contractual clause in California

2022The amount set as liquidated damages ‘must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.’ [Citation.] In the absence of such relationship, a contractual clause purporting to predetermine damages ‘must be construed as a penalty.’ ” (Ridgley v. Topa Thrift & Loan Ass’n (1998) 17 Cal.4th 970, 977 .) Here, the trial court found that the parties participated in significant negotiations to reach a fair amount of compensation for plaintiffs if defendants failed to pay the settlement amount.

2020The amount set as liquidated damages ‘must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.’ [Citation.] In the absence of such relationship, a contractual clause purporting to predetermine damages ‘must be construed as a penalty.’ [Citation.]” (Ridgley, supra, 17 Cal.4th at p. 977 .) Under California law, a “ ‘penalty provision operates to compel performance of an act [citation] and usually becomes effective only in the event of default [citation] upon which a forfeiture is compelled without regard to the

2025(See, e.g., America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 4 (America Online) [affirming the trial court’s denial of a motion to stay because “[e]nforcement of the contractual forum selection and choice of law clauses would be the functional equivalent of a contractual waiver of the consumer protections under the [Consumers Legal Remedies Act],” which “is prohibited under California law”]; Verdugo, supra, 237 Cal.App.4th at p. 144 ; Hall v. Superior Court (1983) 150 Cal.App.3d 411, 416 .) In such cases, courts typically consider the interplay between forum selection and choice

2015(America Online, supra, 90 Cal.App.4th at p. 5 [“Enforcement of the contractual forum selection and choice of law clauses would be the functional equivalent of a contractual waiver of the consumer protections under the CLRA . . . .” (italics added)]; Wimsatt, supra, 32 Cal.App.4th at p. 1522 [forum selection clause would be “effective equivalent” of a waiver].) Here, the forum selection clause has the potential to operate as a waiver, and therefore Alliantgroup bears the burden to show it does not.

2005Without deciding whether the class arbitration waiver was unconscionable or whether the choice-of-law provision was valid, the appellate court held that the FAA preempted any state law mies in those areas that might serve to negate the arbitration provision. *555 With respect to FAA preemption, the Supreme Court declared itself “puzzle[edj” by the Court of Appeal’s conclusion that “[w]hile a state may prohibit the contractual waiver of statutory consumer remedies, including the right to seek relief in a class action, such protections fall by the wayside when the waiver is contained in a validl

2005Nor may a court rely on the uniqueness of an agreement to arbitrate as a basis for a state-law holding that enforcement would *89 be unconscionable, for this would enable the court to effect what we hold today the state legislature cannot." ( Perry, supra, 482 U. S. at pp. 492-493, fn. 9, 107 S.Ct. 2520 italics omitted and added.) The Court of Appeal quoted the above language and also noted similar reasoning in the seminal case of Southland, supra, 465 U.S. at page 16 , 104 S.Ct. 852 in which the Supreme Court held that a California statute prohibiting arbitration of certain claims under the F

2017(Id. at pp. 610-611.) The second, which is applicable and controlling here, “is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation ‘by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.’ ” (Id. at p. 611, italics added.) As the court explained, without section 1717 the prevailing party under either of these two circumstances would be unable to claim attorney fees as a contractual right because the party’s position would be “inconsistent with a contractual claim.” (Sa

2002Guided by Western Decor and Bank of Waunakee , we find no inconsistency between Wilson’s defeating a suit brought by CalPly as Johnwall’s assignee, and Wilson’s entitlement to attorney fees pursuant to the fee provision in the Wilson/Johnwall subcontract. *608 Here, CalPly’s action to recover the sum allegedly due under the subcontract terminated with a judgment in favor of Wilson; Wilson was the party prevailing on the subcontract as a matter of law in that it obtained “ ‘a simple, unqualified win’ ” by defeating the sole contractual claim alleged against it (Hsu v. Abbara (1995) 9 Cal.4th 86

2023Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 12-13 [“court cannot validly enter a judgment or order which is void even if the parties agree to it”].) Timney held “even though there is a strong public policy favoring the settlement of litigation, this policy does not excuse a contractual clause that is otherwise illegal or unjust.” (Timney v. Lin, supra, 106 Cal.App.4th at p. 14 1127.) “[O]ur Supreme Court and other California courts have rejected the notion that a settlement judge may properly act to ‘approve’ an illegal contract and thereby shield it from invalidation. [Citati

2003Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 12-13 [ 84 Cal.Rptr.2d 715 ] (Plaza Hollister) [“The trial court has the duty to ensure that the stipulated judgment is just and cannot act as a mere puppet. [Citation.] More importantly, a court cannot validly enter a judgment or order which is void even if the parties agree to it.”].) Consequently, even though there is a strong public policy favoring the settlement of litigation, this policy does not excuse a contractual clause that is otherwise illegal or unjust.

2015(Olinick, supra, 138 Cal.App.4th at p. 1301 .)2 Nonetheless, “California courts will refuse to defer to the selected forum if to do so would substantially diminish the rights of California residents in a way that violates our state’s public policy.” (America Online, supra, 90 Cal.App.4th at p. 12 ; see Intershop Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 200 (Intershop) [“a forum selection clause will not be enforced if to do so would bring about a result contrary to the public policy of this state”]; CQL Products, supra, 39 Cal.App.4th at p. 1354 ; Hall v. Superior Court

2015(Olinick, supra, 138 Cal.App.4th at p. 1301 .)2 Nonetheless, “California courts will refuse to defer to the selected forum if to do so would substantially diminish the rights of California residents in a way that violates our state’s public policy.” (America Online, supra, 90 Cal.App.4th at p. 12 ; see Intershop Communications AG v. Superior Court (2002) 104 Cal.App.4th 191, 200 (Intershop) [“a forum selection clause will not be enforced if to do so would bring about a result contrary to the public policy of this state”]; CQL Products, supra, 39 Cal.App.4th at p. 1354 ; Hall v. Superior Court

2022Sav. & Loan Assn. (1973) 9 Cal.3d 731, 739 (Garrett).) The amount set as liquidated damages “must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.” (Ibid.) In the absence of such relationship, a contractual clause purporting to predetermine damages “must be construed as a penalty.” (Ibid.) “Civil Code section 1671 and the case law interpreting it aim to combat unfair and unreasonable coercion arising from an imbalance of bargaining power.” (Constellation-F, LLC v. World Trading 23, Inc. (2020) 45 Cal.App.5t

1998Sav. & Loan Assn., supra, 9 Cal.3d at p. 739 (hereafter Garrett ).) In the absence of such relationship, a contractual clause purporting to predetermine damages "must be construed as a penalty." ( Ibid. ) "A penalty provision operates to compel performance of an act [citation] and usually becomes effective only in the event of default [citation] upon which a forfeiture is compelled without regard to the damages sustained by the party aggrieved by the breach [citation].

2020(See The Retirement Group v. Galante (2009) 2 176 Cal.App.4th 1226, 1238 [“section 16600 bars a court from specifically enforcing (by way of injunctive relief) a contractual clause purporting to ban a former employee from soliciting former customers . . ., but a court may enjoin tortious conduct (as violative of either the Uniform Trade Secrets Act and/or the Unfair Competition Law) by banning the former employee from using trade secret information to identify existing customers, to facilitate the solicitation of such customers, or to otherwise unfairly compete with the former employer”].) TGS

2018Instead, Edwards merely stated it was not required to 'address the applicability of the so-called trade secret exception to section 16600 ' ( Edwards , supra , 44 Cal.4th at p. 946, fn. 4 , 81 Cal.Rptr.3d 282 , 189 P.3d 285 ), because it was not germane to the claims raised by the employee." ( Galante , supra , 176 Cal.App.4th at p. 1239 , 98 Cal.Rptr.3d 585 .) This court in Galante recognized the "tension" between section 16600 and trade secrets ( Galante , supra , 176 Cal.App.4th at p. 1233 , 98 Cal.Rptr.3d 585 ), but nonetheless found that section 16600 barred a court from "specifically enf

2018(See Roberts , supra , 358 Or. at p. 428 , 364 P.3d 328 ["When purchasing stock in a Delaware corporation, shareholders buy into a legal framework that allows corporate directors to unilaterally amend the corporation's bylaws and gives the shareholders the right to repeal those bylaws."]; North , supra , 47 F.Supp.3d at pp. 642, fn. omitted ["shareholders ... consented to the Delaware corporate framework by buying shares in a Delaware corporation and agreeing to the certificate of incorporation that allowed the board to unilaterally adopt bylaws"].) Given that knowledge, Drulias consented to t

2018That case-decided, as it was, before Boilermakers and without reference to "the contractual framework established by [Delaware law] for Delaware corporations and their stockholders"-is unpersuasive. ( Boilermakers , supra , 73 A.3d at p. 956 , fn. omitted.) Even if we were to consider the new argument, we would reject it.

2023Partnership v. County of San Benito (1999) 72 Cal.App.4th 1, 12-13 [“court cannot validly enter a judgment or order which is void even if the parties agree to it”].) Timney held “even though there is a strong public policy favoring the settlement of litigation, this policy does not excuse a contractual clause that is otherwise illegal or unjust.” (Timney v. Lin, supra, 106 Cal.App.4th at p. 14 1127.) “[O]ur Supreme Court and other California courts have rejected the notion that a settlement judge may properly act to ‘approve’ an illegal contract and thereby shield it from invalidation. [Citati

2015(See Critzer v. Enos (2010) 187 Cal.App.4th 1242, 1251 [“a judgment on an order granting a motion to enforce settlement under [Code of Civil Procedure] section 664.6 is appealable”]; Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1183 .) Moreover, “[Code of Civil Procedure] section 664.6 does not allow a court to endorse or enforce a provision in a settlement agreement or stipulation which is illegal, contrary to public policy, or unjust. [Citations.] Consequently, even though there is a strong public policy favoring the settlement of litigation, this policy does not excuse a contractual clause t

2018Instead, Edwards merely stated it was not required to 'address the applicability of the so-called trade secret exception to section 16600 ' ( Edwards , supra , 44 Cal.4th at p. 946, fn. 4 , 81 Cal.Rptr.3d 282 , 189 P.3d 285 ), because it was not germane to the claims raised by the employee." ( Galante , supra , 176 Cal.App.4th at p. 1239 , 98 Cal.Rptr.3d 585 .) This court in Galante recognized the "tension" between section 16600 and trade secrets ( Galante , supra , 176 Cal.App.4th at p. 1233 , 98 Cal.Rptr.3d 585 ), but nonetheless found that section 16600 barred a court from "specifically enf

2018Instead, Edwards merely stated it was not required to 'address the applicability of the so-called trade secret exception to section 16600 ' ( Edwards , supra , 44 Cal.4th at p. 946, fn. 4 , 81 Cal.Rptr.3d 282 , 189 P.3d 285 ), because it was not germane to the claims raised by the employee." ( Galante , supra , 176 Cal.App.4th at p. 1239 , 98 Cal.Rptr.3d 585 .) This court in Galante recognized the "tension" between section 16600 and trade secrets ( Galante , supra , 176 Cal.App.4th at p. 1233 , 98 Cal.Rptr.3d 585 ), but nonetheless found that section 16600 barred a court from "specifically enf

2013The first “is „when the contract provides the right to one party but not to the other.‟ [Citation.] In this situation, the effect of section 1717 is to allow recovery of attorney fees by whichever contracting party prevails, „whether he or she is the party specified in the contract or not‟ [citation].” ( Santisas, supra, 17 Cal.4th at pp. 610-611.) “The second situation in which section 1717 makes an otherwise unilateral right reciprocal . . . is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation „by successfully arguing the

2013(Santisas v. Goodin (1998) 17 Cal.4th 599, 611 (Santisas).) As the Supreme Court explained in Santisas, in language directly applicable to Abbey‘s motion: ―The second situation in which section 1717 makes an otherwise unilateral right reciprocal, thereby ensuring mutuality of remedy, is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation ‗by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.‘ [Citation.] Because these arguments are inconsistent with a contractual clai

2026(Cf. Cornette v. Department of Transportation (2001) 26 Cal.4th 63, 73 [“When one part of a statute contains a term or provision, the omission of that term or provision from another part of the statute indicates the Legislature intended to convey a different meaning.”].) Gil v. Mansano (2004) 121 Cal.App.4th 739 (Gil), which YCS asserts is “directly on point,” held that the defendant in that case was not entitled to attorney’s fees under a contract because “the assertion of a contractual defense to a tort action is not an ‘action brought to enforce the contract.’ ” (Id. at p. 741.) However, in

2020(See Black’s Law Dict. (9th ed. 2009) p. 219, col. 1 [defining “bring an action” as “[t]o sue; institute legal proceedings”]; id. at p. 482, col. 2 [defining “affirmative defense” as “[a] defendant’s assertion of facts and arguments that, if true, will defeat the plaintiff’s . . . claim, even if all the allegations in the complaint are true”].) “[W]hile an affirmative defense is a ‘real part of any action’ [citation], it does not, in and of itself, constitute an ‘action’ for purposes of recovering attorney fees.” (Mountain Air, supra, 3 Cal.5th at p. 753 ; see also Gil v. Mansano (2004) 121 Ca

2025(See, e.g., America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 4 (America Online) [affirming the trial court’s denial of a motion to stay because “[e]nforcement of the contractual forum selection and choice of law clauses would be the functional equivalent of a contractual waiver of the consumer protections under the [Consumers Legal Remedies Act],” which “is prohibited under California law”]; Verdugo, supra, 237 Cal.App.4th at p. 144 ; Hall v. Superior Court (1983) 150 Cal.App.3d 411, 416 .) In such cases, courts typically consider the interplay between forum selection and choice

2025(See, e.g., America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 4 (America Online) [affirming the trial court’s denial of a motion to stay because “[e]nforcement of the contractual forum selection and choice of law clauses would be the functional equivalent of a contractual waiver of the consumer protections under the [Consumers Legal Remedies Act],” which “is prohibited under California law”]; Verdugo, supra, 237 Cal.App.4th at p. 144 ; Hall v. Superior Court (1983) 150 Cal.App.3d 411, 416 .) In such cases, courts typically consider the interplay between forum selection and choice

2020(See Black’s Law Dict. (9th ed. 2009) p. 219, col. 1 [defining “bring an action” as “[t]o sue; institute legal proceedings”]; id. at p. 482, col. 2 [defining “affirmative defense” as “[a] defendant’s assertion of facts and arguments that, if true, will defeat the plaintiff’s . . . claim, even if all the allegations in the complaint are true”].) “[W]hile an affirmative defense is a ‘real part of any action’ [citation], it does not, in and of itself, constitute an ‘action’ for purposes of recovering attorney fees.” (Mountain Air, supra, 3 Cal.5th at p. 753 ; see also Gil v. Mansano (2004) 121 Ca

2004(Exxess Electronixx v. Heger Realty Corp., supra, 64 Cal.App.4th at p. 712 .) Thus, for example, an attorney fee provision applicable to “any dispute under the agreement” is sufficiently broad to include the assertion of a contractual defense to fraud and breach of fiduciary duty causes of action.

2019John's Hospital & Health Center (1994) 25 Cal.App.4th 628 , 639, 30 Cal.Rptr.2d 603 [individual physician, who contracted with a hospital to supply exclusive medical services, is bound by the express waiver of due process hearing rights otherwise afforded him or her under the Business and Professions Code where the physician's contract was terminated for reasons unrelated to the physician's medical competency].) Moreover, section 809.6 expressly prohibits a contractual waiver of peer review proceedings in cases where a physician's medical competency is at issue.

2019John's Hospital & Health Center (1994) 25 Cal.App.4th 628 , 639, 30 Cal.Rptr.2d 603 [individual physician, who contracted with a hospital to supply exclusive medical services, is bound by the express waiver of due process hearing rights otherwise afforded him or her under the Business and Professions Code where the physician's contract was terminated for reasons unrelated to the physician's medical competency].) Moreover, section 809.6 expressly prohibits a contractual waiver of peer review proceedings in cases where a physician's medical competency is at issue.

2017(Id. at pp. 610-611.) The second, which is applicable and controlling here, “is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation ‘by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.’ ” (Id. at p. 611, italics added.) As the court explained, without section 1717 the prevailing party under either of these two circumstances would be unable to claim attorney fees as a contractual right because the party’s position would be “inconsistent with a contractual claim.” (Sa

1998The second situation in which section 1717 makes an otherwise unilateral right reciprocal, thereby ensuring mutuality of remedy, is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends 'the litigation “by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.” (North Associates v. Bell (1986) 184 Cal.App.3d 860, 865 [ 229 Cal.Rptr. 305 ].) Because these arguments are inconsistent with a contractual claim for attorney fees under the same agreement, a party prevailing on any of these bases

2017Code, § 7060, subd. (a) ), it also applies to public contracts. ( Embassy LLC v. City of Santa Monica (2010) 185 Cal.App.4th 771 , 777, 110 Cal.Rptr.3d 579 ( Embassy ).) As Division Five of this court explains, public entities "cannot avoid [the Ellis Act's] prohibitions by acting through contract, rather than through regulation." ( Id. at p. 776, 110 Cal.Rptr.3d 579 .) Thus, a landowner's purported contractual waiver of its rights under the Ellis Act is unenforceable. ( Id. at p. 773, 110 Cal.Rptr.3d 579 .) I do not suggest that a trial court may never enjoin activity concerning property subj

2017Code, § 7060, subd. (a) ), it also applies to public contracts. ( Embassy LLC v. City of Santa Monica (2010) 185 Cal.App.4th 771 , 777, 110 Cal.Rptr.3d 579 ( Embassy ).) As Division Five of this court explains, public entities "cannot avoid [the Ellis Act's] prohibitions by acting through contract, rather than through regulation." ( Id. at p. 776, 110 Cal.Rptr.3d 579 .) Thus, a landowner's purported contractual waiver of its rights under the Ellis Act is unenforceable. ( Id. at p. 773, 110 Cal.Rptr.3d 579 .) I do not suggest that a trial court may never enjoin activity concerning property subj