Equity: Attorney’s Fees Award Remanded For Another Looks Because Entered Judgment Based On Stipulated Default Arrangement May Have Been An Unlawful Penalty

 

As Far As Awarding Fees, Orange County Default Fee Schedule Suggested in Remand Look If Entered Judgment Significantly Reduced In the “Redo”.

     The Fourth District, Division 3 has published several decisions in the unlawful penalty area involving leases with certain penalties and judgment stipulations having an increased penal amount feature over/above any agreed-upon settlement amounts. The next unpublished decision shows that this division has their collective eyes on this issue.

     In Hermanson v. Patterson, Case No. G047401 (4th Dist., Div. 3 Sept. 6, 2013) (unpublished), the trial judge entered a $50,660.75 judgment even though the circumstances demonstrated that judgment debtor’s full performance might have resulted in a judgment of only $19,423.78 under a settlement structured through a held stipulation for judgment arrangement. The trial judge also added another $3,391.25 in attorney’s fees and costs as apparently allowed under the stipulation upon default.

     Acting Presiding Justice Bedsworth, on behalf of a 3-0 panel, reversed the judgment and remanded with further directions to the trial judge.

     Because the entered judgment appeared to be disproportionate had judgment debtor fully performed, it raised unlawful penalty concerns. The appellate court remanded for another look on this issue. In the event that the judgment is significantly reduced in the future, it directed the court to look at the fee award again, suggesting that the Orange County Superior Court Local Rule 366 schedule for default judgments “might provide a useful yardstick for this purpose [refixing fees if the judgment was scaled down in a material way].”