Motion EnforceCal. Super. - 6th Dist.February 4, 2019Electronically Filed by Superior Court of CA, County of Santa Clara, TREVOR J. ZINK, ESQ. (218860) OMNI LAW GROUP, LLP 1940 Hamilton Avenue San Jose, CA 95125 on 2/27/2020 4:20 PM Telephone: (408) 879-8500 Reviewed By: S. Uy Case #1 9CV342439 Envelope: 4095137 Facsimile: (408) 879-8501 Attorneys for BRIAN BRAGER / NTS, Inc. SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DANIEL OSUNA and KRYSTAL SUMMERS, individually and dba OS DESIGN AND CONSULTING, Plaintiffs V. BRIAN BRAGER, an individual also known as Brian Timothy Brager, individually and doing business as NEW TECHNOLOGY SPECIALISTS, NEW TECHNOLOGY SPECIALISTS, INC., a California corporation, AMERICAN CONTRACTORS INDEMNITY COMPANY, a California corporation, and DOES 1-20, Defendants. CASE NO.: 19CV342439 MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 Date: March 24, 2020 Time: 9:00 a.m. Dept: 20 MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES CASES Casa de Valley View Owner’s Ass’n v. Stevenson (1985) 167 Cal.App.3d 1182 ........................................................... 11 Estate of Dipinto (1986) 188 Cal.App.3d 625 .............................................................................................................. 11 Grand Prospect Partners, LP v. Ross Dressfor Less, Inc. (2015) 232 Cal.App.4th 1332 ........................................... 15 Levy v. Sup. Ct. (1995) 10 Cal.4th 578, ......................................................................................................................... 10 Magic Carpet Ride LLC v. Rugger Investment Group LLC (2019) 41 Cal.5th 357 ..................................................... 12 Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970 ....................................................................................... 14 Wackeen v. Ma/is (2002) 97 Cal.App.4th 429 ............................................................................................................... 11 STATUTES CCP § 664.6 ................................................................................................................................................................ 11 Civil Code § 1636 ....................................................................................................................................................... 13 Civil Code § 1641 ....................................................................................................................................................... 13 Code 0f Civil Procedure § 664.6 ................................................................................................................................. 10 Evidence Code section 1123 ....................................................................................................................................... 11 MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION Through this motion, Defendants NEW TECHNOLOGY SPECIALISTS, INC. (“NTS”) seeks t0 enforce a written settlement agreement it entered into with Plaintiffs DANIEL OSUNA, KRYSTAL SUMMERS, OS DESIGN AND CONSULTING (collectively “OSD”) and OSD Construction, Inc. 0n June 11, 2019 (EX. A, the “Settlement Agreement”). Defendant Brian Brager, sued herein individually and dba New Technology Specialists, is unable t0 participate in bringing this motion as he is now deceased. His Widow, Brandy Brager, is now the sole shareholder 0fNTS. The dispute arose out 0f a construction joint venture. NTS was the general contractor, and OSD the proj ect manager for the proj ects at issue in the dispute. The gist 0f the settlement was that NTS would pay OSD fifty percent (50%) 0f the net profit for two proj ects (approximately $700,000) Within five (5) days 0f receipt 0f said funds from the owners, and in exchange, OSD would dismiss a lawsuit it had filed against NTS. NTS has complied with all 0f its obligations under the written settlement agreement; it received the monies, provided the accounting to OSD, and paid OSD the funds owed within one day from receiving certain accounting information required t0 finalize the accounting from the accountant hired jointly by OSD and NTS. OSD, however, refuses t0 comply With its obligation t0 dismiss its Complaint against NTS, asserting two separate bases, both of which are unavailing. First, OSD argues that as a portion of the NTS payment was not made until eight days after NTS’s receipt 0f the funds, thus, NTS owes an additional 2% “late” payment. This argument has no merit. As noted, the funds were released within a day of the actual amount owed by NTS being confirmed by the accountant jointly hired by NTS and OSD to resolve their accounts. Second, OSD asserts that NTS has not complied with the Settlement because it has not paid OSD in full. This is based 0n a game being played by OSD in an attempt t0 manufacture a default. Per one 0f the property owners’ request, NTS paid approximately $25,000 t0 two MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 vendors who were owed money and were planning to lien the subj ect proj ect. NTS had an obligation to keep the property lien-free. When NTS received payment from the owner, it included the $25,000 payment as an expense for the proj ect. After receiving payment from NTS, OSD asserted that NTS should not have made the $25,000 payments, and therefore OSD is owed more money. In order t0 bolster its position, OSD double-paid the $25,000 With full knowledge that the amounts had already been paid. OSD has not been harmed by NTS’ payment. NTS was simply reimbursed for monies it had paid out t0 keep the proj ect lien-free, and it received n0 markup 0n the reimbursement. Stunningly, OSD’S position seems to be that it should make a duplicate payment t0 the third-party vendors---meaning the vendors would be paid twice---and then sue NTS for reimbursement. Thus, it would transform the situation from one where it had suffered n0 harm, and all parties had been paid, into a situation where OSD took an affirmative step t0 create a loss so as t0 give itself grounds t0 file a lawsuit against NTS. The above should tell the Court all it needs to know as t0 Why NTS needs the Court t0 enforce the Settlement Agreement; that, regardless of the settlement, OSD continues t0 actively seek out reasons t0 continue litigation with NTS. As the accounting demonstrates, OSD has actually been overpaid by NTS. NTS now brings this motion pursuant t0 CCP section 664.6 to enforce the settlement, have the lawsuit against it dismissed, and be disentangled from OSD. II. STATEMENT OF FACTS A. The Dispute NTS and OSD were 50/50 partners in a construction joint venture. OSD and NTS entered into agreements Where OSD essentially became the project manager for certain commercial construction proj ects for which NTS was the General Contractor. Per its agreement with NTS, OSD was t0 provide “Executive Project Service” on the proj ects. The bulk of the proj ects at issue herein were with two entities, Driftwood and InvenSense. OSD did n_0t have any agreement with Driftwood 0r InvenSense. The subj ect agreements were between InvenSense and NTS, as well as Driftwood and NTS. OSD was MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 entitled to payments for its work through its agreement with NTS. After a falling out between the principals ofOSD and NTS, on February 11, 2019 (EX. B, the Complaint), OSD filed a lawsuit claiming it was owed money 0n the Driftwood and InvenSense proj ects, and additionally claiming that it was an employee 0fNTS. The lawsuit was filed prior to NTS receiving more than $1,500,000 owed t0 it on the two projects. Since the joint venture gave OSD 50% 0f the net profit, and NTS had paid OSD more than 50% 0f the net profit received at the time of fling the lawsuit, NTS did not owe OSD any money at that time. B. The Settlement The parties resolved the matter at mediation, entering into the Settlement Agreement on June 11, 2019. In the Settlement Agreement, it was agreed that OSD would receive its 50% share 0f the net profits from the Driftwood and InvenSense projects, and in exchange OSD would dismiss its lawsuit against NTS With prejudice, upon NTS’s payment in full of all sums due under the Agreement. (EX. A, Settlement Agreement, para.’s 1,2, 18.) The Settlement Agreement spelled out the then-known financial numbers related t0 the Invensense and Driftwood projects. The balances agreed as due t0 Plaintiff were based 0n the Net Profits, though the parties understood that the numbers could change. As related t0 Driftwood, the amounts set forth in the agreement were: Net Profit: $1,539,577 50% Share [ofprofits]: $769,788.57 Paid t0 OSD t0 Date: $500,000 Balance Owed t0 OSD $269,788.57 (EX. A, Settlement Agreement, para. 1.) As related t0 InvenSense, the amounts were: Net Profit: $1,318,572 50% Share [ofprofits]: $659,286 Paid t0 OSD t0 Date: $160,000 Balance Owed t0 OSD: $499,286 MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (EX. A, Settlement Agreement, para. 2.) Importantly, however, the numbers were not set in stone. Rather, the qualifier contained in both paragraph 1 and paragraph 2 0f the agreement was that the amounts owed were “subject t0 NTS ’s receipt ofpayment” from Driftwood and InvenSense. (See, EX. A, Settlement Agreement, para.’s 1-2. Emphasis added.) In the Settlement Agreement, OSD and NTS specifically acknowledged that the InvenSense project was being audited, and that Brian Brager ofNTS represented that there were two items for Which InvenSense was seeking recoupment, and that the items totaled approximately $1 10,000. (EX. A, Settlement Agreement, para. 6.) Consistent with such, the Settlement Agreement conceded that the full payment set forth in the Settlement Agreement might not be received from Driftwood and InvenSense, and in such a case: “In the event that full payment is not received from [Driftwood/InvenSense], each party shall receive its allocable share t0 true up its 50% share 0f the profits.” (EX. A, Settlement Agreement, para.’s 1, 2, respectively.) The Settlement Agreement provided that With regard t0 Driftwood, “Within 5-days 0f receipt 0f full payment from Driftwood, NTS shall promptly pay t0 OSD the full amount owed t0 OSD of $269,788.57. In the event that full payment is not received from Driftwood, each party shall receive its allocable share t0 true up its 50% share of profits.” (EX. A, Settlement Agreement, para. 1.) Similarly, with regard to InvenSense, the agreement provided that, “In the event that full payment is not received from InvenSense, each party shall receive its allocable share t0 true up its 50% share ofprofits.” (EX. A, Settlement Agreement, para. 2.) The Settlement Agreement further provides that NTS would provide t0 OSD a detailed summary 0fpayments made by Driftwood and/or InvenSense; that all payments would be “evenly split between the parties until such time as OSD is paid in full[;]” that “NTS shall pay t0 OSD 50% 0f all payments received by NTS within five (5) days of receipt by NTS[;]” and that NTS shall pay a 2% late payment penalty on each payment that is not timely paid.” (EX. A, Settlement Agreement, para. 4.) The Settlement Agreement does not contain a “Time is 0f the Essence” clause, nor does it MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 provide linkage or relationship 0f the 2% penalty to any actual damage incurred by OSD if the payment is not paid within five days. T0 facilitate matters, NTS and OSD jointly hired CPA Michael Gurr as the joint accountant 0n the matter in the dispute. He prepared a full accounting which was ultimately used by the parties in reaching the resolution set out in the Settlement Agreement. It was also agreed that if there were any discrepancies, Mr. Gurr would determine the “true up.” Mr. Gurr was paid by both NTS and OSD. (See, for example, EX. A, Settlement Agreement, at para.’s 1,2.) C. NTS Did Not Receive the from InvenSense the Amount Set forth in the Settlement Agreement NTS did not receive the full amount from InvenSense as reflected in paragraph 2 0f the Settlement Agreement, for three reasons. First, InvenSense discovered that there had been a double-counting in the amount 0f $100,992 related t0 anticipated change orders. The contract had built in that amount to pay for anticipated change orders, but as the proj ect went on InvenSense was billed for all 0f the change orders Without regard t0 the built-in contingency, resulting in InvenSense being billed an extra $100,992. For clarity 0n this issue, the initial contract price had a change order contingency in the amount of $100,992, and the first $100,992 0f change orders was t0 be billed against this Without adding t0 the contract price. However, all of the change order on the proj ect were billed without any offset to the contingency amount. When InvenSense discovered the circumstance, it reduced its payment by the $100,992. Secondly, the amount set forth in the Settlement Agreement was further changed since NTS was required t0 pay certain other vendors a few days after the mediation. Since both Aegis Fire and United Mechanical were owed approximately $25,000 combined, InvenSense asked NTS t0 take care 0f these obligations t0 prevent liens from being placed 0n the proj ect, Which was a requirement ofNTS’s contract with InvenSense. Thirdly, as a result of the InvenSense audit, the contract price was reduced further by $50,000. This amount was agreed t0 between NTS and InvenSense, and OSD approved this amount as well. This reduction was listed as Change Order 25 to the contract. MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Thus, to simplify, the $100,992 reduction for the double accounting, plus the additional $25,000 payments to Aegis Fire and United Mechanical, plus the $50,000 audit credit reduced the amount owed by InvenSense t0 NTS and OSD by $176,000. As a result, the profit split by NTS and OSD from the InvenSense project was reduced by $88,000 t0 each 0f them. Nevertheless, When NTS did its final accounting, it forgot t0 account for the $50,000 credit. Therefore, instead 0f reducing the amount owed 0n the InvenSense proj ect by $88,000, it only reduced the amount by $63,000 (the Driftwood amounts did not change), resulting in an overpayment 0f $25,000 t0 OSD. That the numbers in the Settlement Agreement might vary was contemplated by the Settlement Agreement, as it states both that, “The Parties acknowledge that the InvenSense proj ect is currently being audited by InvenSense[,]” (EX. A, Settlement Agreement, para. 6), and that, “The Parties acknowledge that the above amount [referring t0 the $499,286 balance due, and its calculation which includes 50% share 0f the profit, t0 OSD from the InvenSense project] is subj ect t0 NTS’s receipt ofpayment from InvenSense.” (EX. A, Settlement Agreement, para. 2.) D. InvenSense’s Payment t0 NTS, and NTS’s Payment to OSD InvenSense paid NTS on August 5, 2019, adjusting the amount for the reductions discussed immediately above. Upon receipt, Mr. Brager ofNTS then immediately sent Mr. Gurr, the jointly hired CPA, emails 0n August 7 and August 8, asking for confirmation as to whether certain items were included in his summary 0f total costs from the InvenSense and the Driftwood proj ects. Specifically, Mr. Brager sent Mr. Gurr the following email 0n August 7, 2019: Hi Michael, I received payment from InvenSense this week, and need to pay OSD/Daniel Within next few days, but before I d0, I need to have confirmation if any 0f the items listed below were included in your summary 0f total costs for the InvenSense project. The “items” listed related t0 InvenSense were nine cost items, totaling approximately $44,190. Mr. Brager sent a similar email t0 Mr. Gurr relating t0 Driftwood, for two items With a total MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 approximate cost 0f $18,414. (EX. C, Email String between Brager and Gurr, August 7, 2019- August 12, 2019 hereinafter “Brager/Gurr Email String”) Mr. Brager’s purpose in seeking confirmation from the amounts indicated in his August 7 and 8 emails, was to ascertain whether the amounts listed therein were included in the accounting Mr. Gurr had prepared, which formed the basis 0f the settlement agreement, so as t0 ensure that OSD was receiving the proper allocation 0f the funds. Mr. Gurr failed to respond t0 NTS until August 12. (EX. C, Brager/Gurr Email String.) On that same day, NTS’s counsel (Trevor Zink) advised OSD that a cashier’s check in the amount 0f $701,516 would be available for OSD t0 pick up in his office 0n August 13, 2019 (the next day). Also, on August 12 2019 after receiving the confirming information from Mr. Gurr, per the terms 0f the Settlement Agreement, Mr. Zink emailed a spreadsheet t0 OSD detailing exactly how NTS arrived at the amount due ($701,516), and providing OSD with a detailed summary 0fpayments received from Driftwood and InvenSense, as was also required by the Settlement Agreement. (EX. D, Zink email t0 OSD, dated August 12, 2019.) The $701,516 payment resolved all amounts due, and, in fact, overpaid OSD by $25,000. While, it is less than the amounts set forth in the Settlement Agreement, it is the appropriate number after the $100,992 reduction discovered by InvenSense for the double counting, and the reduction for the $25,000 paid to Aegis Fire and United Mechanical. Importantly, per the Settlement Agreement, the amount paid t0 OSD on August 13, 2019 was no less than 50% 0f the net profit from the two projects, as was required t0 by the Settlement Agreement. Thus, within one day 0f the numbers being confirmed by the accountant hired jointly by the parties, OSD was presented With full payment (later determined t0 be an overpayment) of the amounts owed pursuant t0 the Settlement Agreement. OSD accepted payment. E. OSD’s Refusal t0 Dismiss Apparently, however, “yes” is not good enough for OSD. Despite having been paid, the amounts due in accord with the Settlement Agreement, OSD refused t0 dismiss the lawsuit it has filed against NTS, as is required by paragraph 26 of the Settlement Agreement. Instead, OSD MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 claims that (1) NTS’s August 13 payment was late, entitling OSD t0 a 2% late fee, and (2) NTS should not have made payments to keep the property from being subj ect t0 liens, even though such payments benefitted OSD. NTS now brings this motion requesting that the Court enforce the Settlement Agreement pursuant t0 CCP section 664.6. III. THE COURT’S AUTHORITY TO ENFORCE SETTLEMENT AGREEMENTS PURSUANT TO CCP SECTION 664.6 Code 0f Civil Procedure § 664.6 provides: If parties to pending litigation stipulate in a writing signed by the parties outside the presence 0f the court. . .for settlement 0f the case, or part thereof, the court, upon motion, may enter judgment pursuant t0 the terms 0f the settlement. In enacting section 664.6, the Legislature “created a summary, expedited procedure t0 enforce settlement agreements When certain requirements that decrease the likelihood 0f misunderstandings are met. Levy v. Sup. Ct. (1995) 10 Ca1.4th 578, 585 (“Levy”). The requirements 0f the statute are strictly construed and interpreted; the written settlement agreement has t0 be signed by the litigants themselves. Levy, at 584-585. A section 664.6 motion can be brought even when issues relating t0 the binding nature 0r terms 0f the settlement are in dispute because in ruling 0n the motion, the trial court is empowered t0 resolve disputed issues and ultimately determine whether a binding mutual accord as t0 the material terms had been met. See, Estate ofDipim‘o (1986) 188 Cal.App.3d 625, 629; Casa de Valley View Owner’s Ass ’n v. Stevenson (1985) 167 Ca1.App.3d 1182, 1189. The Court can determine disputed facts either 0n declarations or with oral testimony. Wackeen v. Mail's (2002) 97 Ca1.App.4th 429, fn. 1. IV. LEGAL ANALYSIS A. The Court Should Enforce the Settlement Agreement Pursuant t0 CCP section 664.6 and Require OSD to Dismiss the Complaint in Compliance with the Settlement Agreement. For the enforcement mechanism ofCCP § 664.6 to apply, the litigants must clearly indicate their assent t0 the material terms 0f a settlement agreement. Here, all parties have signed the Settlement Agreement in the various capacities. For NTS, Brian Brager has signed MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 10 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 for himself individually and as the President ofNew Technology Services, Inc. For OSD, Daniel Osuna has signed for himself individually and as that owner 0f OS Design and Consulting, and Krystal Summers has also signed. (EX. A, Settlement Agreement.) The Complaint, Which is the subj ect of the Settlement Agreement, was brought by Daniel Osuna and Krystal Summers, individually and 0n behalf 0f OSD, against Brian Brager individually and against New Technology Specialists, Inc. (EX. B, Complaint.) As noted, all parties t0 the Complaint signed the Settlement Agreement. The Settlement Agreement specifically was intended t0 be binding, as it specifically states: “This Agreement shall be binding upon and inure t0 the benefit 0f the Parties hereto and each and all 0f their representatives, officers, directors, affiliates, partners, successors, assigns, employees and agents, if any?” (EX. A, Settlement Agreement, para. 15. The Settlement Agreement is enforceable and binding. By paying OSD the $701,000 0n August 13, 2019, NTS has completed its obligations in that OSD has received its allocable share 0f 50% of the profits from InvenSense (and then some). (See, EX. A, Settlement Agreement, para. 2.) There is nothing else t0 be done except for OSD t0 dismiss the Complaint. The only disputes are: (1) the 2% late fee OSD allegedly owes, (2) the payments made by NTS to Aegis and United Mechanical t0 prevent them from putting liens 0n the property, and (3) the overpayment t0 OSD based on the failure t0 account for the $50,000 credit to InvenSense. None of these are sufficient t0 establish that NTS has not met the terms 0f the Settlement Agreement. B. OSD’s Assertion that It is Owed a 2% Late Fee is Unavailing as a Basis that NTS Did Not Comply with the Settlement Agreement Seeking t0 avoid its obligation t0 dismiss the Complaint, OSD asserts that the August 13 payment was late, and that it is, therefore, owed an additional 2% late fee pursuant t0 paragraph 4 of the Settlement Agreement. The argument fails because of the doctrine 0f substantial performance and general equity principles. 1 The binding nature of the Settlement Agreement also makes it admissible even though it was entered into pursuant to mediation. See, Evidence Code section 1123(b). MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 1 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NTS’s payment 0f the amounts due under the Settlement Agreement constituted substantial performance. “‘Substantial performance is sufficient, and justifies an action on the contract, although the other party is entitled t0 a reduction in the amount called for by the contract, to compensate for the defects’ [Citation] ‘What constitutes substantial performance is a question of fact, but it is essential that there be n0 willful departure from the terms 0f the contract, and that the defects be such as may be easily remedied 0r compensated, so that the promise may get practically what the contract calls for.’ [Citation] The doctrine of substantial performance also applies When a party performs but misses a deadline. ‘Where time is not of the essence 0f a contract, payment made Within a reasonable time after the due date stated in the contract constitutes compliance therewith.’ [Citati0n.] ‘ . . .a substantial compliance meets the requirements 0f any obligation.’” Magic Carpet Ride LLC v. Rugger Investment Group LLC (2019) 41 Ca1.5th 357, 364. While NTS is of the position that there was complete performance, NTS at a minimum substantially performed by making the payment Within eight (8) days of receipt 0f the funds from InvenSense, delayed only due t0 its waiting for confirmation 0f certain accounting items from Michael Gurr, the jointly hired CPA. The Settlement Agreement states plainly: “In the event that full payment is not received from InvenSense, each party shall receive its allocable share t0 true up its 50% share 0f profits.” (EX. A, Settlement Agreement, para. 2.) “Full payment” 0f the amounts set forth in the Settlement Agreement was not received because (1) InvenSense discovered that it had been double-charged for the change orders in an amount 0f approximately $100,000, (2) the accounting performed by Mr. Gurr prior t0 mediation and by the parties at the mediation did not include the $25,000 in payments to Aegis Fire and United Mechanical, and (3) the accounting performed by Mr. Gurr prior t0 mediation and by the parties at the mediation did not include the $50,000 credit 0n the InvenSense project as a result of the audit. In order t0 true-up the allocation of payments, NTS asked Mr. Gurr to check the calculations, per the agreement. Upon receipt 0f confirmation from Mr. Gurr, NTS notified OSD that it could pick up a cashier’s check the next day; all of this took place within eight days from NTS’s receipt 0f the funds. MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 12 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OSD cannot use of the process agreed upon by the contract---the use of Mr. Gurr t0 determine final amounts---as a basis for claiming that NTS breached its obligations under the Settlement Agreement. That is not a fair reading 0f the contract under ordinary rules 0f interpretation. First, “A contract must be so interpreted as t0 give effect t0 the mutual intention 0f the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” Civil Code § 1636. Second, “The Whole 0f a contract is t0 be taken together, so as to give effect t0 every part, if reasonably practicable, each clause helping t0 interpret the other.” Civil Code § 1641. To make the five-day payment requirement preeminent would be t0 ignore the role the parties assigned t0 Mr. Gurr in the Settlement Agreement, making the contract potentially unenforceable subj ect t0 the time constraints 0f Mr. Gurr. This simply cannot be a fair 0r appropriate reading 0f the contract. Further, under any reading 0f the agreement, the payment Within eight days 0f receipt by NTS was substantial performance under the precepts 0fMagic Carpet Ride. The Court is invited to note that the Settlement Agreement does not contain a “Time is 0f the Essence” clause. Thus, in order for there t0 be a material breach, there would have t0 be some extraordinary facts as t0 the necessity of the payment in the five days. There are none and the Settlement Agreement does not identify any such conditions or circumstances. C. OSD Cannot Collect the 2% Late Payment Penalty Thus, the only question at bar With regard t0 the payment within eight days is whether OSD is even entitled t0 the 2% payment. It is not. First, as noted above, NTS believes that there was full compliance given that the delay was the consequence 0f a procedure that the parties wrote into the Settlement Agreement, (i.e., Mr. Gurr’s true-up procedure). Second, per the California Supreme Court, unless the 2% late fee has a reasonable relationship to the damages which could be expected to flow from the delay in payment, it is an invalid penalty: A liquidated damages clause will generally be considered unreasonable, and hence, unenforceable under section 1671(b) if it bears n0 reasonable relationship t0 the range of actual damages MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that the parties could have anticipated would flow from a breach. The amount set as liquidated damages “must represent the result 0f a reasonable endeavor by the parties t0 estimate a fair average compensation for any loss that may be sustained.” [Citation] In the absence 0f such relationship, a contractual clause purporting t0 predetermine damages “must be construed as a penalty.” [Citati0n.]” Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970, 977. Here, the Settlement Agreement generally set the amount due at approximately $769,000.00. But payments could have come in less than the full amount owed, depending 0n how Driftwood and InvenSense chose t0 pay, thus, it is nearly impossible to know what the actual 2% would represent. As it was, the payment came in at an amount showing that approximately $701,000 was owed t0 OSD, and OSD asserts that it is owed an additional $14,000 for the payment that it received in eight days, rather than five, because 0f Mr. Gurr’s delay in responding. Importantly, there is nothing in the Settlement Agreement, nor does NTS believe that OSD will be able show basis, reasonably relating the 2% late fee to any damages that OSD be sustained as a consequence of a late payment, (let alone a delay of only three days). “[t]he general rule for Whether a contractual condition is an unenforceable penalty requires the comparison 0f (1) the value 0f the money 0r the property forfeited 0r transferred t0 the party protected by the condition to (2) the range ofharm or damages anticipated t0 be caused that party by failure 0f the condition. Iftheforfeiture 0r transfer bears n0 reasonable relationship t0 the range ofanticipated harm, the condition will be deemed an unenforceable penalty.” Grand Prospect Partners, LP v. Ross Dressfor Less, Inc. (2015) 232 Ca1.App.4th 1332, 1358 (emphasis added). OSD’s inability t0 establish proportionality, the 2% late fee t0 any damages makes the provision invalid. Such invalidity, however, 0f a clause does not affect the validity 0r enforceability of the remainder 0f the Settlement Agreement. (EX. A, Settlement Agreement, para. 23.) D. NTS’s Payments to Third Party Vendors Does Not Render the Settlement Agreement Unenforceable by NTS OSD’s assertion that NTS’s payments t0 Aegis Fire and United Mechanical, and the subsequent accounting for them in its final payment t0 OSD, breached the agreement is MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 14 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 nonsensical. These payments totaling $25,000 were made, as required by InvenSense, to keep Aegis Fire and United Mechanical from filing liens. OSD does not dispute that NTS made these payments in June 2019, nor is there any dispute that NTS included these expenses as costs in the final accounting. OSD’s position is that OSD should have paid Aegis Fire and United Mechanical. It is not clear that it should have, given that NTS was the party in contract With InvenSense and responsible for keeping the proj ect lien-free, not OSD. But even assuming that OSD should have made the payments, NTS’s payments had n0 effect on the amounts OSD ultimately received. Ironically, OSD’s position is actually counterproductive to its economic interests. IfOSD allows NTS t0 make the payment, then OSD’s payment from NTS goes down by $12,500, but OSD does not have to pay the $25,000 t0 Aegis Fire and United Mechanical. Instead, OSD wants NTS to get its $25,000 back so that NTS has t0 pay OSD half 0f that amount (i.e., $12,500), but then OSD has to pay Aegis Fire and United Mechanical. In effect, OSD is paying $25,000 to Aegis Fire and United Mechanical in order t0 receive $12,500 from NTS. Additionally, even though OSD knew NTS had made the payments, it is forcing NTS t0 seek a refund 0f the amounts paid, so that OSD can then pay the identical amount. As this makes n0 economic sense, it is clear that OSD is taking this approach for n0 other reason t0 try t0 legitimize suing NTS. (Ex. E, 1/21/20 Email from OSD Attorney Cannistraci t0 NTS Attorney Zink.) This is a zero sum game, and appears t0 have no purpose other than t0 harass NTS. E. NTS’s Is Entitled to Recover the $25,000 Overpayment it Inadvertently Made t0 OSD. As detailed above, NTS made an overpayment of $25,000 t0 OSD as a result 0f its failure t0 account for the $50,000 credit 0n the InvenSense project that was the result 0f the audit. At mediation, NTS informed OSD 0f the audit and the fact that it could end up being as high as $1 10,000. This was accounted for in the Settlement Agreement at Paragraph 6. As a result of the audit, InvenSense and NTS agreed t0 a reduction in the contract price 0f $50,000. OSD acknowledged this credit and even sent an email to NTS revising the total billings on the MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 15 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 InvenSense proj ect. Krystal Summers sent an email to NTS and its counsel with her own counsel copied 0n June 14, 2019, Which states in relevant part, as follows: “The settlement agreement states the total billing as $2,920,657. This number does not account for the $50k credit that NTS negotiated with InvenSense. Subtracting the 50k leaves a total billing 0f $2,870,657.” Ms. Summers went on t0 say, “The final contract price is 2,920,657 minus the $50k credit is $2,870,657. The amount in the net profit should be reduced by 50K. This reduction reduces the 50% share by 25k.” Ms. Summers was completely correct. (EX. F, 6/14/19 Email from Krystal Summers to NTS and its Attorney Trevor Zink). Unfortunately, two months later, when NTS did its final calculations for purposes of making the distribution, it used the final contract price 0f $2,920,657, which failed to account for the $50,000 credit. NTS prepared a spreadsheet showing how it arrived at the total amount owed 0f $701,516 (EX. D, spreadsheet attached t0 Zink email t0 OSD’s counsel). It clearly indicates that the “Final Contract Price” used was $2,920,657 Without any accounting for the $50,000 credit. Accordingly, the “Balance owed t0 OSD” number on the spreadsheet is $25,000 too much, and NTS is entitled t0 recover this amount from OSD. V. ATTORNEY’S FEES/RQUEST FOR THE COURT TO RETAIN JURISDICTION NTS intends t0 make a motion for attorney’s fees pursuant to paragraph 17 of the Settlement Agreement if it is successful in the motion. NTS respectfully requests that the Court retain jurisdiction over the parties t0 enforce the issue of attorney’s fees under the Settlement Agreement in the event the Court grants NTS’S motion to enforce the Settlement Agreement and orders OSD t0 dismiss its lawsuit, and OSD does s0. /// /// /// /// /// /// /// MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 16 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VI. CONCLUSION For the above-cited reasons, NTS respectfully requests that the court grant its motion brought pursuant t0 CCP 664.6 t0 enforce the Settlement Agreement by ordering OSD to refund the $25,000 overpayment, ordering OSD to dismiss its lawsuit against NTS, and retaining jurisdiction to award attorney’s fees pursuant to the Settlement Agreement, in the event OSD dismisses its lawsuit. Dated: February 26, 2020 OMNI LAW GROUP, LLP By'W' TREVOR J. ZINK, ESQ. Attorneys for BRIAN BRAGER / NTS, Inc. MOTION TO ENFORCE SETTLEMENT AGREEMENT PURSUANT TO CCP § 664.6 17
