A Conditional Stipulated Judgment Is Not a "Penalty"

Credit Adjustment Bureau, Inc. v. Imani, No. B316546 (D2d6 Aug. 9, 2022).

Defendant in this case agreed to a 10-year lease of a hair salon space. He defaulted after a couple months. After the Landlord assigned the claim to a Collector, Defendant agreed to a settlement. He would pay $30k over installments, but in the event of a default, he stipulated to the immediate entry of a judgment for the total of Landlord’s mitigated damages—$251,200.13. Defendant proceeded to immediately default on the settlement. So Collector had the judgment entered. Defendant moved to vacate the judgment as invalid, which was denied.

Defendant claims on appeal that the judgment is unenforceable because it is a penalty unrelated to actual damages and thus a voidable liquidated damages provision under Civil Code § 1671. But it’s not. Defendant agreed in a signed stipulation effectuating the settlement that $251,200.13 was the Landlord’s actual damages. Defendant can’t walk away from that admission once it became operative. 

Affirmed.