testimony by [Stanley] and Deanna Azrilyan to lack credibility, both with respect to the denial of service of process and to the signing of the settlement agreement. It seems highly unlikely that Mr. Azrilyan, as a shareholder of a company with his sister would have been ignorant of the process served and the outcome of the case." Based on the testimony, it appeared to the court that "the alleged signature on the settlement agreement was made while the document was in the custody of [RXI] and its attorneys."
The record on appeal does not include a reporter's transcript of the April 23, 2018 hearing.
The court further found the Azrilyans' "credulity strained by the initial presentation—even before an opposition to the motion had been filed. Certainly the opposition raises many more issues regarding the credibility of the Azrilyans." In making its credibility determinations, the court indicated it did not consider Stanley's prior convictions listed in Teplitsky's opposition to the motions to vacate. J. Motion for Reconsideration and Trial Court's Ruling
On May 7, 2018, Stanley moved for reconsideration of the trial court's denial of the motion to vacate the judgment and its renewal. He argued the court erroneously concluded Stanley was a shareholder of RXI, as there was no evidence before the court upon which a determination of Stanley's "shareholder" status could be based. Stanley also provided a copy of Teplitsky's declaration and objection to Deanna's Chapter 13 filing in the bankruptcy court, where he referred to Deanna as the "sole owner" of RXI—as "new" evidence to be considered by the court as part of his reconsideration motion.
On June 12, 2018, the trial court denied Stanley's motion for reconsideration "[a]fter hearing oral argument." The court ruled: "It was contended that [Stanley] had an equitable interest in [RXI], but it is now admitted that he was not a formal shareholder. Thus, the Court's statement regarding his shareholder status is incorrect. Nevertheless, it was hardly the only basis on which the Court was basing its conclusion that [Stanley] and Deanna Azrilyan had notice of the judgment entered in this case. Moreover, the Defendants had the burden of proof on the motion, and the Court found Defendants' testimony completely lacking in credibility."
The record on appeal does not include a reporter's transcript of the June 12, 2018 hearing.
RXI, Deanna, and Stanley timely appealed.
DISCUSSION
On appeal, appellants do not challenge the findings made by the trial court. Instead, they make two arguments, neither of which was raised in the trial court. First, Stanley's motion to vacate should have been granted because "Teplitsky never served him with the [section 664.6] motion to enter the stipulated judgment, rendering it void as to him." Second, because the stipulated judgment included what appellants viewed to be an "unenforceable penalty" in the amount of $50,000, the judgment as entered is void as to all parties.
We disagree with appellants in all respects and affirm. A. The Trial Court Did Not Act in Excess of Its Jurisdiction When It Entered Judgment Against Appellants.
Appellants argue for the first time on appeal that the trial court "acted beyond its jurisdiction in entering judgment" against Stanley because he was never served with a copy of Teplitsky's motion to enforce settlement agreement pursuant to section 664.6 in 2008. "A hearing was set at which the other defendants [i.e., his sister and RXI] had an opportunity to be heard as to whether there was a default in the installment payments. Stanley had no such opportunity." He contends he did not waive notice of the hearing, and argues the court acted improperly and "in excess" of fundamental jurisdiction by entering the judgment against him.
1. Standard of Review
Application of law to undisputed facts ordinarily presents a legal question to be reviewed de novo. (Boling v. Public Employment Relations Bd. (2018) 5 Cal.5th 898, 912-913.) However, it is well-settled that "when conflicting inferences may be drawn from undisputed facts, the reviewing court must accept the inference drawn by the trier of fact so long as it is reasonable." (Id. at p. 913.)
Further, although failure to raise a point in the trial court estops an appellant from raising it on appeal, a new theory may be presented for the first time on appeal where it " 'involves only a legal question determinable from facts which not only are uncontroverted in the record, but which could not be altered by the presentation of additional evidence.' " (In re Marriage of Priem (2013) 214 Cal.App.4th 505, 511, italics added.)
2. Analysis
Our Supreme Court has observed that although "the term 'jurisdiction' is sometimes used as if it had a single meaning, we have long recognized two different ways in which a court may lack jurisdiction." (People v. Ford (2015) 61 Cal.4th 282, 286.) "A court lacks jurisdiction in a fundamental sense when it has no authority at all over the subject matter or the parties, or when it lacks any power to hear or determine the case." (Ibid.) A claim based on a lack of fundamental jurisdiction may be raised for the first time on appeal. (Ibid.)
Even when a court has fundamental jurisdiction, however, the Constitution, a statute, or relevant case law may constrain the court to act only in a particular manner, or subject to certain limitations. (People v. Ford, supra, 61 Cal.4th at pp. 286-287.) When a trial court has fundamental jurisdiction but fails to act in the manner prescribed, it is said to have acted " 'in excess of its jurisdiction.' " (Id. at p. 287.) Because an ordinary act in excess of jurisdiction does not negate a court's fundamental jurisdiction to hear the matter altogether, such a ruling is treated as valid until set aside. (Ibid.) A party may be precluded from seeking to set aside such a ruling because of waiver, estoppel, or the passage of time. (Ibid.) Thus, error in rendering a judgment or order generally falls into two categories: "A court can lack fundamental authority over the subject matter, question presented, or party, making its judgment void, or it can merely act in excess of its jurisdiction or defined power, rendering the judgment voidable." (In re Marriage of Goddard (2004) 33 Cal.4th 49, 56 (Goddard).)
Here appellants appear to argue that the judgment is void and voidable, despite the headings in their briefs that the trial court acted "in excess of its jurisdiction." We treat each argument in turn.
a. The Judgment is Not Void on Its Face.
"The court may . . . on motion of either party after notice to the other party, set aside any void judgment or order." (§ 473, subd. (d).) Generally, defendants have six months from entry of judgment to move to vacate. (Id., subd. (b).) But, if "the judgment is void on its face, then the six month limit set by section 473 to make other motions to vacate a judgment does not apply." (National Diversified Services, Inc. v. Bernstein (1985) 168 Cal.App.3d 410, 414.)
" 'A judgment or order is said to be void on its face when the invalidity is apparent upon an inspection of the judgment-roll.' " (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1441.) This inquiry, however, "does not hinge on evidence: A void judgment's invalidity appears on the face of the record." (Trackman v. Kenney (2010) 187 Cal.App.4th 175, 181.) The due process clauses of the United States and California Constitutions require that a party be given reasonable notice of a judicial action or proceeding. (Goddard, supra, 33 Cal.4th, at p. 54.) For a court to establish personal jurisdiction, it is essential to comply with the statutory procedures for service of process; if a default judgment was entered against a defendant who was not served with a summons as required by statute, then said judgment is void, as the court lacked jurisdiction in a fundamental sense over the party and no authority to enter the judgment against said party. (OC Interior Services, LLC v. Nationstar Mortgage, LLC (2017) 7 Cal.App.5th 1318, 1330-1331.)
Stanley argues he was "never served with the motion to enter the stipulated judgment" and requests it be vacated as to him. He contends this is "a case in which no further record is necessary," because the judgment is " 'void on its face' " and the invalidity of the judgment is " 'apparent from an inspection of the judgment roll or record without consideration of extrinsic evidence." " He alleges the "invalidity of the judgment can be seen here, without more, from Teplitsky's motion to enter the stipulated judgment."
We disagree.
This is not an issue of fundamental jurisdiction. By merely looking at the judgment roll, we conclude the trial court did not act without authority in entering judgment against Stanley. The judgment was entered based on the Stipulation and Settlement Agreement. The Stipulation provides: "If payment is not received . . . Plaintiff shall give Defendant fax notice of said deficiency to David S. Fisher [counsel for RXI and Deanna] at (818) 888-5549. [¶] Defendant shall cure said deficiency by delivering to the office of Mark Rabinovich [counsel for Teplitsky] the payment due before noon of the 5th day following said fax notice. [¶] If Defendant does not timely cure said deficiency, Plaintiff shall, with appropriate notice on ex parte application, have the right to request and obtain from the Court the entry of the judgment and issuance of a writ of execution for the balance of the Judgment in the amount of $325,000, less the credit for payments made."
It is quite plausible that the parties intended that "appropriate notice" of a motion to enter judgment, as phrased in the Stipulation, was notice to David Fisher only, as the parties had already deemed notice of a payment deficiency to be sufficient if given to Fisher. Had the issue been raised below, the trial court could have sorted this out with factual findings based on extrinsic evidence. But Stanley did not raise this issue in the trial court. We find that the issue of voidness cannot be adjudicated on an inspection of the judgment roll alone. Therefore, the judgment is not void on its face and the issue cannot be raised on appeal in the first instance.
Stanley relies on Rooney v. Vermont Investment Corp. (1973) 10 Cal.3d 351 and S.E.P. Associates, Inc. v. Peto (1975) 49 Cal.App.3d 305 to support his argument that a party must be given notice of the motion for entry of judgment, but these cases are inapposite factually and do not involve judgments based on the terms and conditions of a settlement accepted by the trial court under section 664.6
b. The Judgment is Not Voidable.
The second issue Stanley has dressed up in jurisdictional garb is that the court acted "in excess of its jurisdiction" when it granted a motion to enter judgment which was not served on him. We disagree for a number of reasons.
First, as set forth above, whether the court acted in excess of its jurisdiction, causing the judgment to be "voidable," is subject to estoppel, waiver, and the passage of time. Here, Stanley did not raise this issue in the trial court. Therefore, the issue whether the parties complied with either statutory notice or the notice plausibly agreed to in the Stipulation is waived. (Bardis v. Oates (2004) 119 Cal.App.4th 1, 14, fn. 6.)
Second, if we deem Stanley to have raised the issue by his general allegation in the motion to vacate that "he never received any documents in this case," the issue was adjudicated against him when the trial court found his and his sister's testimony not credible on the issue of service.
Third, the undisputed evidence in the record is that Stanley told Teplitsky's counsel, Mark Rabinovich, in 2012 or 2013 that the judgment was not "fair" because Teplitsky had made a lot of money because of him. Thus, by at least 2013, Stanley was aware that judgment had been entered against him. Yet he did not act until 2017 to challenge the judgment on other grounds in the trial court and he waited until 2019 to raise, for the first time in our court, the specific ground of lack of notice. We find, as a matter of law, that the passage of time compels us to reject Stanley's untimely challenge. B. The Renewal of the Judgment Was Proper.
Stanley next argues the renewal of judgment should be vacated because the "voidness of the judgment constitutes a defense to its enforcement." However, we have found the judgment is not void on its face. Accordingly, the renewal of the judgment was not improper. Stanley adds that even if the judgment was not void, "the failure to provide notice would certainly mean that it was at least 'voidable' because [it was] 'rendered in excess of jurisdiction.' " Stanley does not support this claim with cogent argument and adequate legal support. We cannot guess as to what Stanley is attempting to argue here. An appellant who does not provide adequate legal authority and analysis to support a contention forfeits that contention. (Ewald v. Nationstar Mortgage, LLC (2017) 13 Cal.App.5th 947, 948; Nielsen v. Gibson (2009) 178 Cal.App.4th 318, 324.) C. The Settlement Agreement Did Not Include an Unenforceable Penalty.
Appellants contend they had to pay $50,000 more when they defaulted on the monthly installment payments under the Agreement. They argue this was an unenforceable penalty under Civil Code section 1671. Not so.
1. Standard of Review
"Whether an amount to be paid upon breach is to be treated as liquidated damages or as an unenforceable penalty is a question of law." (Harbor Island Holdings v. Kim (2003) 107 Cal.App.4th 790, 794.) The "ultimate question of a provision's invalidity as a penalty is a question of law subject to de novo review, but the factual foundation for appellate review consists of (1) the facts that are not in dispute, and (2) the facts that are established by viewing the conflicting evidence in the light most favorable to the trial court's judgment." (Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1355.)
2. Analysis
This argument is raised for the first time on appeal and is therefore waived. (Bardis v. Oates, supra, 119 Cal.App.4th at p. 14, fn. 6.)
If we were to consider the merits, we would reject appellants' argument. Under Civil Code section 1671, "a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made." (Civ. Code, § 1671, subd. (b).)
Our Supreme Court has held that a "liquidated damages clause will generally be considered unreasonable, and hence unenforceable under section 1671(b), if it bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach." (Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 977 (Ridgley).) "The amount set as liquidated damages 'must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.' [Citation.] In the absence of such relationship, a contractual clause purporting to predetermine damages 'must be construed as a penalty.' (Ibid.) 'A penalty provision operates to compel performance of an act [citation] and usually becomes effective only in the event of default [citation] upon which a forfeiture is compelled without regard to the damages sustained by the party aggrieved by the breach [citation].'" (Ibid.)
Appellants contend the "the judgment entered against them by stipulation was for $50,000 more than the remaining $125,000 ($225,000)" because the Azrilyans' missed scheduled payments. They argue the additional $50,000 amount in the judgment was an impermissible penalty because it bore no reasonable relationship to the damages Teplitsky actually suffered as a result of the late payments. Appellants argue the "judgment amount . . . had nothing what[so]ever to do with the amount agreed to be paid in settlement."
We find the $50,000 not a penalty at all. It was a discount off the $325,000 balance due. The Settlement Agreement, Stipulation, and short form settlement agreement provided if all payments were timely made, then Teplitsky "shall accept the sum of [$275,000] . . . without interest, as payment in full." (Italics added.) The parties did not enter into an agreement to reduce the original debt of $325,000 to a lesser amount of $275,000, subject to a $50,000 increase in the event of a breach. Instead, the parties specifically agreed upon the judgment amount ($325,000) discounted to $275,000 in exchange for timely payments. Thus, the $50,000 discount was not yet available to appellants until the final installment was paid and all prior installments were timely made. Per Ridgley, the provision did not " 'become effective only in the event of default.' " (Ridgley, supra, 17 Cal.4th at p. 977.) It was not a penalty for breach.
Jade Fashion & Co., Inc. v. Harkham Industries, Inc. (2014) 229 Cal.App.4th 635 (Jade Fashion) is directly on point. In Jade Fashion, the parties acknowledged in their written agreement that Harkham Industries owed Jade Fashion approximately $341,629 for purchased goods. (Id. at p. 639.) Harkham Industries agreed to pay " 'the weekly sum of $25,000 to Jade [Fashion] . . . commencing on Friday, December 2, 2011 and on each Friday thereafter . . . until the entire balance due is paid in full.' " (Ibid.) It was further agreed that if Harkham Industries " 'timely make[s] each installment payment when due, [it] may deduct $17,500 from the final installment due.' " (Ibid.)
Appellants argue Jade Fashion is not dispositive because the settlement agreement there expressly referred to the $17,500 difference as a "discount", whereas the Stipulation and Settlement Agreement here did not explicitly refer to the $50,000 difference as a discount. This makes no difference. By its terms, the Stipulation and Settlement Agreement did not purport to increase the amount of the original debt; instead, the $50,000 amount was part of the existing $325,000 debt owed to Teplitsky; the $50,000 operated as a discount, regardless of whether the Settlement Agreement and Stipulation expressly referred to it as such.
We note Teplitsky referred to the $50,000 discount as a "reduction" as early as 2017 in his opposition to the motions to vacate—years before appellants raised this "unenforceable penalty" argument for the first time on appeal. Specifically, he noted "if RXI had timely complied with its obligations under the Stipulation for Judgment, it could have received a $50,000 reduction from the $325,000 it owed."
Under these circumstances, Civil Code section 1671's restriction on liquidated damages clauses does not apply, and we need not determine whether the $50,000 discount provision bore a reasonable relationship to the actual damages suffered by Teplitsky from the untimely payments. D. By Failing to Brief Issues Related to the Denial of Their Motion for Reconsideration, Appellants Have Waived Their Challenge.
In their respective notices of appeal filed June 22, 2018, appellants indicated they were appealing from: 1) the court's April 23, 2018 order denying the motion to vacate the judgment and renewal, and 2) the court's June 12, 2018 order denying the motion for reconsideration.
In their briefs, appellants present no argument about the trial court's denial of the motion for reconsideration. In fact, appellants do not even identify their challenge to the trial court's ruling on the motion for reconsideration in a "separate argument heading" in their briefs. (Roe v. McDonald's Corp. (2005) 129 Cal.App.4th 1107, 1114.) We treat their contention as waived. (Ivanoff v. Bank of America, N.A. (2017) 9 Cal.App.5th 719, 729, fn. 1; In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 [the absence of cogent legal argument or citation to authority allows this court to treat the contentions as waived.)
DISPOSITION
The trial court's denial of the motions to vacate the judgment and the renewal of judgment is affirmed. The trial court's denial of the motion for reconsideration is also affirmed. Respondent Leonid Teplitsky is awarded costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, J. We concur:
BIGELOW, P. J.
GRIMES, J.