Filed 8/9/22

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

CREDITORS ADJUSTMENT 

BUREAU, INC.,

 Plaintiff, Cross-defendant

and Respondent,

v.

RAY IMANI, 

 Defendant, Crosscomplainant and Appellant.

2d Civil No. B316546

(Super. Ct. No. 56-2013-

00438287-CU-BA-VTA)

(Ventura County)

Over twenty five years ago, we stated the 

unremarkable: “The purpose of the law of contracts is to protect 

the reasonable expectations of the parties . . . . There is . . . a

price to be paid for breach of contract.” (Ben-Zvi v. Edmar Co.

(1995) 40 Cal.App.4th 468, 475.) Here, we protect the reasonable 

expectations of the parties. And there is still a price to be paid 

for breach of contract. 

Ray Imani appeals the order denying his motion to 

vacate the judgment entered against him for $251,200.13 after he 

failed to pay $30,000 as required pursuant to a stipulation for 
2

entry of judgment. Appellant contends the trial court erred 

because the judgment is an unenforceable penalty and is 

therefore void. We disagree. The stipulated judgment, which 

respondent agreed to accept is the exact amount of damages 

suffered by respondent. Although appellant characterizes the 

stipulated damages as a penalty and/or liquidated damage 

provision, it is not. A party to a contract, here a lease and then a 

stipulated settlement, cannot pick and choose favorable aspects of 

the agreements while jettisoning the unfavorable aspects. A 

person should not be rewarded for a breach of contract. 

“He who takes the benefit must bear the burden.” 

(Civ. Code, § 3521.) Appellant took the benefit of the original 

lease. This gave him a long-term lease for what we assume was 

the market price for a commercial real property lease. He took 

the benefit of the settlement agreement. This was an extremely 

favorable financial settlement. And now, after years of defaults, 

he seeks the benefit of the settlement agreement. Were we to 

reverse, this would, in essence, be a decree awarding specific 

performance of the 2015 stipulated judgment. He who seeks 

equity, must do equity and have “clean hands.” Appellant has 

not acted equitably and he does not have “clean hands.” The time 

for performance pursuant to the breached 2015 stipulated 

judgment has expired. We will affirm the order denying the 

motion to vacate the $251,200.13 judgment.

Facts and Procedural History

In January 2012, appellant leased a hair salon space 

from Baldwin Park Plaza LLC (landlord). The lease was for a 

term of 10 years and provided for a monthly base rent of $2,695, 

monthly common area charges of $605 and an annual increase in 

the base rent of 3%. Rent payments were to begin on March 1, 
3

2012. In August 2012, appellant failed to pay the rent. He 

vacated the premises in December 2012 without paying any 

additional rent. 

The landlord assigned its interest in the lease to 

respondent, which filed a lawsuit to collect over $400,000 in 

unpaid past and future rent due. The landlord acted in good 

faith and mitigated the damages. It eventually found a new 

tenant for the space and reduced its damages claim to 

$257,546.17. 

Trial was set for January 2015. Respondent

appeared with counsel and appellant appeared in pro per. The 

parties reached a settlement which they documented in a handwritten stipulation for entry of judgment that was signed by all 

parties and recited in open court. 

The stipulation for entry of judgment requires 

appellant to pay respondent $30,000 in 24 consecutive monthly 

payments of $1,250 starting April 1, 2015. If appellant defaulted 

on any payment, respondent would provide a 10-day written 

notice of default. On the 11th day, if the default had not been 

cured, respondent could “declare the then entire balance due and 

payable, together with reasonable attorneys’ fees and costs in the 

collection of said obligation . . . . In such event, judgment shall be 

immediately entered in the sum of $251,200.13 together with 

reasonable attorneys fees in favor of [respondent] and against 

[appellant], . . . less any sums received by [respondent].” 

Appellant acknowledged that “he has read and agreed to the 

terms of the stipulated judgment, and that he does not dispute 

the amount of the stipulated judgment, and further acknowledges 

that the amount of $251,200.13 is due and owing, but has agreed 

to pay the amount of $30,000.00 to fully and finally resolve all 
4

claims and all related claims.” Appellant also agreed to sign a 

formal version of the stipulation prepared by respondent’s 

counsel and to file a request for dismissal of his cross-complaint. 

Appellant defaulted immediately. He did not make 

any of the payments required by the stipulation. He also failed to 

sign the formal stipulation for entry of judgment. Consequently, 

in June 2015, judgment was entered against appellant for the 

stipulated amount of respondent’s actual damages, $251,200.13. 

This was his second breach of contract. 

Six years later, appellant filed a motion to vacate the 

judgment. He contended, as he does here, that the judgment is 

void because the amount of the stipulated judgment ($251,200) 

bears no reasonable relationship to the damages caused by his

failure to pay respondent $30,000. The trial court denied the 

motion, concluding, appellant “failed to meet his burden to show 

that the stipulated judgment was unreasonable under the 

circumstances existing at the time the contract was made.” 

Standard of Review

We review de novo the question of whether the 

stipulation for entry of judgment constitutes an enforceable 

contract or whether it is an impermissible liquidated damages 

provision or a void and unenforceable penalty pursuant to Civil 

Code section 1671, subdivision (b). (See generally Jade Fashion 

& Co. v. Harkam Industries, Inc. (2014) 229 Cal.App.4th 635

(Jade Fashion); Graylee v. Castro (2020) 52 Cal.App.5th 1107, 

1113; Vitatech International, Inc. v. Sporn (2017) 16 Cal.App.5th 

796, 807-808 (Vitatech International).)

Discussion

The stipulation for entry of judgment requires

appellant to pay $30,000 in monthly payments of $1,250 for 24 
5

months, until the settlement amount of $30,000 was paid in full. 

The stipulation further provides that, if he fails to make any of 

those payments, judgment will immediately be entered against 

him for the full amount owing on the lease, $251,200.13. This 

amount is not referred to in the stipulation as “liquidated 

damages.” Appellant claims that the legal effect is the same, 

however, because the stipulation predetermines the damages 

respondent will recover on appellant’s failure to pay the 

settlement amount. (Vitatech International, supra, 16 

Cal.App.5th at p. 810.) 

We reject appellant’s theory. The amount of damages 

was not “predetermined” in 2015. It was the actual amount of 

damages then due and owing. That appellant was able to settle 

for a fraction of what was owed should not be used against 

respondent. Had appellant agreed to pay half of what was owed, 

$125,000, he would undoubtedly claim that there was a 50%

“penalty.” Respondent’s “more than reasonable” settlement 

terms should not be used against it to show “liquidated damages” 

or a “penalty.”

Civil Code section 1671 provides that a liquidated 

damages clause “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.” (Id., subd. (b).) A provision will be considered 

unreasonable “if it bears no reasonable relationship to the range 

of actual damages that the parties could have anticipated would 

flow from a breach. 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.’” (Ridgley v. Topa Thrift & Loan Ass’n. (1998) 17 
6

Cal.4th 970, 977 (Ridgley), quoting Garrett v. Coast of Southern 

Fed. Sav. & Loan Assn. (1973) 9 Cal.3d 731,739.) 

An unenforceable penalty, by contrast, “‘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]. The 

characteristic feature of a penalty is its lack of proportional 

relation to the damages which may actually flow from failure to 

perform under a contract. [Citations.]’” (Ridgley, supra, 17 

Cal.4th at p. 977.)

We cannot isolate the relevant breach of contract as

only the breach of settlement agreement or stipulation for entry 

of judgment and excluding the underlying contract. Here, the

$251,200.13 damage provision in the stipulation for entry of 

judgment is not arbitrarily drawn from thin air. It is the actual 

and stipulated amount of damages. This is not a penalty or a 

liquidated damage provision. We cannot delete the terms of the 

stipulated judgment calling for monthly payments and we cannot 

add a provision to the terms of the stipulated judgment allowing 

a seven-year moratorium on monthly payments. Money has a 

value over time. Appellant has had the use of the money for 

seven years. Respondent has been deprived of the use of the 

money for seven years.

Respondent correctly relies upon appellant’s 

admission in the stipulation that he did not dispute the amount 

of the stipulated judgment and that $251,200.13 was in fact due 

and and owing on the lease. Reliance upon Jade Fashion, supra, 

229 Cal.App.4th 635 is appropriate. There, Jade Fashion agreed 

to sell garments to Harkham at an agreed price. It then refused 
7

to release the garments because Harkham failed to pay for them. 

Before either party filed suit, Harkham admitted that it owed 

Jade Fashion approximately $341,000. It agreed to make weekly 

payments of $25,000 until the entire balance was paid in full. 

Jade Fashion agreed to release the garments after it received the 

first two payments. The parties further agreed that, if Harkham 

“‘timely make[s] each installment payment when due, [it] may 

deduct $17,500 from the final installment due.’” (Id. at p. 639.) 

If any installment was late, however, Harkham “‘will not be 

entitled to the discount of $17,500 and the remaining balance due 

. . . shall be immediately due and payable.’” (Id. at pp. 639-640.) 

Harkham made all of the required payments, but five were late. 

It nevertheless deducted $17,500 from its final principal 

payment. Jade Fashion refused to accept the final payment and 

sued to recover the unpaid balance. 

The court of appeal held the $17,500 timely payment 

discount was not an unenforceable penalty or forfeiture because 

the agreement between Jade Fashion and Harkham “was not an 

agreement to settle or compromise a disputed claim. Rather, it 

was an agreement to forbear on the collection of a debt that was 

admittedly owed for goods that had been delivered so long as 

timely installment payments were made.” (Jade Fashion, supra, 

229 Cal.App.4th at p. 648.) The $17,500 discount “was not 

liquidated damages for a breach of contract, nor was it an 

additional payment over and above any debt that was owed.” (Id. 

at p. 649.) Instead, the $17,500 was part of the original $341,000 

debt and Harkham’s failure to pay that amount caused Jade 

Fashion actual damage. 

Respondent contends, and we agree, that its 

stipulation for entry of judgment is like the agreement at issue in 
8

Jade Fashion because appellant, like Harkham, admitted that he 

owed the entire $251,000. The stipulation here states that 

appellant “does not dispute the amount of the stipulated 

judgment, and further acknowledges that the amount of 

$251,200.13 is due and owing . . . .” Respondent contends, and we 

agree, that this statement establishes that appellant was not 

compromising a disputed claim when he signed the stipulation. 

Nothing in Greentree Financial Group, Inc. v. 

Executive Sports, Inc. (2008) 163 Cal.App.4th 495 or Vitatech

International, supra, 76 Cal.App.5th 769, compel a contrary 

conclusion. Why? Those cases involved disputed claims and 

here, appellant admitted owing the $251,200.13 as unpaid rent, 

i.e., damages. Appellant’s financial wound was self-inflicted.

Disposition

The order denying appellant’s motion to vacate the 

stipulated judgment is affirmed. Respondent is awarded its costs 

on appeal. 

CERTIFIED FOR PUBLICATION.

YEGAN, J.

We concur:

GILBERT, P. J.

PERREN, J.
Matthew P. Guasco, Judge

Superior Court County of Ventura

______________________________

Law Offices of Shahin Motallebi and Shahin 

Motallebi for Defendant, Cross-complainant and Appellant.

Law Offices of Kenneth J. Freed, Kenneth J. Freed

and David E. Weeks, for Plaintiff, Cross-defendant and 

Respondent.