Case Number: BC490789    Hearing Date: August 12, 2014    Dept: 58

Judge Rolf M. Treu
Department 58
Hearing Date: Tuesday, August 12, 2014
Calendar No.: 8
Case Name: Tadi Brothers, LLC v. Jemko Systems, et al.
Case No.: BC490789
Motion: Motion to Vacate Judgment
Moving Party: Defendants David Bogner, Lilly Bogner, and Nasrin Medici
Responding Party: Plaintiff Tadi Brothers, LLC
Notice: OK

Tentative Ruling: Motion to vacate judgment is denied. Plaintiff is awarded attorney fees in the total reduced amount of $8,030.

I. Background and Procedural History
On 8/22/12, Plaintiff Tadi Brothers, LLC filed this action against Defendants Jemko Systems, David Bogner, Lilly Bogner, Nasrin (aka Nina) Medici, and Stella Group Corp. arising out of the establishing of a competing business. Plaintiff asserts causes of action for (1) breach of duty of loyalty, (2) fraud, (3) violation and conspiracy to violate Bus. & Prof. Code § 17200, (4) violation and conspiracy to violate the Uniform Trade Secrets Act, (5) interference with and conspiracy to interfere with advantageous business relationship, and (6) breach of the covenant of good faith and fair dealing. The 1st, 2nd, and 6th COAs are asserted against David Bogner only.

On 10/11/12, David Bogner, in propria persona, filed a cross-complaint for abuse of process against Tadi Brothers. On 1/22/13, the Court sustained Tadi Brothers demurrer to the cross-complaint without leave to amend. On 3/25/13, the Court struck the answers filed by Stella Group and Jemko Systems and entered defaults against them. On 8/22/13, the Court entered a preliminary injunction in favor of Tadi Brothers against Defendants and denied Defendants’ motion for judgment on the pleadings. On 10/3/13, Tadi Brothers filed a notice of conditional settlement of the entire action. On 11/20/13, upon stipulation of all parties, the Court dismissed this action without prejudice on original terms and conditions of settlement previously reached. On 3/26/14, the Court granted Plaintiff’s motion to enforce settlement agreement, awarding Plaintiff $360,000 in liquidated damages and attorneys’ fees and costs of $4,896.25.

II. Motion to Enforce Settlement Agreement
On 1/15/14, Plaintiff filed a motion requesting liquidated damages and attorneys’ fees pursuant to the parties’ settlement agreement. On 2/4/14, David Bogner (on behalf of Defendants) filed an “answer” to the motion which was really an opposition. On 2/7/14, the Court continued the hearing on the motion to permit the parties to file supplemental papers. On 2/20/14, Plaintiff clarified that it is seeking to enforce a settlement agreement pursuant to CCP § 664.6.

On 3/6/14, David Bogner filed a supplemental opposition (which was unaccompanied by a proof of service) but which only asserted that Plaintiff had not established breach of the parties’ settlement agreement and requested costs pursuant to CCP § 1038, which was inapplicable to the motion. The Court noted that David Bogner’s supplemental opposition did not add anything new.

Plaintiff’s supplemental reply consisted of two sets of documents. One set was filed on 3/14/14 and consisted of evidentiary objections to David Bogner’s opposition and a declaration explaining that David Bogner’s opposition was not received until 3/13/14 (Mabie Second Supp. Decl. ¶¶ 2-3). The other set was filed on 3/18/14 and consisted of a supplemental reply brief and supplemental declaration by Adi Hed. The Court did not consider the supplemental declaration by Adi Hed, but otherwise considered Plaintiff’s supplemental reply papers despite being partially untimely.

Except for the supplemental declaration of Adi Hed, the Court will consider Plaintiff’s supplemental reply papers despite being partially untimely.

III. Motion to Vacate Judgment
On 6/27/14, David Bogner, Lilly Bogner, and Nasrin Medici (“Moving Parties”) filed a motion to vacate the judgment. The motion is supported only by the declaration of David Bogner.

1. Substitution of Attorney
Preliminarily, the Court notes that this motion was filed by attorney Jon Pfeiffer of Pfeiffer Fitzgibbon & Ziontz LLP; however, no substitution of attorney form was filed with the Court. Mr. Pfeiffer is ordered to provide a completed substitution of attorney form at the hearing.

2. Evidentiary Objections
Plaintiff objects to portions of the declaration of David Bogner. All objections are sustained.

3. CCP § 473(b)
Moving Parties argue that the judgment should be vacated pursuant to CCP § 473(b). Notwithstanding the Court’s ruling on Plaintiff’s evidentiary objections, the Court notes that David Bogner’s declaration (even if considered) does not support relief pursuant to CCP § 473(b).

David Bogner submits that he inadvertently failed to include a declarations and a section of arguments and authorities, which is described as “the foundation on which my argument rests.” David Bogner Decl. ¶ 9. However, there is no explanation as to what arguments and authorities or the “foundation” of his argument that he “inadvertently” omitted. Notably, no “complete” supplemental opposition (i.e., consisting of the “inadvertently” omitted declarations and section of arguments and authorities) has been submitted. Additionally, although David Bogner submits that he did not become aware of his “mistake” until Plaintiff filed the supplemental reply on 3/18/14 (David Bogner Decl. ¶ 9); David Bogner did not raise this issue at the 3/26/14 hearing (see Mabie Decl. ¶ 6).

David Bogner submits that he was surprised by the additional evidence and allegations submitted in Plaintiff’s supplemental reply. David Bogner Decl. ¶ 10. However, the Court notes that it excused the untimeliness of Plaintiff’s supplemental reply brief due to Plaintiff’s supplemental opposition having been filed without a proof of service and the undisputed evidence that Plaintiff received the supplemental opposition one day before the supplemental reply was due. Moving Parties fail to address these circumstances.

4. Liquidated Damages
Moving Parties argue that the liquidated damages provision in the settlement agreement is an invalid penalty. The Court notes that a liquidated damages clause is presumed to be valid and the burden is on the challenging party to show that it is unreasonable under the circumstances existing at the time the settlement agreement was made. Weber, Lipshie & Co. v. Christian (1997) 52 Cal.App.4th 645, 654. Notwithstanding the Court’s ruling on Plaintiff’s evidentiary objections, the Court notes that David Bogner’s declaration (even if considered) does not support Moving Parties’ argument.

David Bogner submits that he asked why the liquidated damages provision was in the amount stated and Plaintiff’s counsel replied that it was standard in this type of agreement: no further discussions regarding the liquidated damages provision occurred. David Bogner Decl. ¶¶ 7-8. However, this is disputed by Plaintiff’s counsel, which supports that the parties did not directly communicate with each other. Mabie Decl. ¶¶ 2-4. Additionally, the settlement agreement states that the parties each acknowledge and agr3ee that it would be extremely difficult to ascertain the actual damages from breach of the non-disparagement provision. See, e.g., Mot’n Ex. A § 6. Moving Parties fail to address these circumstances.

5. Breach
To the extent Moving Parties continue to assert that they did not breach the settlement agreement, the Court notes that no new evidence has been submitted to address the issues discussed in the Court’s 3/26/14 ruling.

6. Attorneys’ Fees
Plaintiff requests attorneys’ fees pursuant to the attorneys’ fees provision of the settlement agreement (Mot’n Ex. A § 13). Mabie Decl. ¶ 7 (requesting 20 hours to prepare the opposition, an additional 2 hours to review the reply, and an additional two hours to prepare for and attend the hearing at the hourly rate of $365). However, no reply was filed. Therefore, the Court will award Plaintiff attorneys’ fees in the total reduced amount of $8,030.