As many former litigants know, there is nothing more frustrating than feeling the relief of finally reaching a settlement only to have to engage in further litigation because of the opposing party’s breach of the settlement agreement’s terms. This is particularly true in the field of probate litigation, where actions can pit family members against one another and result in resumed litigation and substantial emotional distress.
So how can one ensure the opposing side is held responsible for committing a breach of the settlement agreement without spending an extraordinary amount of money, time and energy? There are two primary remedies for breaches of settlement agreements, both of which will be covered in the following sections.
A New Lawsuit: The Less Preferred Option
If the opposing party is failing to perform under the terms of the settlement, one option for dealing with such a breach of the settlement agreement is to file another lawsuit for breach of contract. However, this option is not ideal, as it is certain to incur the plaintiff additional expenses as well as cause delays. The reason why one generally settles in the first place is to stay out of court; a new lawsuit would bring them right back, and they would have to start from scratch.
CCP 664.6 (Motion to Enforce Settlement Agreement):
The Preferable Option
If starting a new lawsuit does not sound appealing, there is another option for enforcing a settlement agreement that is both simpler and more efficient: “Entry of judgment pursuant to terms of stipulation for settlement” provided for by Code of Civil Procedure section (“CCP”) 664.6.
Under CCP 664.6, a party can request the court to retain jurisdiction over the case until the settlement terms have been completed. Under CCP section 664.6, the terms of the settlement agreement can also be enforced by filing a motion requesting that the court enter judgment against the party in breach of the settlement agreement. Because Motions to Enforce Settlements occur via motion practice instead of through new lawsuits, they can significantly streamline the settlement enforcement process. This is why the phrase “the court shall retain jurisdiction to enforce the settlement agreement pursuant to CCP 664.6,” or close variants of it, are now ubiquitous in settlement agreements under California law.[1]
When CCP 664.6 Is Not Enough
Once all interested parties sign the settlement agreement, one tactic the party who initiated the lawsuit may employ is to submit a Request for Dismissal form to the court with a statement that reads: “The court shall retain jurisdiction to enforce the settlement agreement pursuant to CCP 664.6.” The purpose of CCP 664.6 is to indicate to the court that it has the power to uphold the terms of the settlement agreement. But, is that enough to ensure the court’s continuing jurisdiction under CCP section 664.6? Unfortunately, it is not.
In order to ensure that a Motion to Enforce Settlement can fulfill its function, there are other procedural hurdles to overcome. Parties and attorneys must be aware that this language (i.e., the court should retain jurisdiction pursuant to CCP 664.6) is essentially meaningless when included on a settlement agreement and Request for Dismissal form on its own, as the opinion by the Court of Appeal in the case of Mesa RHF Partners, L.P. v. City of Los Angeles [2] demonstrates.
Why Mesa RHF Partners, L.P. v. City of Los Angeles Is Significant
Mesa concerns two separate settlement agreements that sought to resolve disputes between three business entities and the City of Los Angeles over the establishment of business development districts in Los Angeles.
For both settlement agreements, the parties filed Request for Dismissal forms with the court, both of which included close variants of the apparent “magic words.” The first stated, “The Court shall retain jurisdiction to enforce settlement per CCP 664.6.” The second stated, “The Court shall retain jurisdiction to enforce the settlement agreement per Code of Civil Procedure 664.6.”[3] In both instances, dismissal was entered by the court clerk “as requested.”[4]
As is often the case, disputes arose after these cases were dismissed over the terms of the settlements and the continuing obligations of one party to the settlement agreements. The business entities filed Motions to Enforce Settlement Agreements with the court pursuant to CCP 664.6 in an attempt to enforce the terms of the settlement agreements against the City. The trial court denied these motions on their merits, so the business entities appealed. The appellate court affirmed these denials but determined that the trial court never should have considered these CCP 664.6 motions in the first place because it did not have the jurisdiction to do so.
The appellate court in Mesa held that three procedural requirements must be met in order for a court to retain jurisdiction pursuant to CCP 664.6:
- The request to retain jurisdiction must be made before dismissal is entered;
- It must be made at the request of the parties, not just at the request of their attorneys; and
- It must be communicated to the court, either through writing or through an oral agreement in open court, but not merely by means of its inclusion as a term of a written settlement.[5]
All parties in Mesa argued that the use of the aforementioned “magic words” on the Request for Dismissal forms that the business entities filed with the court should be construed as valid requests for the court to retain jurisdiction to enforce the breaches of settlement agreements under CCP section 664.6.[6] The court, however, disagreed because none of the procedural requirements had been met. The Request for Dismissal forms had been signed by attorneys, not parties, they had not been drafted before the entry of dismissal but simultaneous to it, and the agreement among the parties to allow the court to retain jurisdiction had not been not validly communicated to the court through either a written or oral agreement.[7]
How to Ensure a Motion to Enforce Settlement Will be Granted
So how do parties ensure that a request for the court to retain jurisdiction over a settlement agreement will be available and granted?
Thankfully, the Mesa court provides guidance on this issue. It states that the request can either be made by filing a stipulation and proposed order signed by the parties that requests the retention of jurisdiction pursuant to CCP 664.6 or by a party making such a request orally on the record during a court proceeding. This sort of written stipulation and order can either be submitted to the court with a copy of the settlement agreement attached, or the court can simply be made aware of the existence of the settlement agreement, and of how it shall retain jurisdiction over it pursuant to CCP 664.6.[8]
Final Thoughts on the “Magic Words”
In conclusion, the “magic words” will only get the job done when it comes to ensuring that the court retains jurisdiction over a settled case if the aforementioned additional procedures are satisfied. Thus, it is essential to make sure those words are validly communicated to the court before dismissal is entered, and in a form that includes the statements or signatures of all parties, not just their attorneys.
Additionally, it is crucial that the settlement agreement and stipulation or oral request submitted to the court demonstrate that the parties agree that the court has the power to enter judgment based on the terms of the settlement agreement, not just retain jurisdiction to enforce those terms; only then can the parties be sure that they can utilize motion practice under CCP 664.6 to enforce the terms of their settlement.
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[1]The settlement must also demonstrate that the parties agree that the court has the power to enforce the terms of the settlement agreement by entering judgment in accordance with those terms, or that the parties agree that the court can enter judgment in accordance with additional terms that are less desirable to the breaching party than the settlement terms as a way to incentivize parties to uphold the original terms of the agreement.
[2] (2019) 33 Cal.App.5th 913.
[3]Id. at 916.
[4]Id.
[5]Id. at 917.
[6]Indeed, both sides wanted the court’s retention of jurisdiction to be deemed valid. Presumably, the City wanted a determination of the city’s compliance with the agreement upheld on its merits in order to prevent continued litigation, and the business entities wanted the appellate court to overturn the trial court’s ruling and enforce the agreement without having to file a separate lawsuit.
[7]Id. at 918.
[8]Id.
