Red & White Distribution, LLC v. Osteroid Enters., LLC.

*402 *584 INTRODUCTION

Red & White Distribution, LLC, Red & White Distribution Sacramento LLC, and Mikhail Cheban (collectively, R&W) appeal a judgment entered after R&W allegedly defaulted in making payments to Osteroid Enterprise, LLC and Eric Oster (collectively, the Osteroid Parties) under a settlement agreement. The principal issue in this appeal is whether the stipulated judgment constitutes an unenforceable penalty. A secondary issue is whether the court's finding that R&W breached the settlement agreement is supported by substantial evidence.

Under Civil Code 1 section 1671, subdivision (b), "a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made." A liquidated damages clause will generally be considered unreasonable if it "bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach." ( Ridgley v. Topa Thrift & Loan Assn. (1998) 17 Cal.4th 970 , 977, 73 Cal.Rptr.2d 378 , 953 P.2d 484 ( Ridgley ).)

In…