Opinion
G061599
11-29-2023
BALBOA CAPITAL CORPORATION, Plaintiff and Respondent, v. ZERLINE CHAMBERS-KERSEY, M.D., P.C. et al., Defendants and Appellants.
Benedetto Law Group and James Benedetto for Defendants and Appellants. Thomas Vogele &Associates, Thomas A. Vogele and Timothy M. Kowal for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County (Super. Ct. No. 30-2019-01086458), Theodore R. Howard, Judge. Affirmed. Request for judicial notice granted.
Benedetto Law Group and James Benedetto for Defendants and Appellants.
Thomas Vogele &Associates, Thomas A. Vogele and Timothy M. Kowal for Plaintiff and Respondent.
OPINION
GOETHALS, ACTING P. J.
A borrower and a guarantor entered into a settlement agreement with their lender to make monthly payments to satisfy a debt. As security for the settlement agreement, they executed a stipulated judgment and agreed the lender could seek entry of the stipulated judgment in the event of a default and failure to cure. The borrower and guarantor defaulted on their payments required under the settlement agreement; the lender then filed a motion to enter the stipulated judgment, which the trial court granted. The borrower and guarantor challenge that ruling, asserting the court abused its discretion in admitting certain evidence concerning their payment history and the lender's notice of default. We find no reversible error and therefore affirm.
FACTS
In 2016, plaintiff Balboa Capital Corporation (Balboa) loaned $197,955 to defendant Zerline Chambers-Kersey, M.D., P.C. (the Practice) to fund the purchase of medical equipment. Balboa's equipment financing agreement required the Practice to make six monthly payments of $99, followed by 60 monthly payments of $4,224.17. Defendant Zerline Chambers-Kersey (Kersey), an officer of the Practice, executed a personal guaranty on the loan.
The Practice stopped making its monthly payments to Balboa in 2019. According to Balboa, the entire balance of the loan-about $144,000, plus interest, costs, and attorney fees-became immediately due.
In July 2019, Balboa filed a complaint against the Practice and Kersey (collectively, Defendants) for breach of the equipment financing agreement, breach of guaranty, and related claims. Defendants did not retain counsel or answer the complaint; instead, they entered into a settlement agreement with Balboa.
The settlement agreement required Defendants to pay Balboa $146,070.12, starting with an initial payment of $5,000, followed by 46 monthly payments of $3,000. It also provided that if any installment payment was not timely made, Balboa would serve on Defendants via mail and e-mail a three-day notice to cure at the mailing address and e-mail address listed in the agreement. If Defendants failed to timely cure the default, the settlement agreement allowed Balboa to accelerate all sums due and exercise all remedies included in the agreement.
As security, the settlement agreement required the parties to enter into a stipulation for entry of judgment (the stipulated judgment). The stipulated judgment provided that if Defendants breached the settlement agreement and failed to cure the default within three days' of the notice of default, Balboa could file the stipulated judgment with the trial court, and judgment would be entered "on an ex parte basis, or otherwise," in the amount of $146,070.12, minus whatever amounts Defendants had already paid Balboa pursuant to the settlement agreement.
The settlement agreement required Balboa to file a notice of settlement with the trial court, which Balboa did, and it specified that Balboa would not file the stipulated judgment unless Defendants breached the settlement agreement. The settlement agreement also provided the court would retain jurisdiction of the matter in the event of a default by Defendants and could enter judgment under Code of Civil Procedure section 664.6.
All further statutory references are to the Code of Civil Procedure. Section 664.6, subdivision (a), provides: "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."
Kersey executed the settlement agreement and the stipulated judgment on behalf of both Defendants. Defendants were not represented by counsel at the time.
The Practice made several monthly payments in accordance with the settlement agreement, but it stopped paying in February 2020. Balboa's in-house counsel, Michelle Chiongson, purportedly sent a written notice of default to Defendants in April 2020. Defendants deny they ever received the notice of default, either by e-mail or mail.
The record contains conflicting information as to how the notice of default was purportedly served. Chiongson later attested, in the passive voice, that the notice of default "was given to Defendants as required by the Settlement and Release Agreement [Agreement, Paragraph 4]," suggesting it was sent by both mail and e-mail as required by the settlement agreement. But the notice of default itself says it was sent only by e-mail (not mail); Balboa has never produced an e-mail confirmation showing the notice was actually sent to Defendants.
In November 2020, Balboa filed a stand-alone declaration by Chiongson "in support of request for entry of judgment pursuant to stipulation," and attached as exhibits the settlement agreement, the stipulated judgment, and the April 2020 notice of default. In her declaration, Chiongson attested (1) Defendants paid a total of $20,000 under the settlement agreement but failed to make the February or March 2020 payments, (2) Balboa sent the written notice of default to Defendants as required by the settlement agreement in April 2020, and (3) Defendants failed to cure the default; Balboa therefore requested judgment in the amount of $126,070.12. Balboa also filed a proposed judgment in that amount.
The declaration was unaccompanied by any motion or ex parte application.
According to the attached proof of service, the declaration and proposed judgment were served via mail on Defendants at the address for service listed in the settlement agreement. Defendants maintain they did not receive either document.
The trial court entered judgment in the amount of $126,070.12 in favor of Balboa and against Defendants, jointly and severally, in January 2021. The court clerk served the judgment on Balboa via e-mail but did not serve it on Defendants, who had not yet appeared in the case.
Soon thereafter, Balboa had the judgment domesticated in Virginia (Defendants' home state) and began collection efforts. According to Defendants, this was the first time they became aware of the judgment.
In November 2021, Defendants retained counsel, who filed a motion to set aside and vacate the judgment. Citing the trial court's equitable powers and section 473, subdivision (d), Defendants asserted the judgment was entered without a noticed motion as required by section 664.6, they were deprived of a hearing on the merits, and Balboa had deliberately kept Defendants ignorant about the entry of judgment.
The trial court granted Defendants' motion and vacated the judgment due to lack of notice of the proceedings. However, it permitted Balboa to submit evidence and authority in support of its request for entry of judgment and set a hearing for the following month.
Balboa filed a motion to enforce the settlement agreement and enter judgment in April 2022. In support, Balboa submitted a declaration by its in-house counsel, Marisa Poulos. Poulos's declaration largely mirrored the Chiongson declaration filed 17 months earlier, and again attached the settlement agreement, stipulated judgment, and April 2020 notice of default as exhibits.
Defendants opposed the motion, this time attacking the settlement agreement as unenforceable and unconscionable. They also filed evidentiary objections to the Poulos declaration and exhibits, asserting they were hearsay and lacked foundation.
After hearing oral argument, the trial court overruled most of Defendants' evidentiary objections to Poulos's declaration, including her statement that Defendants had paid $20,000 through January 2020 (¶ 8). It also overruled Defendants' objections to the Poulos declaration exhibits, including the April 2020 notice of default letter (Exh. 2). The court sustained objections to the paragraphs in Poulos's declaration concerning the lack of further payments after January 2020 (¶ 9) and the April 2020 notice of default (¶ 10).
The trial court then granted Balboa's motion and ordered that judgment be entered in favor of Balboa and against Defendants in the amount of $126,070.12. The court noted the April 2020 notice of default letter reflected the mailing address and e-mail address listed in the settlement agreement for service, and Balboa had "obviously" given Defendants credit for amounts paid under the settlement agreement before the breach, since the amount of the judgment sought was only $126,070.12.
Defendants filed a notice of appeal from the May 2022 "judgment" (i.e., the order granting Balboa's motion to enter judgment) in July 2022. The trial court entered judgment in favor of Balboa and against Defendants a month later in August 2022.
DISCUSSION
1. Appealability
As an initial matter, we must consider the threshold question of appealability. As noted, Defendants filed their notice of appeal in July 2022, a month before the trial court entered the judgment. Although Defendants' notice of appeal references a May 2022 "judgment," it appears Defendants instead appealed from the court's May 2022 order granting Balboa's motion to enter judgment, as there was no judgment entered in May 2022. Balboa contends the May 2022 order is not an appealable order and therefore asks us to dismiss the appeal.
We decline to do so. Because the trial court subsequently entered a judgment, Defendants' notice of appeal was only premature. We therefore exercise our discretion to liberally construe the appeal to have been taken from the August 2022 judgment. (Los Altos Golf &Country Club v. County of Santa Clara (2008) 165 Cal.App.4th 198, 202.)
We also note the stipulated judgment, which Kersey signed on behalf of herself and the Practice, provides that Defendants "waive all right to appeal any aspect of this case including judgment entered pursuant to the terms of this Stipulation." Because neither side addressed that provision, however, we will not consider it further and instead turn to the merits of the appeal.
2. Analysis
"A motion to enforce a settlement agreement under Code of Civil Procedure section 664.6 provides a summary procedure 'for specifically enforcing a settlement contract without the need for a new lawsuit.' [Citation.] 'Factual determinations made by a trial court on a section 664.6 motion to enforce a settlement must be affirmed if the trial court's factual findings are supported by substantial evidence.'" (Red &White Distribution, LLC v. Osteroid Enterprises, LLC (2019) 38 Cal.App.5th 582, 586.)
"We review evidentiary rulings for abuse of discretion." (Loy v. Kenney (2022) 85 Cal.App.5th 403, 406.) A trial court abuses its discretion when its ruling exceeds the bounds of reason, all circumstances considered, or when its ruling is so irrational or arbitrary that no reasonable person could agree with it. (Iloh v. Regents of Univ. of Cal. (2023) 87 Cal.App.5th 513, 522.)
Defendants' arguments on appeal largely stem from the trial court's evidentiary rulings. First, Defendants contend the court abused its discretion in admitting the statement in Poulos's declaration that Defendants paid $20,000 through January 2020 (¶ 8), and there was no evidence, aside from that improperly admitted statement, that Balboa properly calculated Defendants' payments to date. Second, Defendants assert the court abused its discretion in admitting the April 2020 notice of default letter (Exh. 2), which was hearsay and lacked foundation, and there was no substantial evidence, aside from that improperly admitted letter, that Balboa provided Defendants written notice of default in April 2020. We are not persuaded.
Defendants do not assert the settlement agreement or stipulated judgment were unenforceable or unconscionable.
To begin with, we discern no error in the admission of the statement in Poulos's declaration that Defendants paid $20,000 through January 2020 (¶ 8). Defendants note it was inconsistent for the trial court to admit that statement but sustain Defendants' objections to the paragraph in Poulos's declaration attesting that "[n]o further payments were made" (¶ 9) on the basis that Poulos lacked personal knowledge. But notwithstanding the trial court's ruling on paragraph 9, an in-house attorney of a corporate lending institution generally has sufficient knowledge to speak to that institution's business records. Poulos is an employee of and in-house counsel for Balboa, and she is one of the attorneys who filed Balboa's complaint in July 2019. She therefore had sufficient knowledge to speak to Balboa's business records concerning what was paid under the settlement agreement in late 2019 and early 2020. We also note that Defendants had ample opportunity to present evidence of any other payments made, if such evidence existed. The declarations Kersey filed in November 2021 and May 2022 in support of Defendants' motion to set aside the judgment and in opposition to Balboa's motion to enforce the settlement agreement were noticeably silent on that issue.
The admission of the April 2020 notice of default letter (Exh. 2) presents a trickier issue. It was seemingly inconsistent for the trial court to admit the notice of default letter but sustain Defendants' hearsay and foundational objections to the paragraph in Poulos's declaration authenticating that very letter (¶ 10). But notwithstanding the trial court's ruling on paragraph 10, we would be hard pressed to say the court exceeded the bounds of reason or acted irrationally in admitting the notice of default letter. As an in-house attorney of a corporate lending institution who had been involved in the case since it was filed in 2019, Poulos had sufficient knowledge to speak to Balboa's business records concerning what was served and when.
Paragraph 10 is three sentences long, so it is not clear which portion the trial court took issue with. Paragraph 10 reads: "Defendants failed to make the February 29, 2020 monthly payment as required by the Settlement and Release [Agreement, Paragraph 1(b)]. Thereafter, by letter dated April 17, 2020, written notice of the default was given to Defendants as required by the Settlement and Release Agreement [Agreement, Paragraph 4]. A true and correct copy of the letter is attached hereto as Exhibit '2' and incorporated herein by this reference." Defendants objected to the entire paragraph.
In any event, any error in admitting the notice of default letter was harmless because the rest of the record establishes Defendants eventually received notice of the default, yet never attempted to cure it. Even if Defendants did not receive the notice of default letter in April 2020, they presumably became aware of the default when Balboa initiated collection efforts on the judgment in January 2021, and they clearly received the written notice of default in April 2022 when Balboa filed and served its noticed motion to enforce the settlement agreement and enter judgment, which Defendants opposed. Despite that, the record contains no evidence suggesting Defendants ever attempted to cure the default.
Defendants seem to assume that Balboa's alleged failure to give written notice of default in April 2020 excuses their failure to make any payments under the settlement agreement for the last three and a half years and defeats Balboa's ability to file the stipulated judgment for entry by the trial court. We cannot agree, especially when it is undisputed that Defendants eventually received the notice of default but made no effort to cure it. On this record, we find no reversible error.
DISPOSITION
The judgment is affirmed. Balboa shall recover its costs on appeal.
WE CONCUR: MOTOIKE, J. DELANEY, J.