MICHAEL D. MARCUS’S MEDIATION MESSAGE NO. 96
EVERYTHING YOU NEED TO KNOW ABOUT C.C.P. SECTION 664.6
Mediation Message no. 95 looked at the mechanics of enforcing settlements, pursuant to C.C.P. section 664.6. This Mediation Message supplements that analysis.
Parties must personally approve an oral or written settlement. As discussed in last month’s Mediation Message, Levy v. Superior Court (1995) 10 Cal.4th 578 holds that parties must personally execute settlement agreements because that process affects substantial rights. Johnson v. Department of Corrections (1995) 38 Cal.App.4th 1700 applies Levy’s reasoning to all settlement agreements, written and oral. Corporations, like individuals, must also approve settlements. (Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110, 1118 [Levy construed “party” in section 664.6 to mean “the specific person or entity by or against whom legal proceedings are brought.”].)
An agent or person with sole and exclusive authority to settle claims on a party’s behalf is not an exception to the requirement that a party must personally consent to settlement terms. (Id. at pp. 1119-1121; see also Murphy v. Padilla (1996) 42 Cal.App.4th 707, 716 holding that motions to enforce oral settlements made before the court cannot rely on agency principles.)
An exception to the personal consent requirement to settlements occurs if the client is covered fully under an insurance policy that gives the insurer the right to settle the matter without the insured’s consent. (Fiege v. Cooke, et al. (2005) 125 Cal.App.4th 1350, 1355 [settlement by a carrier within policy limits does not prejudice the substantial rights of the insured].)
“Orally before the court” does not require that the settlement be on the record. Section 664.6 provides, in part, that parties may stipulate to settle a case “orally before the court.” 1538 Cahuenga Partners v. Turmeko Properties, Inc. (2009) 176 Cal.App.4th 139, 143 holds that a settlement agreement was enforceable where the party and his counsel had discussed the terms in the judge’s chambers.
Enforceable settlements under section 664.6 in the same case need not all be written or made orally before the court; they may be a combination of each as long as the material terms of all agreements are the same. (Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421, 1431.)
In a section 664.6 motion to enforce a settlement, the court may not create the material terms of the settlement; its only authority is “to decid(e) what terms the parties themselves have previously agreed upon.” (Critzer v. Enos (2010) 187 Cal.App.4th 1242, 1252-1253, citing Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809–810 and also relying on Terry v. Conlan (2005) 131 Cal.App.4th 1445 [court erred in granting section 664.6 motion where record demonstrated no meeting of minds concerning material terms of settlement].)
When section 664.6 is not available (for example, the parties never agreed to its application or one of the parties did not personally approve the settlement), the settlement can still be enforced by summary judgment, a suit for breach of contract, a suit in equity (Robertson v. Chen (1996) 44 Cal.App.4th 1290, 1293) or by amendment of the pleadings to raise settlement as an affirmative defense. (Gauss v. GAF Corp., supra, 103 Cal.App.4th at p. 1122.) Neither Robertson nor Gauss mentions that these alternatives to section 664.6 are more costly since a section 664.6 stipulation may include a condition that the prevailing parties in a motion to enforce a settlement shall be entitled to their attorney’s fees and costs.
Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
Copyright Michael D. Marcus, March 2014