Filed 5/19/23 Lazaro v. Yadav Enterprises CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or 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. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

MARTHA VALENCIA LAZARO et 

al.,

Plaintiffs and Respondents,

v.

YADAV ENTERPRISES, INC. et al.,

Defendants and Appellants.

 A165823

 (Monterey County Super. Ct.

 No. 15CV000143)

Plaintiffs Silvia Contreras and Martha Valencia Lazaro sued their 

former employers, Yadav Enterprises, Inc. (fka JIB Management, Inc.), 

Central Coast Restaurants, Inc., and Bridget Hernandez (collectively, 

defendants) under the Private Attorneys General Act of 2004 (PAGA) 

(Lab. Code, § 2698 et seq.), seeking civil penalties for alleged violations of the 

Labor Code, including unpaid wages. Amidst a growing fracture in the 

Courts of Appeal over whether unpaid wages constituted a civil penalty that 

could be recovered under Labor Code section 558 in a PAGA action, the 

parties reached a settlement of the entire case and, for more than a year,

sought court approval of the settlement as required by the Labor Code. In

June 2019, the trial court signed an order which—in approving the

settlement and entering judgment thereon—expressed the contemplation of 

the parties and the court that the judgment was “intended to be a final 

disposition of the Lawsuit in its entirety.”
2

A few months later, the California Supreme Court held that unpaid 

wages sought under Labor Code section 558 are not civil penalties 

recoverable under PAGA. (ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 

197 (ZB).) The trial court subsequently denied defendants’ motion to vacate 

or set aside the judgment. On appeal from this post-judgment order,

defendants contend that ZB must be applied retroactively to this case and

that the trial court abused its discretion in denying relief under various 

statutory provisions. We conclude otherwise and affirm.

1

FACTUAL AND PROCEDURAL BACKGROUND

A. Proceedings up to settlement and judgment

Plaintiffs are former employees of defendants’ Jack in the Box

restaurant, and their complaint alleged a single cause of action under PAGA 

seeking penalties for defendants’ unlawful wage and hour practices, including 

their failures to pay minimum wage, to pay for overtime, to provide breaks

and meal periods, to provide accurate itemized wage statements, and to 

maintain accurate timekeeping records. Plaintiffs sought unpaid wages 

pursuant to Labor Code section 558 on behalf of themselves and other 

aggrieved employees, alleging they were bringing the action “on behalf of the 

State of California pursuant to PAGA and not for [their] own individual 

causes of action.”

In 2017, defendants filed motions contending that plaintiffs’ claims for 

unpaid wages were not recoverable in a PAGA action and were subject to 

arbitration despite the holding in Iskanian v. CLS Transportation Los 

Angeles, LLC (2014) 59 Cal.4th 348 that an employment agreement 

1 The California Supreme Court transferred this matter from the Court 

of Appeal for the Sixth Appellate District to the First Appellate District on 

August 9, 2022. 
3

purporting to compel the waiver of representative claims under PAGA is 

unenforceable as a matter of state law. (Iskanian, at p. 384.) Specifically, in 

seeking to bifurcate plaintiffs’ claims for civil penalties from their claims for 

unpaid wages and to compel arbitration of the latter, defendants cited the

then-recent decision by the Fifth District Court of Appeal in Esparza v. KS 

Industries, L.P. (2017) 13 Cal.App.5th 1228 (Esparza), for the proposition 

that Iskanian’s rule barring arbitration of PAGA claims applied only to 

“PAGA representative claims for civil penalties,” which excluded claims for 

unpaid wages. Plaintiffs countered with Thurman v. Bayshore Transit 

Management, Inc. (2012) 203 Cal.App.4th 1112 (Thurman), wherein a 

division of the Fourth District Court of Appeal held that Labor Code 

section 558’s provision for civil penalties included unpaid wages that would

ultimately be paid entirely to the affected employee. (Thurman, at p. 1145.)

After the trial court denied defendants’ motion to bifurcate but before it 

ruled on their motion to compel arbitration, defendant Central Coast 

Restaurants made an offer pursuant to Code of Civil Procedure section 9982

to settle all of plaintiffs’ “claims for penalties, individual wages payable 

directly to aggrieved employees, damages, interest, attorneys’ fees and costs” 

for $400,000 “in exchange for a judgment of dismissal of the Complaint

against all parties with prejudice.” (Fn. omitted.) Plaintiffs accepted the 

offer in November 2017. 

In December 2017, the same appellate division that authored Thurman

issued Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705, which disagreed with 

Esparza. Then, in March 2018, before the parties began to seek the trial

2 All further statutory references are to the Code of Civil Procedure 

unless otherwise indicated.
4

court’s approval of the settlement as required by Labor Code section 2699, 

subdivision (l)(2), the California Supreme Court granted review in Lawson.

Thereafter, for more than a year, plaintiffs and all defendants made

joint efforts to obtain court approval of the settlement. Although the parties 

were unified in seeking approval of the settlement, a dispute arose whether 

the settlement would preclude individual claims for wages by nonparty 

employees. Defendants repeatedly urged the court not to decide the issue, 

indicating such a ruling would be an unlawful “advisory ruling.” Instead,

defendants urged the court to apply “class settlement procedures” to 

nonparty employees because of the possibility the judgment could bind absent 

employees as to the unpaid wages claim. (See Arias v. Superior Court (2009) 

46 Cal.4th 969, 987 (Arias).)

On June 5, 2019, the trial court approved the parties’ settlement in the 

amount of $400,000, signing a proposed order drafted by defendants. The

order allocated the settlement as follows: $38,636.25 to the Labor Workforce 

and Development Agency; $133,333 and $38,107.96 to plaintiffs’ counsel for 

attorney fees and litigation costs, respectively; $5,000 to each plaintiff for 

their service as PAGA representatives; $7,500 to a consulting company for 

calculation of the aggrieved employees’ shares and administration of payment 

of the penalties; and $167,423.75 “designated primarily as penalties and to

recover underpaid wages as penalties pursuant to Labor Code section 558.” 

The order indicated the amount set aside for penalties and unpaid wages 

would be allocated to aggrieved employees pursuant to Labor Code 

section 558, subdivision (a)(3), and Thurman. The order entered judgment 

and stated: “This Order and Judgment is intended to be a final disposition of 

the Lawsuit in its entirety.” The order further indicated: “Without affecting 

the finality of this Order or the Judgment entered thereon, the Court retains 
5

jurisdiction of all matters relating to the interpretation, administration, 

implementation, effectuation and enforcement of the Order and Settlement

Agreement pursuant to Cal Civ. Proc. Code § 664.6.” (Italics added.) 

B. Defendants’ motion to vacate or set aside the judgment

On September 12, 2019, the California Supreme Court issued its 

decision in ZB, holding that “the civil penalties a plaintiff may seek under 

section 558 through the PAGA do not include the ‘amount sufficient to 

recover underpaid wages.’ ” (ZB, supra, 8 Cal.5th at p. 182.) ZB disapproved 

of Thurman and other cases to the extent they were inconsistent with its 

holding. (ZB, at p. 196, fn. 8.)

A week later, defendants filed a notice of intent to vacate or set aside 

the June 5, 2019 judgment. Defendants indicated they would move to do so

pursuant to section 663 on the grounds that the judgment (1) did not reflect 

the terms of the section 998 offer and (2) failed to afford due process rights to 

unnamed parties affected by the judgment. Alternatively, defendants 

indicated they would move for relief pursuant to section 473, subdivision (d) 

(“473(d)”) on the ground the judgment was void, or section 473, 

subdivision (b) (“473(b)”) on the ground of mistake or surprise. 

Before defendants filed their motion, plaintiffs filed a declaration from 

their counsel concerning defendants’ efforts to proceed with distribution of 

the settlement. Plaintiffs’ counsel explained they were involved in an

unrelated case against defendant Central Coast Restaurant, i.e., a class 

action for wage claims with no cause of action under PAGA. This other case 

was filed by a plaintiff named Jennifer Garcia in Alameda County then 

removed to federal court. Central Coast Restaurant had moved for summary 

judgment in the federal court, arguing the order approving the settlement in 

the instant PAGA state case barred the federal action under res judicata 
6

principles. On September 23, 2019, the federal district court denied the 

summary judgment motion, ruling that res judicata did not preclude the class 

action insofar as the plaintiff in the class action “neither asserts the same 

primary right nor was she adequately represented by the Contreras [Lazaro] 

plaintiffs.”

3

On September 27, 2019, defendants filed another notice of motion to 

vacate or set aside the judgment and also a memorandum in support. 

Relying on section 473(d), defendants argued the judgment was void because, 

contrary to the agreed terms of the section 998 offer, “in approving the 

settlement, the Court characterized the settlement as one involving 

penalties, with unpaid wages among those penalties.” Defendants also

argued the settlement resolved unnamed employees’ claims for damages 

without affording them due process. Moreover, relying on ZB, defendants 

invoked section 663, arguing the order approving the settlement and the 

judgment rested on an erroneous legal basis that unpaid wages constituted 

penalties that could be recovered under Labor Code section 558 in a PAGA 

only action. Last, relying on section 473(b), defendants claimed the court 

should set aside the judgment because they were surprised by the holding in 

ZB and had mistakenly believed—based on Thurman and Esparza—that 

they could make an offer that included all of the relief sought by plaintiffs.

3 Pursuant to Evidence Code section 452, subdivision (d), defendants 

request judicial notice of various court documents in the federal class action 

matter, i.e., the complaint, docket, and orders denying defendants’ motions 

for summary and to compel arbitration. We deny the request. Defendants 

acknowledge the trial court did not judicially notice any of these documents, 

and defendants fail to demonstrate the relevance of these documents such 

that judicial notice is warranted. (People v. Rowland (1992) 4 Cal.4th 238, 

268, fn. 6.) Nonetheless, as can be seen in this factual summation, some 

information about this class action and the federal court order denying 

summary judgment already appears in the appellate record. 
7

The trial court denied defendants’ motion on July 1, 2020. As relevant 

here, the court rejected defendants’ argument that the judgment should be 

set aside because “it was entered on an incorrect or erroneous legal basis” in 

light of ZB’s subsequent holding that unpaid wages under Labor Code 

section 558 are individual damages not penalties. Relying on Campbell v. 

Rainey (1932) 127 Cal.App. 747 (Campbell), the court reasoned that 

Thurman, supra, 203 Cal.App.4th 1112, was good law at the time the parties 

settled the case, and the fact that ZB later overruled Thurman did not 

“change the fact this was valid authority at the time of the settlement.” 

Defendants appealed. 

DISCUSSION

A. Judicial Retroactivity and Settlement Agreements

Relying on the general rule regarding the retroactivity of judicial 

decisions, defendants contend the decision in ZB must apply retroactively in 

this case. For the reasons below, we cannot agree.

We acknowledge the general rule that decisions of the California 

Supreme Court resolving conflicts amongst the lower courts operate 

retroactively. (Donaldson v. Superior Court (1983) 35 Cal.3d 24, 36–37.) But

this case involves a judgment entered pursuant to a settlement agreement

under section 998. “A judgment entered pursuant to a section 998 settlement 

is a ‘stipulated or consent judgment [which], being regarded as a contract 

between the parties, must be construed as any other contract.’ ” (Milicevich 

v. Sacramento Medical Center (1984) 155 Cal.App.3d 997, 1004, fn. 9.)

Accordingly, the more precise question in this case is whether the

parties’ settlement agreement can be undone by ZB. It has long been settled 

that the answer to this question is no.

Over a century ago, the California Supreme Court addressed this very 
8

issue in Cooley v. County of Calaveras (1898) 121 Cal. 482 (Cooley). In 

Cooley, the plaintiff, a justice of the peace, presented a claim to the defendant 

county for $465 as payment for 155 criminal actions that he tried or 

examined. (Cooley, at pp. 483–484.) At the time he presented his claim, an 

1895 statute prescribed $3 as payment for each criminal action tried or 

examined. (Id. at p. 484.) The county paid the claim, and that payment 

constituted “ ‘a complete settlement between plaintiff and defendant 

county.’ ” (Ibid.) Sometime later, the Supreme Court issued a decision 

holding the 1895 statute unconstitutional, which left standing an 1893 

statute that provided a $7 payment for each criminal action tried or 

examined. (Id. at pp. 484–485.) The plaintiff then sought recovery of the 

additional amount authorized under the 1893 statute, and the county board 

of supervisors rejected the claim. (Id. at p. 484.) The Supreme Court held he 

could not recover the difference, reasoning “[t]here was no mistake as to the 

fees plaintiff should receive when his services were rendered. The statute of 

1895 fixed their amount and plaintiff settled upon that basis, and no 

subsequent decision of a court can create a mistake and annul a previous 

contract which was legal and valid when made.” (Id. at p. 485, italics added.) 

In the Supreme Court’s words, “[t]he understanding of the law prevailing at 

the time of the settlement of a contract, although erroneous, will govern, and 

the subsequent settlement of a question of law by judicial decision does not 

create such a mistake of law as courts will rectify.” (Id. at pp. 486–487.)

In Campbell, supra, 127 Cal.App. 747, a plaintiff stockholder of a bank 

paid the defendant Superintendent of Banks part of an assessment that the 

defendant had levied against the bank’s stockholders after the bank became 

insolvent. (Campbell, at p. 748.) After the California Supreme Court 

invalidated the statute on which the defendant relied to levy the assessment,
9

the plaintiff filed an action to recover the amount that he previously paid. 

(Ibid.) The defendant appealed from the judgment permitting recovery, and 

the Court of Appeal reversed. (Id. at pp. 748, 753.) Citing Cooley, the court 

rejected the plaintiff’s contention that “a mutual mistake of law establishes a 

sufficient basis for recovery.” (Id. at p. 750.)

In Bank of America v. Department of Mental Hygiene (1966) 246 

Cal.App.2d 578 (Bank of America), the Department of Mental Hygiene 

instituted a superior court action against a father to recover money for the 

care of his daughter pursuant to Welfare and Institutions Code section 6650,

which imposed “liability for the care and support of a mentally ill person on 

certain of his relatives.” (Bank of America, at pp. 580, 587.) The parties 

settled that action, and the executor of the father’s will paid the settlement 

amount in December 1963. (Id. at p. 581.) Later, in Department of Mental 

Hygiene v. Kirchner (1964) 60 Cal.2d 716, the California Supreme Court held

Welfare and Institutions Code section 6650 unconstitutional, and the 

executor filed suit in October 1965 to recover the money paid in the 

settlement. The trial court sustained a general demurrer to the executor’s 

complaint without leave to amend and entered judgment in favor of the 

defendant. (Bank of America, at pp. 580–581.) The Court of Appeal affirmed. 

(Id. at p. 589.) Citing cases such as Cooley and Campbell, the Court of 

Appeal concluded the executor had no cause of action. (Bank of America, at 

pp. 585–587.)

In Cal. Ass’n of Highway Patrolmen v. Dep’t of Pers. Admin. (1986) 185 

Cal.App.3d 352 (Highway Patrolmen), plaintiff California Association of 

Highway Patrolmen (CAHP) and the State of California entered into a 

written memorandum of understanding (MOU) that, in short, provided 

“ ‘ordered overtime’ is a necessary precondition of overtime compensation.” 
10

(Highway Patrolmen, at pp. 356–357, 361–362.) The MOU was negotiated at 

a time when Fowler v. State Personnel Bd. (1982) 134 Cal.App.3d 964

established that “a CHP officer was not entitled to overtime compensation for 

his lunch period, even though he was subject to numerous restrictions on his 

freedom during his lunch period.” (Highway Patrolmen, at pp. 356–357.) In 

July 1984, about a week after execution of the MOU, the California Supreme 

Court rendered a decision holding that a city’s rules and regulations 

mandated overtime pay to police officers for their mealtimes because of 

numerous restrictions on the officers’ freedom during these times. (Highway 

Patrolmen, at p. 357, citing Madera Police Officers Assn. v. City of Madera

(1984) 36 Cal.3d 403 (Madera).) In May 1985, CAHP filed a petition for 

mandamus to compel the respondent, California Department of Personnel 

Administration, “to set aside its decision denying overtime compensation to 

officers employed by the California Highway Patrol (CHP) for the one-half 

hour lunch period of each working shift.” (Highway Patrolmen, at pp. 356, 

358.) The court sustained the defendant’s demurrer without leave to amend,

and the Court of Appeal affirmed. (Id. at pp. 358, 367.)

As relevant here, the Court of Appeal rejected CAHP’s argument that 

Madera compelled payment of overtime, stating the right to overtime “must 

be located in the MOU.” (Highway Patrolmen, supra, 185 Cal.App.3d at 

pp. 360–361.) The court noted that “ ‘ordered overtime’ is a necessary 

precondition of overtime compensation under the MOU” and “the term 

‘ordered overtime’ was given a definitive construction” in Fowler. (Highway 

Patrolman, at p. 362.) The court held that the MOU’s use of the term 

“ ‘ordered overtime’ ” would still be interpreted according to Fowler and that

Madera had “no bearing” on the dispute. Though the court did not examine 

the effect of Madera upon Fowler, it reasoned that any effect was immaterial 
11

in light of the Cooley decision. As part of its analysis, the Highway 

Patrolmen court noted Cooley ’s assessment that “ ‘ “[t]he community would 

be in a miserable condition if at every change of opinion upon questions of 

law all their previous contracts and settlements were to be overturned.” ’ ” 

(Highway Patrolmen, at pp. 364–365, quoting Cooley, supra, 121 Cal. at 

p. 486; see also Estate of Propst (1990) 50 Cal.3d 448, 462 (Propst) [a decision 

announcing a change in a judicial rule of law will not be “applied to impair 

contracts made or property rights acquired in accordance with the prior 

rule”].)

The California Supreme Court has explained that general contract law 

principles should apply to section 998 offers and acceptances only where such 

principles neither conflict with nor defeat the statutory purpose to encourage 

the settlement of lawsuits prior to trial. (T.M. Cobb Co. v. Superior Court 

(1984) 36 Cal.3d 273, 280.) Defendants, however, offer no legal or logical 

reason why contract principles should not apply in the instant situation. As 

a practical matter, general application of the Cooley rule in the context of

section 998 settlements would encourage such settlements by ensuring a 

measure of certainty in their enforcement. Conversely, allowing judicial 

decisions to retroactively undo settlement agreements—especially those that 

are executed with awareness that the relevant law is open to question—

seems unfair and unwise given that the unsettled nature of the law is 

typically a circumstance that figures into the calculation of whether to settle 

and for how much. (See 1 California Trial Handbook § 13:03 [one 

consideration when evaluating whether to settle is the strength of the legal 

theories supporting and opposing the claim]; 5 Successful Partnering 

Between Inside and Outside Counsel, Partnering strategies in settlement

§ 65:5 [discussing considerations in settling a test case where the law is 
12

unsettled].)4

We turn to address defendants’ contention that ZB must be applied 

retroactively because, in their view, no final judgment had been entered when 

ZB became final. We see no basis for relief.

Case law establishes that “a party cannot appeal from a judgment to 

which the party has stipulated as part of a settlement.” (Pazderka v. 

Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 666; Norgart v. 

Upjohn Co. (1999) 21 Cal.4th 383, 400 [a party may not appeal “a judgment 

entered by a court under the authority of, and in accordance with, the 

contractual agreement of the parties [citation], intended to settle their 

dispute fully and finally”]; Mecham v. McKay (1869) 37 Cal. 154, 158 [“we will 

not review, on appeal, judgments and orders entered by consent”].)

Defendants, however, contend the June 5, 2019 judgment was not 

“final” until the time for making a direct attack on that judgment had passed. 

(See Code Civ. Proc., § 1049.) Relying on Department of Finance v. 

Commission on State Mandates (2022) 85 Cal.App.5th 535 (Department of 

Finance), defendants contend that, notwithstanding the express 

contemplation of the parties and the trial court that the June 5, 2019 

judgment was “intended to be a final disposition of the Lawsuit in its 

entirety,” the judgment was not final because defendants timely moved to set 

4 In urging the trial court to not decide whether the settlement would 

preclude individual claims for wages by nonparty employees and to instead

apply class settlement procedures, defendants were clearly aware of Arias, 

supra, 46 Cal.4th 969, which explained that nonparty employees could assert 

collateral estoppel if an employee plaintiff obtained a favorable judgment, but 

the nonparty employees would not be bound by an unfavorable judgment to

an employee plaintiff unless the nonparty employees were given notice of the 

PAGA action and an opportunity to be heard. (Arias, at p. 987.) With ZB

pending in the California Supreme Court, it appears reasonably apparent 

that this issue figured into defendants’ settlement strategy.
13

aside or vacate that judgment under sections 473 and 663. As relevant here, 

Department of Finance held that to be “immune from retroactive or clarifying 

legislation, [the decision of the Commission on State Mandates] must be free 

from direct attack by a petition for writ of administrative mandate either 

because a judgment resolving such a petition has become final and conclusive 

or because a petition was not timely filed.” (Department of Finance, at 

p. 572.) Notably, however, that case did not involve retroactive application of 

a judicial decision to a judgment based on a stipulated settlement, nor did it 

discuss the meaning of “final” in such a situation. (Id. at pp. 552–553, 570–

572.)

In any event, even if we assume arguendo that a judicial decision could 

be applied retroactively to a judgment where a party makes a timely motion 

under section 473 or section 663, this still leaves us with the rule set out in 

Cooley and its progeny. As discussed, that rule supports the trial court’s 

decision not to apply ZB retroactively so as to undo the parties’ agreed 

settlement of this case.

Indeed, defendants do not argue that Cooley and its progeny are no 

longer good law, and they offer no case law supporting a different outcome in 

circumstances similar to those here. Like Department of Finance, supra, 85 

Cal.App.5th 535, none of their other authorities applies the general rule of 

decisional retroactivity to undo either a stipulated settlement or a judgment 

entered thereon where, as here, the terms of the settlement were lawful when 

approved. (E.g., Vazquez v. Jan-Pro Franchising Internat., Inc. (2021) 10 

Cal.5th 944, 948–954; Penn v. Prestige Stations, Inc. (2000) 83 Cal.App.4th 

336, 339–344; In re Marriage of Ankenman (1983) 142 Cal.App.3d 833, 836–

837.)

With regard to Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56, the 
14

Court of Appeal reversed a judgment and remanded for further proceedings 

in a PAGA case after finding that the trial court abused its discretion in

approving a settlement that disproportionately allocated civil penalties 

between two classes of aggrieved employees without apparent justification. 

(Moniz, at pp. 87―89.) But Moniz focused on procedural challenges to the 

appeal (id. at pp. 70–73) and various challenges to the approved settlement

(id. at pp. 73–89); decisional retroactivity was not at issue.

As for Johnson v. Department of Corrections (1995) 38 Cal.App.4th 

1700, the court there did undo a settlement where the appellant had declined 

to authorize the settlement. (Johnson, at pp. 1703–1710.) Unauthorized 

settlements, however, are subject to considerations different than those

where there is no question concerning authority to settle, as is the case here. 

(Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 260 

[where attorney’s clerical mistake resulted in a settlement not authorized by 

the client, “the public policy favoring settlements has no force”].)

Finally, defendants contend the rule in ZB should apply in this case 

because the decision did not “create or alter the law” but “declared what the 

law had always been.” (Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 

973, 979.) Though that concept has been criticized as a “ ‘myth’ ” (ibid.), we 

note it simply reflects the general rule of retroactivity; it offers no shield 

against application of the Cooley exception to that general rule.

B. Sections 473(b) and 663

Defendants further contend the trial court should have vacated the 

section 998 settlement and judgment pursuant to section 473(b) because they 

were based on the mistaken belief that unpaid wages were recoverable in a 

PAGA-only action, and defendants were surprised by ZB’s holding to the 

contrary. Similarly, defendants cite section 663 and argue the settlement 
15

was based on the erroneous legal conclusion that the PAGA settlement could 

encompass unpaid wages as penalties, which the California Supreme Court 

later rejected in ZB. These contentions fail to persuade.

Under section 473(b), the trial court has the discretion “on a showing of 

‘mistake, inadvertence, surprise or excusable neglect’ to grant relief from a 

judgment, dismissal or other order based on its evaluation of the nature of 

the mistake or error alleged and the justification proffered for the conduct 

that occurred.” (Austin v. Los Angeles Unified School Dist. (2016) 244 

Cal.App.4th 918, 928 (Austin).) “A motion to vacate under section 473(b) 

‘ “ ‘is addressed to the sound discretion of the trial court, and in the absence 

of a clear showing of abuse . . . the exercise of that discretion will not be 

disturbed on appeal.’ ” [Citation.] The appropriate test for abuse of 

discretion is whether the trial court exceeded the bounds of reason.’ ” (Id. at 

p. 929.)

Section 663 provides in pertinent part: “A judgment or decree, when 

based upon a decision by the court . . . may, upon motion of the party 

aggrieved, be set aside and vacated by the same court, and another and 

different judgment entered, for either of the following causes, materially 

affecting the substantial rights of the party and entitling the party to a 

different judgment: [¶] 1. Incorrect or erroneous legal basis for the decision, 

not consistent with or not supported by the facts; and in such case when the 

judgment is set aside, the statement of decision shall be amended and 

corrected.” The trial court’s decision to deny a motion to set aside the 

judgment is reviewed under the deferential abuse of discretion standard. 

(National Secretarial Service, Inc. v. Froehlich (1989) 210 Cal.App.3d 510, 

524.)

As a preliminary matter, we reject defendants’ contention that the trial 
16

court abused its discretion by failing to rule on their request for relief under 

section 473(b). Because defendants cite nothing in the record indicating the 

trial court refused to consider their argument under section 473(b), we 

presume the court considered and denied it. (Denham v. Superior Court

(1970) 2 Cal.3d 557, 564; cf. Austin, supra, 244 Cal.App.4th at pp. 926–932 

[trial court abused its discretion by explicitly declining to consider a plaintiff’s 

section 473(b) motion].)

On the merits, we cannot conclude the trial court abused its discretion 

under either section 473(b) or section 663. Even assuming the June 5, 2019 

judgment was not final, as discussed, the court correctly reasoned that “ ‘[t]he 

understanding of the law prevailing at the time of the settlement of a 

contract, although erroneous, will govern, and the subsequent settlement of a 

question of law by judicial decision does not create such a mistake of law as 

courts will rectify.’ ” (Quoting Campbell, supra, 127 Cal.App. at p. 750, italics 

added.) Moreover, the record indisputably reflects that the parties settled 

with full awareness of the decisional split amongst the Courts of Appeal with 

regard to whether unpaid wages constituted a “civil penalty” under Labor 

Code section 558. On this record, no abuse of discretion appears.

Finally, defendants contend the trial court’s failure to vacate the 

settlement under section 473(b) is “both unjust and contrary to public policy” 

because the plaintiff in the pending federal class action against defendant 

Central Coast Restaurants is seeking unpaid wages on behalf of aggrieved

employees. As such, defendants claim they might be subjected to possible 

“double recovery” of unpaid wages because of the federal class action pending 

against them. Because this argument was not raised below and is 

unaccompanied by citation to legal authority on point, we decline to address 

it here. (In re Aaron B. (1996) 46 Cal.App.4th 843, 846 (Aaron B.).) 
17

C. Section 473(d)

Relying on section 473(d), defendants next argue the trial court should 

have set aside the judgment as void because the judgment included relief that 

was contrary to law, i.e., an award of unpaid wages in contravention of ZB. 

Defendants argue the entire judgment is void and no part of it can be saved 

by excision. We disagree. 

“A judgment is void if the court rendering it lacked subject matter 

jurisdiction or jurisdiction over the parties. . . . Lack of jurisdiction in this

‘fundamental or strict sense means an entire absence of power to hear or 

determine the case, an absence of authority over the subject matter or the 

parties.’ [Citation.] [¶] In a broader sense, lack of jurisdiction also exists 

when a court grants ‘relief which [it] has no power to grant.’ [Citations.] 

Where, for instance, the court has no power to act ‘except in a particular 

manner, or to give certain kinds of relief, or to act without the occurrence of 

certain procedural prerequisites,’ the court acts without jurisdiction in this 

broader sense.” (Carlson v. Eassa (1997) 54 Cal.App.4th 684, 691.) 

“ ‘When a court has fundamental jurisdiction [over the subject matter 

and the parties], but acts in excess of its jurisdiction, its act or judgment is 

merely voidable.’ [Citation.] A ‘voidable’ judgment is one that is valid until it 

is set aside as void.” (Grados v. Shiau (2021) 63 Cal.App.5th 1042, 1050.) 

“The validity of the judgment is to be determined from the law in force when 

it is rendered and if valid then subsequent changes in the law cannot affect 

it.” (Lake v. Bonynge (1911) 161 Cal. 120, 133; cf. Memphis & L. R. R. Co. v. 

Railroad Comm’rs (1884) 112 U.S. 609, 623 [“It is, of course, the law in force 

at the time the transaction is consummated and made effectual, that must be 

looked to as determining its validity and effect”].)

As recounted above, the award of unpaid wages was lawful at the time 
18

of the settlement and the judgment entered thereon; consequently, the 

judgment is neither void nor voidable. Defendants’ reliance on 311 South 

Spring Street Co. v. Department of General Services (2009) 178 Cal.App.4th 

1009 is misplaced. Unlike the situation here, the judgment rendered in 311 

South Spring Street Co. was contrary to law at the time the judgment was 

entered. (Id. at pp. 1012–1013 & fn. 1, 1015.)

Defendants also argue the judgment is void because the trial court 

acted in excess of its jurisdiction when it approved the settlement despite 

plaintiffs’ failure to comply with the following italicized portion of Labor Code 

section 2699, subdivision (l): “(2) The superior court shall review and approve 

any settlement of any civil action filed pursuant to this part. The proposed 

settlement shall be submitted to the agency at the same time that it is 

submitted to the court.” (Italics added.) 

But defendants never raised this point below, and they present no 

developed argument or authority on appeal why this procedure should be 

considered jurisdictional. (Aaron B., supra, 46 Cal.App.4th at p. 846.) 

Accordingly, we decline to consider the point for the first time here.5

Finally, defendants suggest in their opening brief—but do not clearly 

argue—that the settlement was not apportioned properly. Later, in their 

reply brief, they repeatedly suggest the settlement was not apportioned 

properly under Labor Code section 2699, subdivision (i). We do not address 

this issue because it was neither preserved nor properly raised on appeal.

Defendants’ motion to vacate or set aside the judgment did not directly 

challenge the settlement or judgment on the ground it was improperly 

5 Having found defendants’ forfeiture of the issue, we deny their request 

for judicial notice of “public search results for a PAGA Notice on the 

Department of Industrial Relations (a California agency) website,” which 

defendants allege are relevant to this issue.
19

apportioned.

In sum, we reject defendants’ claims of error.

DISPOSITION

The order of the trial court is affirmed. Plaintiffs are awarded costs on 

appeal. (Cal. Rules of Court, rule 8.278.)

FUJISAKI, J. 

WE CONCUR: 

TUCHER, P.J. 

PETROU, J.

Lazaro v. Yadav Enterprises, Inc. (A165823)