A great deal of history lies behind the moment where a settlement agreement is reached in the mediation of a civil case. There is the initial harm, whether it be an accident, medical malpractice, elder abuse, a business agreement gone wrong or the breakdown of a landlord tenant relationship. Following this initial incident, came the discovery of the harm, and, perhaps, attempts at informal resolution. After this, lawyers were likely brought in and pre-litigation negotiations occurred, which did not resolve the matter. Finally, litigation was initiated and has likely been taking place for a year or more, including written discovery, depositions, and motion practice. Thus, it may come as no surprise, in practically all cases, trust between the parties has eroded by the time of mediation.
It will further come as no surprise that when the parties agree on a settlement number to resolve the case, the plaintiff often voices the question. “What if they don’t pay me?”
In most instances, the best answer is that as a term of the settlement, the parties may request that the court retain jurisdiction of the case, to enforce settlement, pursuant to California Code of Civil Procedure (CCP) section 664.6. Thus, if a party does not meet the terms of the settlement agreement, the party may petition the court to enter judgment pursuant to the terms of the agreement.
How CCP 664.6 works:
Section 664.6 has teeth. The filing of a petition to enter judgment may motivate the defaulting party to pay up, either as a means of avoiding further involvement by the court, but more likely the desire to avoid having a judgment entered. A judgment is a searchable public record, which may have negative impact on the defaulting party’s reputation, future business dealings, and possibly have financial implications, such as a background search conducted for a credit check for financial approvals, like mortgage qualification or automobile financing.
In the event, the defaulting party does not simply respond to the petition, it should only take one court hearing for a judgment to be entered, and thereafter, the petitioner, usually the plaintiff in the underlying action, can retain a collection’s attorney, who can take actions, including levying the defaulter’s bank accounts, placing liens on real property or garnishing wages.
Why CCP 664.6 is the Best Option:
While parties could also file a case for breach of contract (the contract being the settlement agreement) CCP 664.6 is a more efficient mechanism of enforcing the agreement, as a breach of contract case may open the possibility of relitigating many issues and possibly dragging the settlement out for several more years. Additionally, the same judge, who presided over the underlying case, up until the time of settlement, will most likely preside over the 664.6 Petition. Their familiarity with the case and settlement should assure the ease of the petition.
The Importance of Meeting the Statutory Requirements of 664.6 to Assure the Court Retains Jurisdiction:
As much as CCP 664.6 is a safety net for settlement, the statute does have its requirements that must be met at the time of the original settlement. Failure to adhere to them may result in the court lacking jurisdiction to enforce.
- The parties must specifically request the court retain jurisdiction.
For the court to retain jurisdiction to enforce the settlement, the parties must specifically request this. The request can be made orally before the court, or in writing outside of the court. The request must be made by the parties, either directly or through their attorney of record. In a case, involving insurance coverage, an insurance adjuster/representative may also make the request. It is also critical to note that the court can only enter judgment as to the parties that have consented to the court retaining jurisdiction. In cases with multiple parties, this should highlight the absolute necessity that all parties request the court retain jurisdiction, which is a common term of settlement agreements.
Another key detail is that the parties must make the request to the court. While this may appear obvious, where parties may make a mistake is in including the 664.6 language in the settlement agreement without making the specific request of the court. Mesa RHF Partners, L.P. v. City of L.A., 33 Cal.App.5th 913.
- The request for the court to retain jurisdiction must be made, while the court still has jurisdiction.
Another area where parties may make a mistake with 664.6 is where they file the dismissal of the case, prior to requesting the court retain jurisdiction. Once the dismissal has been processed, the court no longer has jurisdiction to retain. Accordingly, attorneys and their parties must be very cautious to have the court sign off on the 664.6 request prior to dismissing the case. Sayta v. Chu (2017) 17 Cal.App.5th 960
- The terms of the settlement must be clear.
For the court to enter a judgement on the terms of the settlement, the terms must be clear. If essential terms are left for future determination, the agreement is not sufficiently definite for enforcement under the statute. Hines v. Lukes (2008) 167 Cal.App.4th 1174.
- The request to enforce the settlement agreement must be made in a reasonable time frame.
This last point may again seem obvious but remains worth mentioning. While there are no specific time limits on a court’s ability to enter judgment on a settlement agreement, the request to enforce must be brought within a reasonable timeframe. In other words, a party who waits multiple years to file their petition, may find themselves without relief.
Changes to CCP 664.6, effective January 1, 2025
In addition to the above, as of January 1, 2025, there will some additional components of 664.6:
- If a plaintiff, cross-complainant, or other party seeking affirmative relief has filed a notice of conditional settlement, the court may, upon its own motion, without stipulation from the parties or their counsel, set an order to show cause as to why the court should not dismiss the entire action without prejudice and retain jurisdiction to enforce the settlement.
- The court shall exercise its retained jurisdiction if a party files a notice that a written settlement agreement required of all parties was not signed by all parties.
- A party who has paid a first appearance fee shall not be assessed a first appearance fee again for filing a motion, notice or other document pertaining to the settlement after entry of judgment or dismissal without prejudice.
- The clerk of the court shall accept any motion, notice, or other document properly filed by a party after entry of judgment or dismissal without prejudice.
- A party file a request for dismissal with prejudice after the court has dismissed the case without prejudice.
- The judicial council shall update the dismissal forms to reflect these changes. Currently, there has been a proposal to amend California Civil Form 110: “Request for Dismissal” by adding a new section: 1(a)(3), which states the case is to be dismissed “without prejudice, and with the court retaining jurisdiction (CCP 664.6)” The proposed form requires that if box 1(a)(3) is checked that all parties must sign the form.
In conclusion, so long as parties and attorneys are careful to follow the requirements of 664.6, it should serve as a straightforward and accessible way of enforcing a settlement agreement and should provide parties with confidence to proceed with the settlement of their cases.
