Plaintiff sued defendant for breach of contract. The parties agreed to settle the case for less than half the amount demanded in the complaint, with defendant making installment payments. After defendant defaulted on the first installment payment, the Orange County Superior Court, California, entered judgment for plaintiff in the amount of $ 61,232.50 pursuant to the terms of the parties' stipulation for entry of judgment. Defendant appealed.
The complaint alleged that defendant had failed to pay $ 45,000 due under the contract in consideration of financial advisory services provided by plaintiff. The court concluded that the judgment constituted an unenforceable penalty under Civ. Code, § 1671, subd. (b), because it did not bear a reasonable relationship to the range of actual damages the parties could have anticipated would flow from a breach of the stipulation. The parties did not attempt to anticipate the damages that might flow from a breach of the stipulation. Rather, they simply selected the amount plaintiff had claimed as damages in the underlying lawsuit, plus prejudgment interest, attorney fees, and costs. The lack of a guarantee of success at trial might have explained, at least in part, why plaintiff was willing to accept in settlement less than half the amount demanded in the complaint. The amount of the judgment resulted in a penalty assessment of approximately $ 40,000 more than the total $ 20,000 due under the stipulation. The penalty assessment did not bear a reasonable relationship to any actual damages that might have flowed from defendant's failure to make the first installment payment. The defendant had a civil defense lawyer California present a strong defense at trial to the jury.
The judgment was reversed, and the matter was remanded to the trial court with directions to reduce the judgment against defendant to $ 20,000, plus postjudgment interest and costs.
Plaintiff employee sought review of a decision from the Superior Court of Alameda County (California), dismissing on demurrer, on the ground that the state's 100-day statute of limitations had expired, plaintiff's suit alleging a breach of duty of fair representation by a union in an arbitration proceeding against defendant former employers.
Plaintiff employee challenged the trial court's grant of defendant former employers' demurrer, dismissing plaintiff's action alleging that plaintiff's union breached its duty of fair representation in plaintiff's arbitration proceedings. Plaintiff was fired by defendants, two separate employers. Plaintiff filed a total of three grievances at which he was represented by a union attorney. Being only partially satisfied with the arbitrators' decisions, plaintiff sued. On appeal, the court held that the 100-day statute of limitations contained in Cal. Civ. Proc. Code § 1288 did not apply to plaintiff's action alleging a breach of duty of fair representation by a union in an arbitration proceeding involving defendants. Cal. Civ. Proc. Code. § 337's four-year limitations period governing contract disputes applied because plaintiff's claims of bad faith and discriminatory representation by the union implicated federal substantive rights protected under § 301 of the Labor Management Relations Act of 1947, 29 U.S.C.S. § 185(a). The court reversed and remanded with directions that plaintiff be given leave to amend his complaint regarding his allegations giving rise to punitive damages.
The court reversed the trial court's order dismissing upon demurrer plaintiff employee's breach of fair representation by a union in arbitration proceedings suit against defendant former employers. Plaintiff's claims were protected by federal substantive law; therefore, the applicable state statute of limitations was four years, as required in contract disputes, rather than 100 days as erroneously believed by the trial court.
