Enforce Your Settlement Under the Correct Statute

You have completed your mediation and secured what you believe is a binding settlement agreement. The agreement is signed by both the plaintiff and her counsel. The plaintiff’s counsel has notified the trial court of the settlement on a form which requires dismissal of the action within forty five days after the defendant organization signs the agreement “unless good cause is shown why the case should not be dismissed.” The authorized representative of your client subsequently signs the agreement. The settlement payment is tendered to the plaintiff. However, plaintiff rejects the payment and seeks to set aside the settlement. What do you do?

The incorrect procedure to enforce this settlement was the subject of the opinion issued by the Fourth Appellate District in Irvine v. Regents of the University of California. (2007 Cal. App. LEXIS 582) In Irvine the plaintiff and her lawyer had signed the settlement agreement at the conclusion of the mediation. Plaintiff’s counsel then filed a notice of settlement with the court under California Rules of Court, rule 3.1385 [formerly rule 225]. All that was necessary for the settlement to be concluded was for the Regents to approve the agreement (a University risk manager had conditionally signed the agreement “for Regents” at the mediation). The notice of settlement filed by plaintiff’s counsel provided that the case could be dismissed forty five days after the Regents’ approval had occurred.

However, by the time the Regents approved the settlement and forwarded the settlement payment, the plaintiff had changed her mind based upon additional information obtained after the mediation. (The opinion in Irvine does not indicate whether the settlement agreement included a waiver of the provisions of Civil Code section 1542.) Plaintiff filed a motion to vacate the settlement. The court denied plaintiff’s motion. Thereafter, because the court determined that the plaintiff had failed to show good cause to avoid dismissal under rule 3.1385, the court proceeded to dismiss the case.

The Court of Appeal reversed the order of dismissal. Although it made no finding as to the merits of plaintiff’s motion to vacate, the Court stated that rule 3.1385 is a case management tool “and is not intended as a means to enforce settlements.” By contrast, the opinion in Irvine included a discussion of the procedural safeguards present when Code of Civil Procedure section 664.6 is utilized to enforce a settlement and concluded that no such safeguards exist in rule 3.1385.

So, the next time you come to the end of a successful mediation, make certain you get an agreement in writing. Don’t leave without it. And, make certain that – – at a minimum — the agreement contains: (1) a waiver of the protections within Civil Code Section 1542; (2) enforcement pursuant to Code of Civil Procedure section 664.6; and, (3) admissibility of the agreement in any enforcement proceeding under Evidence Code section 1123(b). Thereafter, don’t waste your time trying to enforce the settlement under CRC rule 3.1385. Use C.C.P. section 664.6.

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