MAKING SETTLEMENTS STICK
Since most litigation cases end in settlement, it is important to assure that the settlement agreement is both enforceable and does not lead to further litigation. Settlements are often reached on the courthouse steps and then recited “on the record” in open court before the judge. The usual procedure is for the attorneys to tell the judge the terms of the settlement and for the parties to agree. Often it is stated that a written settlement agreement will be executed by the parties within a week or two and then the case will be dismissed. Frequently the settlement provides for a series of payments or other actions to be taken over a period of time.
When the parties leave court, they shake hands and are generally relieved to have resolved their dispute. However, there are three issues burning in the back of their minds which hopefully their attorneys have considered:
1. What if the parties cannot agree upon the written settlement agreement?
2. What if the other party fails to make the payments or do what has been agreed?
3. Is the case really over? Can it be dismissed?
Even after a case is dismissed, California Code of Civil Procedure § 664.6 allows the court to “retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” In Corkland v. Boscoe (1984) 156 C.A.3d 989, 994, the Court of Appeal “in the interest of judicial economy,” gave the statute a liberal construction. “Thus, what formerly was a nonstatutory ’speaking’ motion is now … applicable not only to judicially supervised settlement and conferences, but to stipulations of settlement in writing or orally before the court in pending litigation…. Even where there are contentions of disputed facts, if the motion is one for entry of judgment pursuant to such a settlement” it is proper. (156 C.A.3d 994.)
However, the courts power to enforces a settlement is not unlimited. In Weddington Productions v. Flick (1998) 60 C.A.4th 793, 809, the Court of Appeal cautioned, that while “Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit…, nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.”
Additionally the settlement agreement must either be “a writing signed by the parties outside the presence of the court or orally before the court’ to be enforceable pursuant to California Code of Civil Procedure § 664.6. In Datatronic Systems Corp. v. Speron (1986) 176 C.A.3d 1168, the Court refused to enforce an agreement that was entered into “on the record” before the court reporter following a deposition.
Thus, as long as the agreement was entered into orally before the court, the court can enforce it even if the parties never signed a written settlement agreement. It is crucial, however, that the settlement agreement provide both orally and in any writing that the court will retain jurisdiction to enforce it pursuant to California Code of Procedure §664.6. In Pietrobon v. Libarle, (2006) 137 Cal. App. 4d 992, the parties failed to do so. When the defendant failed to make the payments, the plaintiff was required to file a new lawsuit. In that case, the court found that the plaintiff had a four years to enforce the settlement in a subsequently filed lawsuit. The oral settlement agreement before the court had been entered in the court record . Therefore, the statute of limitations for written agreements applied, as opposed to a two year statute of limitations for oral agreements.
