AISHA A. KRECHUNIAK, as Trustee, etc., Cross-Complainant and Respondent,
ZIA JAMAL NOORZOY, Cross-Defendant and Appellant.
County Superior Court Superior Court No.: M100205 The
Honorable Thomas W. Wills.
Attorneys for Cross-Complainant and Respondent, Aisha A.
Krechuniak: Bruce C. Funk LAW OFFICE OF BRUCE FUNK Laura S.
Attorneys for Cross-Defendant and Appellant, Zia Jamal
Noorzoy: STRONG APPELLATE LAW Jeanine G. Strong DOUGHERTY
& GUENTHER, APC Ralph P. Guenther
appeal challenges an order enforcing an agreement between two
siblings, Aisha A. Krechuniak
(“Sister”) and her brother Zia Jamal Noorzoy
(“Brother”), settling litigation concerning the
failed development of a residential parcel in Pebble Beach.
Sister was awarded a stipulated judgment of $850, 000.00
against Brother as provided in their “MEMORANDUM OF
SETTLEMENT.” Brother's appeal contends that this
amount includes a liquidated damages penalty of $250, 000.00
that is unenforceable under Civil Code section 1671, an
argument he did not make in the trial court.
affirm the judgment after concluding that Brother has
forfeited his fact-based contention. In doing so we hold that
the determination of whether a contract provision is an
illegal penalty or an enforceable liquidated damage clause is
a question to be determined by the trial court and, on
review, appellate deference to the trial court's factual
findings is required unless the facts are undisputed and
susceptible of only one reasonable conclusion.
to Sister's cross-complaint filed August 31, 2010, Sister
owned realty at 952 Sand Dunes Road in Pebble Beach,
California (sometimes “the subject property”) in
2005. Brother was a licensed real estate
agent working for Alain Pinel and was also a land developer.
In July 2005, Brother and Sister entered a written contract
under which Brother would develop Sister's property
through funding from investors and then sell the developed
property, with Brother and Sister to split the profits
remaining after paying off investors and after paying $1.5
million to Sister, reflecting her equity in 2005, and $30,
000 to Brother as a management fee.
January 2006, Brother entered separate “investor rights
agreement” with Andrew Dieden and Jeffrey Dieden. Each
agreed to contribute $100, 000.00 towards development of the
subject property, estimated to be completed by the end of
2006 at a cost of $700, 000 and with a net profit of $810,
000 after sale of the property.
2006, Sister obtained a loan of $815, 000.00 from the Bank of
America secured by a first deed of trust on the subject
property. In December 2006, Sister obtained a loan of $193,
000.00 from Indy Mac Bank secured by a second deed of trust
on the property. Brother was to use the proceeds of both
loans to develop the property and to make mortgage payments.
September 2007, Brother obtained $300, 000 from investors to
complete the development and pay off the Indy Mac loan. The
money was not used for those purposes.
November 2008, Sister agreed to relinquish ownership of
another Pebble Beach property at 2889 17 Mile Drive
(“the second property”), co-owned with Brother
and another relative, so that Brother could obtain a loan of
$400, 000.00 secured by that property. Brother was to use the
proceeds of that loan to develop the subject property and to
make mortgage payments.
was unaware that Brother had defaulted on the loans and was
receiving mortgage default notices. Because he did not make
the mortgage payments on the subject property, it was sold at
foreclosure. Sister also incurred a $400, 000 debt on the
investors sued Brother for loss of their investments through
foreclosure on the subject property. In her cross-complaint,
Sister sought actual damages in excess of $1.7 million and
punitive damages for breach of contract, breach of the
implied covenant of good faith and fair dealing, breach of
fiduciary duty, conversion, negligent and intentional
misrepresentation, and intentional infliction of emotional
to a statement by Brother's attorney in opposition to
enforcing the settlement, Brother and his wife filed for
bankruptcy on November 10, 2011. On April 4, 2012, the
federal bankruptcy court granted Sister relief from the
automatic stay to pursue her state causes of action for
“Breach of Fiduciary Duty, Conversion, Fraud, and
Intentional Infliction of Emotional Distress, ” but not
her other causes of action.
Memorandum of Settlement
trial set for November 17, 2014, mediation on November 6,
2014 resulted in a self-titled “memorandum for
settlement” signed by each party and by a
representative of Brother's employer, Pinel, that stated:
This MEMORANDUM OF SETTLEMENT is, and is intended to be,
fully binding and enforceable as to each party
notwithstanding that a more formal agreement is to be
prepared. Any disputes in the formal agreement shall be
brought to Richard M. Silver, who absent agreement, shall
have binding authority to resolve.
[Brother] shall pay to [Sister] the total sum of $600, 000.00
payable as follows:
$100, 000.00 no later than December 31, 2014;
[Brother agreed to pay the balance with 10 percent of his net
real estate commissions beginning in April 2015. His employer
promised to prepare and forward to Brother's counsel
checks reflecting 10 percent of Brother's commission
payments to be endorsed by Brother to Sister.]
The balance of $500, 000.00 shall be paid in no more than
five years from January 1, 2015.
Payment may be made sooner than ...