$11,143,50 Fee Award to Defense for Enforcing Settlement Not Allowed.
We all know by now that almost all state laws, including California, have a strong policy to promote settlement. After all, the court system would be overstressed and could not function if everything was tried (especially in these times of fiscal pressures). The next case illustrates this principle, but also adds an important wrinkle: add-on terms not agreed to by the parties and resultant fee awards from such terms will not be enforced unless it was an unmistakable component of the bargain between the litigants.
In Nussbaum v. Corlyn, Case No. B222102 (2d Dist., Div. 2 Oct. 25, 2011) (unpublished), plaintiffs won a default judgment in a real estate fraud action and then filed a follow-up fraudulent conveyance lawsuit against the defendants. On the eve of trial, the parties reached a settlement that was put on the court record under Code of Civil Procedure section 664.6. At the end of the settlement, plaintiffs’ counsel requested that the parties agree that attorney’s fees be allowed to parties enforcing the settlement, with counsel for one of the defendants so agreeing but no one else consenting to this add-on term.
Defendants circulated and signed a written settlement agreement prepared by some of the defendants, but plaintiffs refused to sign. Defendants moved to enforce the settlement, which was successful, and the trial court also awarded defendants $11,143.50 in attorney’s fees to enforce the settlement against plaintiffs.
The appellate court affirmed the motion to enforce the settlement, but reversed the fee award.
The fee award reversal was grounded on two primary facts: (1) the settling parties never individually consented to the fee award; and (2) two of the defense counsel rejected the add-on term outright. Under the circumstances, it could not be said that fee recovery was expressly agreed to by all of the settling parties.