CONTINUING COURT JURISDICTION TO ENFORCE A SETTLEMENT v. CONDITIONAL SETTLEMENT,
IS THERE A DIFFERENCE?
Mark E. Hancock
You’ve reached a settlement, but wonder if the other side will honor the agreement. It’s not a simple money for release and dismissal settlement. The other side has promised to do things that will take time. You’d like to have options other than paying to file and serve a new lawsuit for breach of contract, or making a motion for summary judgment in the present one, to secure performance. How should you terminate your present case?
Fortunately, you have options. This article will focus on two procedures which are separate, but often confused with one another.
One option is to request, under Code of Civil Procedure (“C.C.P.”) § 664.6, that the Court retain jurisdiction to enforce a settlement. Another is a “conditional settlement” of a Court case under California Rules of Court (“C.R.C.”), Rule 3.1385(c). These are sometimes confused together because Court forms relating to each method both use the term “conditional settlement.”
REQUESTING THAT THE COURT RETAIN JURISDICTION TO ENFORCE THE SETTLEMENT (C.C.P. §664.6)
It is public policy to encourage the voluntary settlement of litigation. (Osumi v. Sutton (2007) 151 Cal.App. 4th 1355.) C.C.P. §664.6 is a means toward this end. This section states: “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.” (bolding and underlining added.)
C.C.P. 664.6 creates a summary, expedited procedure to enforce settlement agreements when certain requirements are met. (Inamed Corp. v. Kuzmak (C.D. Cal. 2002) 275 F.Supp.2d 1100.) Neither a new lawsuit, nor a motion for summary judgment is required and the trial Court, in deciding the motion, is able to determine disputed facts, based on declarations and/or oral testimony. (Wackeen v. Malis (2002) 97 Cal.App.4th 429; see also Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421.) In ruling on a motion to enter judgment based on settlement, the Court acts as the trier of fact. (Terry v. Conlan (2005) 131 Cal.App.4th 1445.)
Two things, with regard to C.C.P. §664.4, are important to remember. First, it is not the exclusive remedy for enforcing a settlement. (Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110.) Second, it is only available if statutory pre-requisites have been satisfied. (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App. 4th 299.)
What are the statutory prerequisites? First, it must be a settlement of pending litigation. (Kirby v. Southern California Edison Co. (2000) 78 Cal.App.4th840.) Second, it must be made in a writing signed by all the parties, or made by them orally before the Court. (Harris v. Rudin, Richman & Appel, supra, 74 Cal.App. 4th 299; see also Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002) 103 Cal.App.4th 30.) It is especially important to remember the requirement that the settlement be signed by the parties, because, generally, an agreement that is signed by an attorney, but not by her client, may not be summarily enforceable under C.C.P. §664.6 and there certainly may be problems trying to enforce such a “settlement” by other methods as well. (Robertson v. Chen (1996) 44 Cal.App.4th 1290; see also Knabe v. Brister (2007) 154 Cal.App.4th 1110.)
When parties to pending litigation enter into such a settlement (i.e., one in writing signed by the parties, or made orally by them before the Court), the Court retains jurisdiction to enforce the settlement even after a dismissal, provided that the parties request that retention of jurisdiction before the dismissal. (Hines v. Lukes (2008) 167 Cal.App.4th 1174,)
The Ventura Court has a local form, VN059, that provides for this. The form provides: “All parties consent to the Court retaining jurisdiction pursuant to CCP section 664.6.” According to the Clerk’s office, the filing fee for a motion requesting entry of judgment pursuant to a settlement is $60.00 and is filed under the original case number. (This is less expensive than filing a new case.)
The form also takes care of two other matters that have to be addressed. First, there is a duty to inform the Court of settlement under C.R.C ., Rule 3.1385(a). Form VN059 provides that: “The above-entitled case has been settled.”
The second matter has to do with dismissal of the case. C.R.C., Rule 3.1385(b) provides that , except as provided in (c) or (d) [the latter subsection having to do with the compromising of the claims of a minor or disabled person], a request for dismissal of the entire case has to be filed within 45 days of the date of settlement. If this is not done, the Court must, in the absence of a demonstration of good cause, dismiss the case. How this is handled in Form VN059 highlights a difference with the other option to enforce settlement on which we will now focus.
CONDITIONAL SETTLEMENT (C.R.C., Rule 3.1385(c))
In a typical money for release and dismissal case, the insurer may tell you that it will be a couple of weeks to issue and mail you and your Client a check. 45 days is enough time for that, but what if the settlement requires the other party to do things that will take longer than 45 days? Another way to handle this is through C.R.C., Rule 3.3.1385(c).
This subsection provides that if the settlement agreement provides for things that will not be performed within 45 days of the settlement (such as the completion of installment payments by an uninsured defendant), the notice of conditional settlement must provide the (later) date by which the dismissal will be filed. If the case is not dismissed within 45 days of that later date, the Court must, in the absence of a showing of good cause, proceed to dismiss it.
The form used for this method of settlement enforcement is Judicial Council Form CM-200 and the “incentive” for performance is that the pending case does not get dismissed (assuming, of course, that the plaintiff remains awake and diligent) until and unless the other party performs. If they don’t perform as agreed, an option here is to continue the case.
Given the costs and time associated with trial, however, this may not be an attractive option. Moreover, what if, in the settlement of your case, the opposing party makes promises that are “timeless,” i.e., of longer duration than “I will pay you x dollars, or I will do y, in 90 days.” Do you want the onus of updating and keeping the Court from dismissing your case especially when there are variables as to whether and when things promised or prohibited, or conditions that need to occur or be satisfied first, happen?
This highlights some differences between Local Form VN059 and Judicial Council Form CM-200 (and between C.C.P. §664.6 and C.R.C. , Rule 3.1385(c).) Using Form VN059, the Court enters a dismissal, without prejudice, when you file it. One does not have to set a date by which dismissal will be entered; it is entered right then. [Note, however, that Form VN059 provides that the parties request and consent to the Court retaining jurisdiction under CCP §664.6 and that the Court expressly reserves the right to vacate the dismissal and to enforce the settlement upon a showing of default.] Recall the case law, cited above, that voluntary dismissal of the case does not prevent enforcement under C.C.P. §664.6 and that, to get it, one has to request 664.6 enforcement power before the present case is dismissed. Using this method, you only have to do something when and if there is default and then you pay $60 and file papers to move to enforce the settlement.
Form CM-200, on the other hand, nowhere provides or requests that the Court retain jurisdiction under C.C.P. §664.6. By itself, this can create problems, especially for a settlement reached out of Court. Further, the onus is on you to keep your case alive (and not dismissed before 664.6 jurisdiction is requested.) So, one question you and your Client have to ask yourselves is: do you want enforcement of a settlement, or to continue with a case? If you want the former, where have you (in addition to providing for it in your written settlement agreement) requested (to the Court) that it retain jurisdiction to enforce the settlement and where has it agreed to do so?
I would suggest that Form VN059 is incorrectly titled and this creates confusion. It is not used with “conditional” settlements. It is used to enforce settlements. A more appropriate title would be: “Notice of Settlement and of Dismissal Based Thereon providing for Court Enforcement of the Terms”
Mark E. Hancock is an Attorney, with offices in Ventura, who handles claims under disability and other insurance policies (auto, businessowners, CGL, homeowners, inland marine, liability, life, UIM and UM, etc.) and insurance, personal injury and real estate litigation.
THIS ARTICLE WAS PUYBLISHED, WITH THE AUTHORI'S PERMISSION, IN THE NOVEMBER, 2021 EDITION OF CITATIONS MAGAZINE,
THE OFFICIAL PUBLICATION OF THE VENTURA COUNTY BAR ASSOCIATION
OF WHICH ATTORNEY MARK E. HANCOCK IS A LONG-TIME MEMBER.