2010-00090967-CU-BC

CERF SPV I, LLC vs. Scott Goldie

Nature of Proceeding: Motion for Entry of Judgment against Defendants Pursuant to Stipulation

Filed By: Wood, Ryan C.

The motion of Plaintiffs CERF SPV I, LLC and EnviroFinance Group SPV-III, LLC (EnviroFinance) (collectively “Plaintiffs”) for entry of judgment is DENIED.

The request for judicial notice of Defendants Scott Goldie (Goldie), Chris Yelch and Neil Brandom (Brandom) (collectively “Defendants”) is GRANTED.

Factual/Procedural Background

Plaintiffs filed this breach-of-guaranty case in 2010. Defendants are the guarantors.

The parties entered into a written settlement agreement (Settlement) in March 2012.

Under the Settlement, each Defendant is required to pay a maximum of $1,000,000 over a period not to exceed 10 years from the time his first payment is made (subject to an exception not relevant here). (See Derickson Decl., Exh. A, ¶ 4(f).) Each Defendant must make an annual Settlement payment based on his adjusted gross income (AGI). (Id., Exh. A, ¶ 4(a).) In addition, each Defendant must produce a copy of certain tax records substantiating AGI within 30 days after filing an IRS Form 1040 return. (Id., Exh. A, ¶ 4(g).)

The Settlement identifies several failures which, if not corrected within 10 days of Plaintiffs’ written notice, constitute “Event[s] of Default.” (Derickson Decl., Exh. A, ¶ 5.) Failure timely to produce a copy of the first page of the Form 1040 return, and failure timely to make a Settlement payment, are both default events. (Id., Exh. A, ¶ 5(a), (c).) Plaintiffs are entitled to obtain a $4,000,000 judgment against one or more defaulting

Defendants, plus fees and costs, minus Settlement payments or other credits received. (Id., Exh. A, ¶ 3.)

In August 2012, the court signed a Stipulation for Entry of Judgment in which the parties agreed that, upon a Defendant’s default under the Settlement, Plaintiffs could obtain the Defendant’s judgment on an ex parte basis. (See Derickson Decl., Exh. B.) The Stipulation for Entry of Judgment is incorporated by reference into the Settlement. (Id., Exh. A, ¶ 3.) The Stipulation for Entry of Judgment provides for a money judgment “equal to $4,000,000 less the amount of payment made in total by all Defendants at the time of an Event of Default, less credits, if any, earned pursuant to the terms of the Settlement Agreement as of the time of an Event of Default… .” (Id., Exh. B, emphasis added.) Paragraph 4(d) addresses Credits, which are tethered to Plaintiffs’ sales of certain real property. No such Credits are currently at issue.

On 3/08/18, EnviroFinance served written notice that none of the Defendants had provided copies of their tax forms for 2015 or 2016. EnviroFinance demanded production of such forms, and any Settlement payments owed, by 3/21/18. Defendants did not produce the records or make any payments. On 4/20/18, EnviroFinance served a second letter indicating that it has instructed it counsel to obtain stipulated judgments against Defendants.

On 4/20/18, Before Plaintiffs sought entry of any judgment, Defendants forwarded their 2015 tax documents, and Goldie forwarded his 2016 tax documents. (Derickson Decl.,

¶ 15.) The same day, Plaintiffs’ counsel told Brandom that he would not seek entry of judgment if Defendants forwarded their annual settlement payments within 30 days. (Derickson Decl., ¶ 14.) Plaintiffs acknowledge that Defendants forwarded two payments of $75,000 and $148,276 in June and July 2018, but not within 30 days of 4/20/18. (See Moving Memo. at 5:27-28.) According to Defendants, they have now overpaid amounts due as annual Settlement payments. (See Opp. at 5:21-23, citing evidence.)

On 7/12/8, Plaintiffs served notice of an ex parte hearing for entry of judgment. The same day, Goldie sent EnviroFinance’s CEO an email request not to obtain entry of a judgment. EnviroFinance’s CEO expressed apprehension, but no judgment was entered, and the parties discussed alternatives. (See Elanjian Decl., Exhs. B, C.) It appeared Defendants might obtain a loan to finance their obligations under Settlement, but the parties did not resolve the dispute. (See Elijian Decl., Exhs. D-G.) On 8/29/18, Plaintiffs’ counsel served a second notice of an ex parte proceeding to obtain entry of judgment. (Id., Exh H.) The court elected to hear the matter as a motion on shortened time, but Plaintiffs eventually withdrew that motion and filed this instant motion on regular notice.

Discussion

The motion is denied because Plaintiffs accepted Settlement payments after the Events of Default on which they predicate entry of judgment. As noted above, the Stipulation for Entry of Judgment provides for a judgment that is “$4,000,000 less the amount of payments made in total by all Defendants at the time of an Event of Default [.]” What follows is that Plaintiffs must elect either to seek such a judgment and refuse Settlement payments tendered after the underlying Event(s) of Default, or they may accept such payments and abandon efforts to obtain a judgment based on such Event (s) of Default.

Plaintiffs argue that they were entitled to continue accepting post-default payments without foregoing entry of a judgment. They note that, when they accepted the post-default payments, they informed Defendants that the payments would be applied to a balance owed under a Stipulation for Entry of Judgment, not the Settlement. (See Derickson Decl., Exh. F.) But no judgment had been entered when the payments were accepted, and Plaintiffs were not entitled unilaterally to recharacterize the nature of Defendants’ payments. At the time Plaintiffs received the post-default payments, they understood that the payments were tendered under the Settlement, and there was no basis to accept them as anything other than Settlement payments.

Because the court denies the motion for reasons above, it does not address the other arguments raised in support of or in opposition to the motion.

Evidentiary Objections

The court need not rule and does not rule on Defendants’ evidentiary objections.

Sanctions

The court does not award any fees or costs incurred to bring or oppose the motion.

Disposition

The motion is denied.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.