Normally, if a matter settles at mediation, the parties will enter into a settlement agreement then and there to ensure that the matter has indeed settled; there will be no buyer’s remorse or change of mind the next morning.

Often included within the settlement agreement  are provisions that the settlement agreement may be enforced by a motion to enforce the settlement pursuant to California Code of Civil Procedure Section 664.6 (“C.C.P. §664.6”) and that the court will retain jurisdiction to enforce the terms of the settlement agreement.

In Mesa RHF Partners, L.P. v City of Los Angeles, et al, and Hill RHF Housing Partners, L.P. v City of Los Angeles,  B288355 (filed 3/29/19), the Second Appellate District Court in California just made it tougher on the parties to have the trial court retain jurisdiction on a motion to enforce the settlement. It ruled that the parties themselves, and not their counsel, must make the request to the court. For counsel to do so, will not be enough.

In both matters, the plaintiffs sued the City of Los Angeles seeking declaratory and injunctive relief challenging payments that they had to make regarding the City’s establishment of the Downtown Business Center Business Development Improvement District (“District”) in downtown Los Angeles ( first cited case) and then also of the San Pedro Historic Waterfront Property and Business Improvement District and the San Pedro Property Owners Alliance (“District’) in Los Angeles (second cited case). Both lawsuits challenged the tax assessments for such services.

Eventually, both lawsuits settled in which the parties agreed that the plaintiffs would be remitted the amounts that they were paying in assessments for these Districts . Both settlement agreements contained the provision that the Court would retain jurisdiction to enforce the  terms of the settlement agreement pursuant to C.C.P. §664.4.  Further in the request for dismissal of each lawsuit, counsel inserted the provision that the  Court would retain jurisdiction to enforce the settlement pursuant to C.C.P. § 664.6.

Section 664.6 provides:

If 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.

Approximately, five years later, the city  ordinance creating the Districts expired. In negotiating the renewal of these Districts, the City of Los Angeles took the position that the terms of the settlement agreements expired with the expiration of the ordinance creating these Districts. (Id. at 2-5.)

So, the plaintiffs moved to enforce the settlement agreements. The trial court denied the motion on the merits.

The appellate court agreed with the denial but based its decision on a lack of jurisdiction.  Citing C.C.P. §664.6, the appellate court noted that the requests for dismissal were not signed by the “parties” as previous Courts have construed the statute. (Id. at 5.) :

A request for the trial court to retain jurisdiction under section 664.6 “must conform to the same three requirements which the Legislature and the courts have deemed necessary for section 664.6 enforcement of the settlement itself: the request must be made (1) during the pendency of the case, not after the case has been dismissed in its entirety, (2) by the parties themselves, and (3) either in a writing signed by the parties or orally before the court.” (Wackeen v. Malis (2002) 97 Cal.App.4th 429, 440 (Wackeen).) The “request must be express, not implied  from other language, and it must be clear and unambiguous.” (Ibid.)  (Id. at 5-6.)

 The court refused to accept the request being made by the attorneys as being sufficient. Rather, it “… must be made either in a writing signed by the parties themselves, or orally before the court by the parties themselves…” (Id. at 6.)

In response that this may create a  “Catch 22”or burden on the parties, the court  stated that this requirement was not all that complex: the attorneys could have either attached a copy of the settlement agreement to the requests for dismissal (Id. at 6), or they could file a new action for breach of settlement agreement, or

…, the parties could have easily invoked section 664.6 by filing a stipulation and proposed order either attaching a copy of the settlement agreement and requesting that the trial court retain jurisdiction under section 664.6 or a stipulation and proposed order signed by the parties noting the settlement and requesting that the trial court retain jurisdiction under section 664.6. The process need not be complex. But strict compliance demands that the process be followed. (Id at 7.)

Consequently, simply  providing either in a settlement agreement or in a request for dismissal  that the Court retains jurisdiction to enforce a settlement agreement pursuant to C.C.P. § 664.6 will not be sufficient. A document signed by the parties  in the form of the settlement agreement either attached to the request for dismissal or attached to a stipulation and proposed order or having the parties themselves sign the stipulation and proposed order must be submitted to the court for it to retain jurisdiction. Otherwise, a party seeking to enforce the settlement agreement will be left with the undesirable alternative of having to file a whole new lawsuit for breach of contract.

… Just something to think about.

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