Creditors Adjustment Bureau Prevails in a Landmark California Appellate Court Decision

Creditors Adjustment BureauCreditors Adjustment Bureau’s settlement agreement guidelines were key in fighting a consumer’s case after he defaulted on a lease.

09/23/2022 11:30 A.M.

2 minute read

Creditors Adjustment Bureau (CAB) recently prevailed in a landmark California appellate court decision, Creditors Adjustment Bureau, Inc. v. Ray Imani.

This ruling establishes case law that provides specific guidelines and assurances for purposes of structuring settlement agreements to stand up against a decision in the related Greentree Financial Group case.

“This published decision is definitive and will provide clarity and relief to creditors entering into these sorts of settlement agreements,” said CAB chief counsel Kenneth J. Freed in a news release.

Case Breakdown

The consumer in this case, Ray Imani, owed $251,200 after defaulting on a lease. Under a settlement agreement reached through CAB, Imani would pay a much lesser sum in 24 monthly installments. However, if he defaulted, he would owe the full amount sought in the complaint including fees, interest and costs.

Imani immediately defaulted on the settlement agreement and judgment was accordingly entered. He sought to set aside the judgment arguing that it constituted a penalty and was void under Greentree and related cases.

In the Aug. 9, 2022, ruling, the California Court of Appeals rejected this argument and was persuaded by CAB’s position that the specific language used in its settlement documentation made it distinguishable from Greentree and that court’s finding of an unenforceable penalty.

“It’s all about the way we framed our stipulations for entry of judgment after [the] Greentree decision,” Freed said.


California Associate Justice Kenneth Yegan began his ruling by quoting an earlier opinion: “Over 25 years ago, we stated the unremarkable: ‘The purpose of the law of contracts is to protect the reasonable expectations of the parties…. There is…a price to be paid for breach of contract.’”

That quote was from Yegan’s Nov. 20, 1995, opinion in Ben-Zvi v. Edmar Co. He continued, “Here, we protect the reasonable expectations of the parties. And there is still a price to be paid for breach of contract.”

Member’s Take

Creditors and their counsel can now breathe easier knowing that a properly drafted settlement agreement will be deemed valid and enforceable even if it has a substantial “kicker” in the event of a default, according to the news release from CAB.

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.




Collector Magazine
One moment please...

Share Profile

This site uses cookies. By continuing to use our site, you are agreeing to our use of cookies. Review our Privacy Policy for more information. You may change your preferences on how cookies are stored by reviewing the settings on your browser.

The content on this site is presented for educational, general reference, and informational purposes only; is not intended to serve as legal or other advice; is not intended to be a full and exhaustive explanation of the law in any area; and should not replace the advice of your own legal counsel. By continuing to use our site, you are agreeing to the legal disclaimers in our Terms of Use. Review our Terms of Use for more information.

Friendly Reminder

Get continued access to ACA International’s wide array of resources, which can help you become more profitable, compliant and successful.

Renew your membership today to take advantage of tools you won’t find anywhere else:

  • Discounts on seminars, products, services and events
  • Resources to strengthen your compliance department
  • Industry-specific risk management products and services
  • Participation in ACA’s online community, The Hub
    Members-only website content
  • Professional development and training opportunities, and so much more!

If you have completed your renewal, please disregard this reminder.