Woodland Hills personal injury lawyer Barry P. Goldberg has literally settled thousands of cases over the years. A settlement seems simple and easy to document. However, many lawyers make a “mistake” when settling a litigated case by simply having a settlement agreement and then a Request for Dismissal. In a recent published California Court of Appeal case, the court has pointed the “mistake” out and it should serve as a warning to all parties and their counsel who settle a litigated case.
In Sayta v. Chu (November 29, 2017) the court was called upon to interpret Code of Civil Procedure section 664.6. That section provides a summary, expedited procedure to enforce settlement agreements. Section 664.6 provides that “[i]f parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” “Section 664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.)
The new Sayta v. Chu case offers an object lesson on the requirements in order to invoke section 664.6 and the consequences of failure to comply with those requirements. Sayta filed suit against Chu alleging various causes of action arising from efforts to terminate Sayta’s tenancy. The suit was resolved by a written settlement agreement. The complaint, and a cross-complaint against Sayta, were dismissed by the parties. Sayta subsequently brought a motion to enforce the settlement pursuant to section 664.6, alleging breach of a confidentiality provision and seeking liquidated damages.
Because the parties failed to request, before dismissal, that the trial court retain jurisdiction to enforce the settlement, or alternatively seek to set aside the dismissals, the trial court lacked jurisdiction to even entertain the motion.
In the “real world” parties and their counsel do not always have a direct opportunity to speak to the judge when a case is settled and dismissed. Often, but, not always, a judge may ask from the bench; “counsel, do you want the court to retain jurisdiction to enforce the settlement?” Usually, that question comes when both parties and/or counsel are present in court for a pre-trial hearing, but the case settles before that hearing.
For many Los Angeles Superior Court judges, they are anxious to get cases settled and are happy that the particular case has been removed from their docket. However, the “trigger” for a judge to even ask about retaining jurisdiction, comes when there are future payments or other future activities required in order to satisfy the settlement. In the situation of future payments, it is essential that the court retain jurisdiction just in case the paying party fails to make the required payments. Then, the benefiting can run into court with a section 664.6 motion and obtain an instant judgment or other relief.
Without the court retaining jurisdiction, the benefitting party is stuck having to file a new lawsuit for breach of contract. That could take years to conclude and would frustrate the initial settlement.
The nothing in the record indicates any part of it presents a situation that is not as obvious as future payments. Rather, in the Sayta v. Chu case, Sayta subsequently brought a motion to enforce the settlement pursuant to section 664.6, alleging breach of a confidentiality provision and seeking liquidated damages. Many settlement agreements have similar provisions, but it is not really anticipated by the parties that the settlement agreement will ever be breached. So, it may not occur to anybody—-the judge included— to ask the court to retain jurisdiction. In fact, the parties made their settlement agreement confidential, and was probably not communicated to the trial court judge before the dismissals.
It becomes even more difficult and complex when a case is settled and dismissed outside the presence of the judge and a simple Request for Dismissal is filed with the court clerk. Many lawyers would think twice about marking up a Request for Dismissal with a written requirement that the court retain jurisdiction to enforce the settlement. That Request for Dismissal might be outright rejected by the clerk, or it could be forwarded to the judge’s department for a separate hearing on the court retaining jurisdiction.
By the time a case gets to the settlement stage, most lawyers and their clients, want the case over with and do not want additional hearings or additional attorney fees or expenses. Therefore, there is an internal motivation to simply Request a Dismissal without asking the court to retain jurisdiction.
The best lesson that can be learned from the Sayta v. Chu case is that if the parties and counsel are genuinely concerned that a settlement agreement may be breached, then it is a requirement that the court be requested to retain jurisdiction on the record or in a minute order.