Music Video Products v. Kreative Video Products

Filed 7/19/06 Music Video Products v. Kreative Video Products CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from orders of the Superior Court of Los Angeles County. Howard J. Schwab, Judge. Affirmed.

Katten Muchin Rosenman, Stuart M. Richter and Monte K. Grix for Plaintiff and Appellant.

Greenberg & Bass, James R. Felton and Dana J. Hadl for Defendant and Respondent Philip Knowles.

No appearance for Defendant and Respondent Kreative Video Products, Inc.

____________________

This appeal arises out of two trial court orders: (1) an order granting the motion of respondent Philip Knowles (Knowles) to enforce a settlement agreement, and (2) an order denying the cross-motion of appellant Music Video Products, Inc. (MVP) to enforce a settlement agreement. At issue is whether a discounted prepayment made by Knowles and Kreative Video Products, Inc. (KVP) in accordance with the terms of a settlement agreement constituted an accord and satisfaction of all of MVP's claims against Knowles and KVP, including claims that Knowles and KVP breached their contractual obligation to make accurate financial representations to MVP.

We conclude that the trial court properly found that an accord and satisfaction occurred. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

MVP sues Knowles and KVP

On February 6, 1998, MVP filed suit against Knowles and his company, KVP, alleging fraud, breach of contract, breach of fiduciary duty, and unfair competition. Essentially, MVP averred that Knowles had misappropriated more than $3 million from MVP and was operating a competing business while acting as the president of MVP. On February 9, 1998, the trial court entered a stipulated judgment of permanent injunction against KVP and Knowles.

The settlement agreement

On October 15, 1999, the parties entered into a settlement agreement and release. Pursuant to the settlement agreement, KVP and Knowles were required to make three lump sum payments of $50,000 on specified dates within one year of the effective date of the agreement.

In addition to the lump sum payments, KVP and Knowles were required to make monthly payments to MVP for 10 years from the date of the settlement agreement. For the first five years, they were required to make minimum payments in the amount of $1,000 per month or 10 percent of their combined monthly adjusted gross income, whichever was greater. For the subsequent five-year period, KVP and Knowles were required to make minimum monthly payments of $2,000 or 10 percent of their combined monthly adjusted gross income, whichever was greater.

The settlement agreement also contained a prepayment clause. Knowles and KVP were permitted to prepay their monthly obligations at any time by discounting the future specified minimum monthly payments at a specified rate. While the prepayment option satisfies KVP and Knowles's monthly payment obligations, it does not satisfy any other payment obligations provided for in the agreement. All payments were required to be made directly to MVP.

To secure performance of their payment obligations, Knowles and KVP executed two stipulated judgments, to be held by MVP and not filed unless an event of default occurred. With respect to the first stipulated judgment, the parties agreed that in the event of any default by Knowles and KVP, MVP could seek to have judgment entered against them, ex parte, in the amount of $850,000, less any payments already made. An event of default includes, inter alia, â€