Opinion
B316213
02-01-2023
SHAHRAM ELYASZADEH, Plaintiff and Appellant, v. HOMAYOUN NEMAN, Defendant and Respondent.
Manatt, Phelps &Phillips, Benjamin G. Shatz and Benjamin E. Strauss for Plaintiff and Appellant. Lyle R. Mink and Thomas J. Weiss for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County Super. Ct. No. 20STCV26306, Maurice A. Leiter, Judge.
Manatt, Phelps &Phillips, Benjamin G. Shatz and Benjamin E. Strauss for Plaintiff and Appellant.
Lyle R. Mink and Thomas J. Weiss for Defendant and Respondent.
MOOR, J.
The current case between plaintiff and appellant Shahram Elyaszadeh and defendant and respondent Homayoun Neman was preceded by two earlier relevant cases. In the first case, Elyaszadeh obtained a $15 million judgment (the 2009 judgment) against Neman. During the second case Elyaszadeh and Neman entered into a settlement agreement in 2012 that, among other provisions, reduced the 2009 judgment to around $795,000 and provided that the trial court would retain jurisdiction under Code of Civil Procedure section 664.6 to enforce the settlement. In the current case, Elyaszadeh filed an independent action in 2020 on the 2009 judgment against Neman. After a short bench trial, the court entered judgment in favor of Neman, reasoning that the 2009 judgment was extinguished because it was encompassed within the 2012 settlement agreement.
Further statutory references are to the Code of Civil Procedure, unless specified otherwise. "The retention of jurisdiction pursuant to section 664.6 is intended to allow the court to ensure all parties perform pursuant to a settlement agreement that results in a dismissal of a lawsuit." (Howeth v. Coffelt (2017) 18 Cal.App.5th 126, 134.)
A "judgment creditor has two distinct methods by which to continue to pursue collection of a judgment as it nears expiration of the 10-year period of enforceability: the renewal of judgment provisions set forth in sections 683.110 et seq., or an independent action on the judgment." (Goldman v. Simpson (2008) 160 Cal.App.4th 255, 260.) Rather than executing on a judgment, a judgment creditor may "commence an independent action on the judgment" within a 10-year statute of limitations. (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2008) 168 Cal.App.4th 185, 194; § 683.050.)
Elyaszadeh contends the court erred, because Neman did not meet the requirements of his accord and satisfaction defense and any other affirmative defenses were waived. Neman contends the court correctly determined that the 2012 settlement agreement precluded Elyaszadeh from pursuing an independent action on the 2009 judgment.
Elyaszadeh's motion to strike portions of Neman's brief is denied. We will, however, disregard any statements of fact or law that are not supported by citations to the record or legal authority. (Cal. Rules of Court, rule 8.204(a)(1)(B) & (C).)
We affirm. Because the parties had compromised and extinguished the 2009 judgment through settlement, Elyaszadeh could no longer prove a valid judgment. Alternatively, Neman established the affirmative defense of settlement.
FACTUAL AND PROCEDURAL BACKGROUND
A. The 2009 Judgment
After a May 2008 court trial, Elyaszadeh was awarded a judgment against Neman for around $14 million. An amended judgment for around $15 million was entered in February 2009. Neman appealed, the appellate court affirmed the judgment in March 2010, and remittitur issued in July 2010.
B. Marilyn Drive Case and 2012 Settlement
Elyaszadeh and Neman were subsequently adverse to each other in litigating a separate case entitled 1124 Marilyn Drive Development, LLC v. Elyaszadeh (Super. Ct. L.A. County No. SC085437) (the Marilyn Drive Case). In March 2012, they entered into a settlement agreement in that case (the 2012 Settlement). The terms of the 2012 Settlement were recited during a court hearing by the attorney for Elyaszadeh and the attorney for Neman, and transcribed by a court reporter. Neman was present in person and Elyaszadeh was present telephonically. The court accepted the 2012 Settlement and dismissed the Marilyn Drive Case, retaining jurisdiction under section 664.6 to enforce the settlement. The court noted, and the parties agreed, that if the parties had any disagreements as to reducing the settlement terms to writing, any dispute would be resolved in the department that had accepted the oral agreement.
The 2012 Settlement included terms that involved not just the Marilyn Drive Case, but also a judgment for around $795,000 held by a third party against Elyaszadeh in yet another matter (the Fidelity Judgment), as well as the 2009 judgment. Focusing on the details of the 2012 Settlement relevant to the current appeal, the parties agreed that Elyaszadeh would (a) reduce the 2009 judgment to the amount of the Fidelity Judgment, and (b) provide Neman a full satisfaction of judgment on the 2009 judgment. Neman would (a) dismiss the Marilyn Drive Case with prejudice and (b) simultaneously with receiving the satisfaction of judgment, execute a promissory note in favor of Elyaszadeh for the principal amount of the Fidelity Judgment (with specified conditions not relevant here).
C. Current Action
In July 2020, Elyaszadeh filed an independent action on a judgment, seeking to enforce the 2009 judgment against Neman. The 2020 complaint sought a judgment in the amount of the $15 million 2009 judgment, plus around $17 million in accrued interest, for a total of around $33 million in general damages.
Neman responded to the 2020 complaint with a general denial, asserting nine affirmative defenses, the first of which stated: "This action is barred in its entirety by the principle of accord and satisfaction. The judgment sued upon was compromised and satisfied by an agreement made in open court March 12, 2012 in Dept. 54 of the LA Superior Court, with both parties settling the judgment sued hereon and the judgment in favor of 1124 Marilyn Drive Development, LLC, and Neman. The settlement was reported and transcribed by Mary Kelly, CSR No. 11519, and was the subject of court minute order dated March 12, 2012." Neman was self-represented at the time he filed his response to the 2020 complaint, although he was represented by counsel by the trial date.
The remaining affirmative defenses are not relevant to this appeal. They were (2) failure to state facts sufficient to constitute a cause of action, (3) laches, (4) unclean hands, (5) failure to mitigate, (6) waiver, (7) offset, (8) recoupment, and (9) statute of limitations.
A short bench trial took place on July 30, 2021. In his opening statement, Elyaszadeh's counsel stated that his prima facie case would consist of showing that the 2009 judgment was entered, but that it was never satisfied, entitling Elyaszadeh to a new judgment. Counsel continued that he expected Neman's defense to be insufficient as a matter of law. Neman's counsel's opening statement focused entirely on the fact that, in 2012, the 2009 judgment had been settled by the parties in a court hearing, and the settlement was made pursuant to section 664.6.
In his case-in-chief, Elyaszadeh offered into evidence two documents: the 2009 judgment and the remittitur dated July 7, 2010, issued after the appellate court affirmed in large part the 2009 judgment against Neman. The court inquired of Neman's counsel whether Neman was stipulating to the admission of the documents. Neman's counsel agreed to have the documents received into evidence, so long as his stipulation would not be viewed as a concession that the 2009 judgment remained valid. The court agreed, explaining that introduction of the documents into evidence did not include an admission by Neman as to any other underlying facts involved in the case. Elyaszadeh rested.
The timeliness of the Elyaszadeh's action on the judgment is not at issue. Although a money judgment is generally enforceable for a 10-year period, after the enforceability period has expired, a judgment creditor may still file an independent action on a judgment under section 683.050 within the 10-year limitations period prescribed by section 337.5. (Fidelity Creditor Service, Inc. v. Browne (2001) 89 Cal.App.4th 195, 200-201.) "The 10-year periods in question are not coterminous: The period applicable to renewals begins when judgment is entered, and may not be tolled, whereas the period applicable to actions on a judgment begins when the judgment is final, and is subject to tolling." (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp., supra, 168 Cal.App.4th at p. 195, fn. 7.)
Neman then presented his defense case. He called as a witness the attorney who represented him in the Marilyn Drive Case. The testimony established that Neman's company was the plaintiff in the Marilyn Drive Case suing defendant Elyaszadeh, and the posture of the case in 2012 was that liability had been established against Elyaszadeh and a trial was set to begin solely on the issue of damages, including punitive damages. Neman entered into evidence two minute orders from the Marilyn Drive Case and the reporter's transcript reflecting the 2012 Settlement. The witness explained the settlement terms, that the court had accepted the settlement and canceled the trial on damages against Elyaszadeh, and that the court dismissed the Marilyn Drive Case. The attorney's testimony further established that Neman never executed or paid the promissory note agreed to in the 2012 Settlement, nor were any settlement documents prepared or executed by anyone.
Elyaszadeh testified in the rebuttal case. He did not receive any documentation from Neman on account of the 2012 Settlement. Elyaszadeh paid the Fidelity Judgment, including accrued interest, within the last year. This concluded the presentation of evidence.
Elyaszadeh's counsel provided the court with a bench brief on the affirmative defense of accord and satisfaction, and then proceeded to closing argument. During argument, counsel contended that he had shown a "valid judgment" that Elyaszadeh was timely seeking to renew. Elyaszadeh's counsel agreed with the court that the issue presented was whether the 2012 Settlement superseded the underlying obligation of the 2009 judgment. He conceded that the 2012 Settlement encompassed the 2009 judgment, but described the settlement as a mere exchange of promises that had since become a nullity because of the parties' failure to perform the settlement obligations. Counsel pointed the court to the doctrine of accord and satisfaction, describing the 2012 Settlement as an accord that had not been satisfied. In response to the court's question whether there was any case authority addressing a situation involving a settlement stated in court, Elyaszadeh's counsel conceded he did not have any authority. Counsel added that the defense - that the prior judgment obligation was extinguished- was incorrect.
In Neman's closing argument, his counsel pointed to the 2012 Settlement having been accepted by the court, the dismissal of the Marilyn Drive Case as the result of the settlement (including the benefit to Elyaszadeh of avoiding a trial on damages), and that court's retention of jurisdiction to enforce the settlement as dispositive.
After closing arguments, the court took the matter under submission. Returning after a brief recess, the court found in Neman's favor, explaining that the 2012 Settlement was a binding contract and "encompassed the judgment at issue here."
Elyaszadeh filed a motion for new trial, arguing that the court's ruling was in error because Neman had no evidence of satisfaction, a necessary element of an accord and satisfaction affirmative defense. The court denied Elyaszadeh's motion, explaining that it had not found in Neman's favor based on an accord and satisfaction defense, but rather because Elyaszadeh had failed to meet his burden to show he was entitled to renew the 2009 judgment. According to the court, the 2012 Settlement "extinguished" the 2009 judgment, and Elyaszadeh's only remedy was to enforce the 2012 Settlement. Elyaszadeh filed a timely appeal.
DISCUSSION
Elyaszadeh contends the judgment was in error because it was based on the defense of release, an affirmative defense that Neman did not assert in his answer or at trial. Elyaszadeh further contends that because Neman never performed on the terms of the 2012 Settlement, Neman's affirmative defense of accord and satisfaction was inapplicable.
Neman argues that because the court presiding over the 2012 Settlement retained jurisdiction under section 664.6, the court here correctly determined that Elyaszadeh could not maintain an independent action on the 2009 judgment. Neman refers to his assertion of an accord and satisfaction affirmative defense as a "mislabeling" that does not preclude judgment in his favor.
We are not persuaded by Elyaszadeh's argument that the court erred when it entered judgment in favor of Neman. Whether the judgment was based on Elyaszadeh's failure to prove the elements of his case, or on an affirmative defense, Elyaszadeh has not shown the judgment to be in error.
A. Failure of Proof
On appeal, Elyaszadeh attempts to frame the case entirely as a case about affirmative defenses, and dismisses as "curious[ ]" the court's statement that he failed to meet his own burden of proof. To the extent Elyaszadeh addresses his affirmative burden to establish his claim at all, he merely asserts that he presented "an unrebutted prima facie case" establishing the 2009 judgment, which he contends the court "ignored." We affirm the court's ruling that Elyaszadeh failed to meet his burden.
To prevail in an action on the judgment, Elyaszadeh had to show he had a valid judgment against Neman, and that his action was filed timely. (See Green v. Zissis (1992) 5 Cal.App.4th 1219, 1223 [original judgment could be enforced by plaintiff, because that original judgment remained valid even after a court order vacated a renewed judgment as untimely]; Evid. Code, § 500; Becerra v. McClatchy Co. (2021) 69 Cal.App.5th 913, 950 [plaintiff generally bears burden of establishing elements of his or her cause of action].)
The prima facie case that Elyaszadeh presented consisted solely of introducing, pursuant to a stipulation of the parties, the documents that comprise the 2009 judgment, as affirmed on appeal. Elyaszadeh offered no evidence as part of his prima facie case that the 2009 judgment remained a valid judgment at the time of trial. The introduction of the 2012 Settlement and the testimony of Neman's former counsel, who litigated the Marilyn Drive Case, squarely addressed the issue of the continuing validity of the 2009 judgment as a required element of Elyaszadeh's case. Elyaszadeh did not contest any of the facts surrounding what happened in connection with the 2012 Settlement. Most significantly, his counsel conceded at trial that the 2012 Settlement encompassed the 2009 judgment.
The parties' closing arguments and the court's questions focused on whether the 2012 Settlement, when approved by the court accepting the settlement, had superseded and extinguished the 2009 judgment. When the trial court asked Elyaszadeh's counsel for authority addressing the effect of a court-approved settlement that encompasses resolution of a previously issued judgment, Elyaszadeh offered none.
On appeal, Elyaszadeh criticizes the trial court's reliance on Armstrong v. Sacramento Valley R. Co. (1919) 179 Cal. 648, 650-651 and Ebensteiner Co., Inc. v. Chadmar Group (2006) 143 Cal.App.4th 1174, 1179-1181, but his effort to distinguish these authorities is not persuasive. Elyaszadeh concedes that in both cases, a preexisting judgment or obligation was extinguished by a consummated second agreement, and attempts to distinguish the present matter on the ground that it involves an "unsatisfied accord." In Armstrong and Ebensteiner, however, just like in the instant matter, significant performance obligations remained outstanding on the subsequent settlement agreement. In Armstrong, the plaintiff had previously obtained a judgment against two defendants, and later entered into a written settlement contract with the two defendants and an intervenor (the debtors) encompassing the prior judgment and numerous other actions. Under the written settlement contract, the debtors would pay plaintiff an initial $5,000, plus around $12,000 in land, as valued by three mutually selected appraisers. (Armstrong, at pp. 649-650.) Although the debtors made the initial payment, the parties could not agree upon a third appraiser, and plaintiff initiated a new lawsuit seeking specific performance of the settlement agreement. (Id. at p. 650.) The plaintiff also moved to dismiss a pending appeal of the prior judgment, arguing that the settlement agreement "superseded and extinguished" the prior judgment. (Ibid.) The appellate court agreed, concluding "that the agreement of compromise and settlement extinguished the judgment, and that any subsequent remedy of the parties with reference to the matters included therein must be based upon the compromise agreement alone." (Id. at p. 651.) Similarly, the Ebensteiner court rejected the plaintiff's argument that a prior judgment could not be extinguished by a later settlement agreement because "defendant has not tendered the settlement amount; the lien has not been satisfied; and the parties have not executed the releases." (Ebensteiner, at p. 1180.) Based on similar reasoning, the trial court here concluded that the 2009 judgment was extinguished by the 2012 Settlement, even though the parties had not yet fully performed.
Elyaszadeh has failed to establish that his current action is based upon a valid judgment, as the 2012 Settlement superseded and extinguished the 2009 judgment. A compromise settlement is" 'decisive of the rights of the parties thereto and operates as a bar to the reopening of the original controversy.'" (Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 677; Doran v. North State Grocery, Inc. (2006) 137 Cal.App.4th 484, 492.)
We express no opinion on any additional rights and remedies the parties may have against each other.
B. Defense of Settlement
Neman contends that the ruling against him was in excess of the court's jurisdiction, reasoning that the ruling must have been decided based upon the affirmative defense of release, which was not specifically pleaded. We disagree. To the extent that the court's ruling should be viewed as one that was grounded in an affirmative defense-despite the court's express statement was based on a failure of Elyaszadeh to prove his affirmative case- we find no reversible error.
Neman's first affirmative defense provided clear notice that the 2012 Settlement was a complete defense to Elyaszadeh's action on the 2009 judgment. A treatise on California affirmative defenses explains, "Accord and satisfaction can be viewed as a species of settlement; in both instances the parties come to an agreement that is to govern their future relations relating to the subject matter of the settlement or accord and satisfaction. The accord must actually be performed, however, to form a defense whereas a settlement is a defense even if it has not been performed." (3 Carr &Schwing, Cal. Affirmative Defenses (2022 ed.) § 63:14.) "If a plaintiff was fully informed of a defense and the case was fairly tried on the merits, any defect in the pleading of the defense is usually harmless." (Harper v. Kaiser Cement Corp. (1983) 144 Cal.App.3d 616, 620-621; Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240 [defect in pleading that otherwise properly notifies party cannot be said to affect substantial rights].)
Although Neman's first affirmative defense does assert the action is barred by the principle of accord and satisfaction, the subsequent text states the "judgment sued upon was compromised . . . with both parties settling the judgment sued hereon." In its opening statement at trial, and throughout the trial, Neman made clear he was presenting a defense that the 2012 settlement extinguished Elyaszadeh's prior judgment. Both parties presented evidence on the validity and effectiveness of the 2012 Settlement, and the court properly concluded that the settlement barred Elyaszadeh's claim. Even if the court's decision to enter judgment in favor of Neman was implicitly based on the affirmative defense of settlement, Elyaszadeh has not shown that he was prejudiced in any way, as the issue was squarely before the court and litigated by the parties during the trial.
DISPOSITION
The judgment is affirmed. Homayoun Neman is awarded his costs on appeal.
We concur: RUBIN, P. J. KIM, J.