Sybron Corp v. Clark Hosp. Supply Corp.

43 Citing cases

  1. Greentree Financial Group, Inc. v. Execute Sports, Inc.

    163 Cal.App.4th 495 (Cal. Ct. App. 2008)   Cited 63 times   3 Legal Analyses
    In Greentree, we considered the impact the 1977 amendments to section 1671 had on Sybron, and published our decision to "reaffirm that the rule set forth in Sybron... continues to apply after the intervening amendment to... section 1671."

    Under consistent authority, the judgment constitutes an unenforceable penalty because it bears no reasonable relationship to the range of actual damages the parties could have anticipated would flow from a breach of their settlement agreement. We publish this opinion to reaffirm that the rule set forth in Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896 [ 143 Cal.Rptr. 306] ( Sybron) continues to apply after the intervening amendment to Civil Code section 1671. We reverse and remand with directions to the trial court to enter judgment in the amount specified in the settlement agreement, plus postjudgment interest and costs.

  2. In re Wescot Intern., Inc.

    236 B.R. 27 (N.D. Cal. 1999)   Cited 6 times
    In Wescot, one of the parties argued that the bankruptcy court had erred in relying on a California decision (i.e., the Sybron decision upon which the Family Defendants rely) when it granted relief under Rule 60(b)(6) "because an action under Rule 60 is uniquely a creature of federal law, and therefore the court is not bound by California law."

    The Bankruptcy Court then determined that Eising is entitled to relief pursuant to FRCP 60(b)(6) because the amount of the judgment is unreasonable in proportion to his original obligation and the seriousness of the default, and results in an unconscionable penalty. The Bankruptcy Court based this holding, in large part, upon Sybron Corp. v. Clark Hospital Supply Corp., 76 Cal.App.3d 896, 143 Cal.Rptr. 306 (1978). In that case, a debtor had agreed to pay $72,000.00 in 12 payments, but that on default, a judgment could be entered of $100,000.00.

  3. Van Curen v. Escamilla (In re VEC Farms, LLC)

    395 B.R. 674 (Bankr. N.D. Cal. 2008)   Cited 12 times
    Holding that under California law, the court could consider whether a liquidated damages clause in a settlement agreement approved under Bankruptcy Rule 9019 violated a statute requiring liquidated damages to be reasonable

    The Family Defendants argue that the actual damages suffered by the Trustee as a result of their delay in obtaining the waiver of Claim no. 42 are minimal and the Judgment based on paragraph 7 is so disproportional in amount as to constitute an unenforceable penalty or a forfeiture. The Family Defendants rely on Cal. Civ. Code § 1671 and Sybron Corp. v. Clark Hosp. Supply Corp., 76 Cal. App. 3d 896, 900 (Cal.Ct.App. 1978). The Family Defendants also argue that because they have now provided the waiver of Claim no. 42, they are entitled to relief from forfeiture under Cal. Civ. Code § 3275.2. The Trustee's Position

  4. Atel Financial Corp. v. Quaker Coal Co.

    132 F. Supp. 2d 1233 (N.D. Cal. 2001)   Cited 10 times

    However, the California courts have "consistently ignored form and sought out the substance of arrangements" to determine whether penalties are being imposed. Id. at 979, 73 Cal.Rptr.2d 378, 953 P.2d 484; see also Sybron Corp. v. Clark Hospital Supply Corp., 76 Cal.App.3d 896, 900 n. 3, 143 Cal.Rptr. 306 (1978) (the parties' mutual agreement that "the event of default is not a forfeiture or penalty" would not govern, as the "parties may not circumvent the public policy of sections 1670 and 1671 by characterizing penalties as something else"). Quaker characterizes the liquidated damages provision as a means of coercing timely payment through the application of a massive penalty.

  5. Vitatech Int'l, Inc. v. Sporn

    16 Cal.App.5th 796 (Cal. Ct. App. 2017)   Cited 35 times
    Concluding stipulated judgment that included unlawful liquidated damages provision was void

    Vitatech, however, fails to recognize that a liquidated damages provision lacking a reasonable relationship to the range of damages the parties reasonably could have anticipated is unenforceable and void as against public policy. ( Civ. Code, § 1599 ["Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest"]; Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 900, 143 Cal.Rptr. 306 ( Sybron ) ["Under California law liquidated damages not reasonably related to actual damages are unenforceable and void as penalties"].) "[A] court cannot validly enter a judgment or order which is void even if the parties agree to it."

  6. Stadium Promenade, LLC v. Shake It Up, LLC

    No. G049753 (Cal. Ct. App. Mar. 2, 2015)

    The public policy expressed in that code section may not be waived or circumvented by language in the contract. Indeed, not even an express waiver of the right to appeal or the right to contest a stipulated judgment on any ground will prevent a party from challenging a penalty or forfeiture included in the stipulated judgment. (Purcell, at pp. 972, 975; see Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 902 & fn. 3.) If a party could not challenge an illegal term in a contract because he or she agreed to it, all statutes and other authorities establishing prohibitions on certain types of contracts or contractual provisions would be rendered meaningless and unenforceable.

  7. Dye v. Sachs (In re Flashcom, Inc.)

    Case No. 2:12-bk-16351-RK (Bankr. C.D. Cal. Mar. 5, 2013)

    In Greentree Financial Group, Inc. v. Execute Sports, Inc., 163 Cal.App.4th 495 (2008), a California Court of Appeal explained that under a stipulated judgment-as is the case between Trustee and Andra Sachs-the court must analyze damages based on a "breach of the stipulation, not the breach of the underlying contract." 163 Cal. App. 4th at 499 (emphasis in original), citing, Sybron Corp. v. Clark Hospital Supply Corp., 76 Cal.App.3d 896, 902 (1978).          The facts of Greentree are similar to those in the case at bar relating to the Stipulated Judgment.

  8. Marinakis v. Dias

    No. A146458 (Cal. Ct. App. Oct. 13, 2016)   Cited 1 times
    Holding liquidated damages "bore no reasonable relationship" to the amount at issue

    Several cases discuss the enforceability of settlement agreement terms that call for entry of a stipulated judgment following one party's default in payment obligations. (See Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896 (Sybron); Greentree Financial Group, Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495; Purcell v. Schweitzer (2014) 224 Cal.App.4th 969 (Purcell). "In Sybron, . . . [t]he parties reached a settlement under which the buyers would pay the seller $72,000 plus interest in 12 monthly installments; if the buyers defaulted on any payment, a stipulated judgment for $100,000 could be entered in the seller's favor.

  9. Jade Fashion & Co., Inc. v. Harkham Industries, Inc.

    229 Cal.App.4th 635 (Cal. Ct. App. 2014)   Cited 120 times   1 Legal Analyses
    Holding that the trial court did not err in denying a nonmovant's request for a continuance of a summary judgment hearing because the party "failed to show how facts essential to its opposition could be obtained by deposing [the movant's] attorney" given that, although the movant's attorney could offer testimony relevant to the nonmovant's unclean hands defense (i.e., evidence showing the attorney "intentionally misrepresented" that the nonmovant's check was "returned unpaid due to unavailable funds"), that evidence would not have been sufficient to enable the movant to survive summary judgment based on that defense

    (Harbor Island Holdings v. Kim (2003) 107 Cal.App.4th 790, 794, 132 Cal.Rptr.2d 406 (Harbor Island ).) In support of its argument that the $17,500 discount provision was an unlawful penalty, Harkham Industries primarily relies on three Court of Appeal decisions—Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 143 Cal.Rptr. 306 (Sybron ), Greentree Financial Group. Inc. v. Execute Sports, Inc. (2008) 163 Cal.App.4th 495, 78 Cal.Rptr.3d 24 (Greentree ), and Purcell v. Schweitzer (2014) 224 Cal.App.4th 969, 169 Cal.Rptr.3d 90 (Purcell ). In Sybron, a seller of goods sued the buyers for approximately $144,000 and the buyers cross-complained for approximately $160,000 on grounds of defective goods and rescission.

  10. Keshbaf Knitting, Inc. v. Shoshani

    No. B204935 (Cal. Ct. App. Nov. 24, 2008)   Cited 1 times

    “Under California law liquidated damages not reasonably related to actual damages are unenforceable and void as penalties.” (Sybron Corp. v. Clark Hosp. Supply Corp. (1978) 76 Cal.App.3d 896, 900; see generally Civ. Code, §§ 1671, 3275.) In Sybron, the parties settled a dispute for a total of $72,000 to be paid in 12 monthly installments, plus monthly interest on the unpaid balance at 10 percent.