Legado Companies v. Jones CA2/4

INTRODUCTION

Derek Jones and Derek Jones PLC (collectively, Jones) appeal a judgment entered after Jones defaulted in making payments under a settlement agreement. The sole issue in this appeal is whether a portion of the settlement constitutes unenforceable liquidated damages. Jones and respondents Legado Companies and Edward M. Czuker (collectively, Legado) entered into a settlement agreement providing that Jones would pay Legado $2.4 million. However, Legado agreed to accept $2 million as satisfaction of the debt if Jones made timely payments as required by the settlement agreement. When Jones failed to do so, Legado sought a default judgment for the full $2.4 million, minus the amount Jones already had paid. Jones argued that the parties actually agreed to settle their dispute for $2 million and the additional $400,000 was only owed as liquidated damages in the event of a default. He further contended that this liquidated damages amount was unenforceable. The trial court found that the parties agreed to a total settlement of $2.4 million, as reflected in their agreement, and that the $400,000 discount was a negotiated benefit, and not an unenforceable penalty. We conclude…