First District, Division 3 Highlights Pitfalls of CCP Section 664.6 in the Retention of Jurisdiction Area.
Code of Civil Procedure section 664.6 concerns judicial enforcement of settlement agreements through an expeditious motion procedure. The last sentence of this provision 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.” However, that request must be made orally before the court or in a signed writing, must be made by the parties (not their attorneys, spouses, or other such agents except in certain construction defect actions), must be made before dismissal of suit, and must be granted by the court. (Wackenn v. Malis, 97 Cal.App.4th 429, 433, 437 (2002); Hagan Engineering, Inc. v. Mills, 115 Cal.App.4th 1004, 1010 (2003); Hines v. Lukes, 167 Cal.App.4th 1174, 1182 (2008).) Meet all those requirements or suffer an adverse fee award from losing an enforcement motion … as the unsuccessful litigant learned in our next case for discussion.
Steele v. Spina, Case No. A123860 (1st Dist., Div. 3 Aug. 28, 2009) (unpublished) involved a situation that we would guess is faced by many litigants, but ultimately demonstrates the care with which retention of jurisdiction requests must be made in settlement discussions that are court supervised.
There, parties settled a case by which two insurance carriers were to make future payments after arbitration/mediation and a note secured by a trust deed against defendants’ property was to be executed. The court accepting settlement indicated it would “maintain jurisdiction over this through completion of a written settlement agreement.” The lower court also indicated later, on the record, that this was a judicially enforceable settlement under section 664.6 after all the parties approved the settlement terms on the record. The parties’ subsequent settlement agreement indicated that the court would retain jurisdiction to enforce it and would determine if a prevailing party in any proceeding involving a claimed breach of the settlement would be entitled to attorney’s fees. The settlement agreement apparently was never filed or presented to the court, and the underlying lawsuit was dismissed with prejudice.
Almost 6 years later, plaintiffs filed a section 664.6 motion to clarify certain terms of the settlement agreement. The lower court—a different judge because the one accepting the settlement had retired—denied the motion because no one had the previous judge actually retain jurisdiction before the lawsuit was dismissed. The lower court also awarded defendants $2,500 in attorney’s fees under the fees clause in the settlement agreement. Plaintiffs appealed.
The First District, Division 3, in a 3-0 decision penned by Justice Siggins, affirmed. The primary basis was that plaintiffs never made an express, clear and unambiguous request that the settlement judge retain jurisdiction after dismissal, but only obtained the court’s supervision until the settlement agreement was signed. The judge’s general statement that the settlement agreement was judicially enforceable under section 664.6 was “trumped” by the more specific statement of only retaining jurisdiction through completion of the settlement agreement.
Plaintiffs argued that the language in the subsequent settlement agreement allowed for retention of jurisdiction, but the appellate panel found that “[t]he language in the parties’ written settlement agreement could not effectively vest the trial court with retained jurisdiction after the case was dismissed with prejudice” given that subject matter jurisdiction cannot be conferred by consent, waiver or estoppel. Rather, the parties must ask the court to retain jurisdiction, with a decision then being made on what will be done. (Hagan, supra, 115 Cal.App.4th at 1010; Hines, supra, 167 Cal.App.4th at 1182.)
Although finding that the trial court lost jurisdiction to enforce under section 664.6, the appellate panel noted that a separate enforcement action might be an appropriate alternative (although expressly not passing on whether this alternative would actually be effective under the circumstances). (Slip Opn., p. 5 n. 4.)
That left the challenge to the attorney’s fees award against plaintiffs. This decision, too, was sustained on appeal. Reason: Plaintiffs would have been entitled to fees had they won the enforcement motion based on the fees clause, such that it operated reciprocally under Civil Code section 1717 even where defendants won based on a claim that the contract was unenforceable under section 664.6. (Hsu v. Abbara, 9 Cal.4th 863, 870-871 (1995) [one of our Leading Cases].)
BLOG OBSERVATION—Co-contributor Mike wrote an article on Hagan a few years ago. The article was published in the Los Angeles Daily Journal. If any of you readers want the cite, contact us and Mike can get it to you.
BLOG QUOTE OF THE DAY—“There is never enough time to do it right, but always enough time to do it over.” American Express Travel Related Services, Inc. v. Fulton, 2006 WL 1774196 (4th Dist. Cal.App. 2006).