You have worked very hard to get a case ready for settlement or trial and the parties are now ready to settle the case in its entirety. You, the parties and counsel have spent hours hammering the general terms of the settlement out and you want to put the terms on the record or in writing quickly, so the settlement can be enforced as a judgment, if necessary, pursuant to CCP Sections 664.6 (non-construction defect matters) and 664.7 (residential construction defect matters). There are essential conditions you must follow if you want to use these code sections successfully to enforce the settlement you worked so hard to reach.
Code of Civil Procedure Section 664.6 states:
“If parties to pending litigation stipulate, in writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties , the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” (Emphasis added)
Code of Civil Procedure Section 664.7 states, in pertinent part:
“(a) Notwithstanding Section 664.6, if parties to a pending construction defect action stipulate personally or, where a party’s contribution is paid on its behalf pursuant to a policy of insurance , the parties stipulate through their respective counsel, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.
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(c) For purposes of this section, “construction defect action” shall mean any civil action that seeks monetary recovery against a developer, builder, design professional, general contractor, material supplier, or subcontractor of any residential dwelling based upon a claim for alleged defects in the design or construction of the residential building unit.” (Emphasis added)
Unless your case is a residential construction defect action, you must use Section 664.6 to enforce your settlement as a judgment.
First, there must be pending litigation when the stipulation or settlement agreement, in writing, or orally before the court is made. If the case has been dismissed before the settlement is properly placed on the record or properly placed in writing, then the court lacks jurisdiction to act in any way whatsoever. (See, Hagen Engineering, Inc. v. Daniel Mills, (2003) 115 Cal.App.4 th 1004, 1007-1008)
Second, the request that the court retain jurisdiction over the case in order to enforce the settlement must be made orally by the parties before the court or in a signed writing by the parties, not by their attorneys, spouses or agents. If after a suit has been dismissed, a party brings a Section 664.6 motion for judgment on a settlement agreement but cannot present to the court a request for retention of jurisdiction that meets all of these requirements, then enforcement must be left to a timely filed separate lawsuit. (See,Caesar Wackeen, et al. v. William Malis, et al., (2002) 97 Cal.App.4 th 429,433 ).
Remember, in non-residential construction defect cases, only the parties, not their attorneys, can secure the protections of Section 664.6.
In regard to Section 664.7, it was enacted to allow counsel to bind the parties and allow the court to retain jurisdiction to enforce insurance funded settlements by judgment. This is known as the “parties themselves” exemption found in construction defect cases. Please note, subsection (c) of Section 664.7, only applies to construction defect actions for residential dwellings. If your construction defect action is commercial, industrial or a mix of residential and commercial uses then you would be wise to follow the requirements of Section 664.6, even if the settlement is funded by insurance proceeds.
Keep an eye on these requirements and you should be able to use these CCP Sections 664.6 and 664.7 as the legislature intended them to be used.
Grant R. Mullen is an Associate attorney with Kring & Chung, LLP‘s Irvine, CA office. He can be contacted at (949) 261-7700 or [email protected].