Judge: Helen Zukin, Case: 19SMCV02158, Date: 2022-11-21 Tentative Ruling

Case Number: 19SMCV02158    Hearing Date: November 21, 2022    Dept: 207

Background

This action concerns alleged damage to real property owned by Plaintiffs Gary Schultz and Maria Schultz (“Plaintiffs”) caused by construction activities undertaken at a neighboring property owned by Defendant Shawn Yashar (“Yashar”) by contractor Precision Building & Development, Inc. (“Precision”) and subcontractors Century Construction Builders, Inc. (“Century”) and Leon Krous Drilling, Inc. (“Krous”). Yashar, Precision, Century, and Krous have filed Cross-Complaints against each other raising claims for indemnity. Yashar’s Cross-Complaint, filed August 3, 2020, asserts additional causes of action for breach of warranty and negligence. Century has filed a separate action, LASC No. 21SMCV01061, seeking payment for work performed on Yashar’s property.

The parties participated in a mediation session on January 18, 2022, which resulted in a Stipulation for Settlement by the parties. Pursuant to the stipulation, Century, Krous, and Yashar paid certain funds to Plaintiffs and Plaintiffs dismissed their case against Precision, Krous, Century, and Yashar on January 19, 2022.

Precision now moves the Court to enforce the Stipulation for Settlement entered into by the parties in January 2022. Alternatively, Precision asks the Court to set an Order to Show Cause re: dismissal of the action. Yashar opposes Precision’s motion.

Legal Standard

Code Civ. Proc. § 664.6 provides “[i]f parties to pending litigation stipulate, 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.” In hearing a motion brough under section 664.6, the trial court may receive evidence, determine disputed facts, and enter terms of a settlement agreement as a judgment.  (Bowers v. Raymond J. Lucia Companies, Inc. (2012) 206 Cal.App.4th 724, 732.) The Court may also receive oral testimony in addition to declarations. (Kohn v. Jaymar-Ruby, Inc. (1994) 23 Cal.App.4th 1530, 1533.) The Court may interpret the terms and conditions to settlement (Fiore v. Alvord (1985) 182 Cal.App.3d 561, 566), but the Court may not create material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810).

Strict compliance with the statutory requirements is necessary before a court can enforce a settlement agreement under this statute. (Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002) 103 Cal.App.4th 30, 37.) The party seeking to enforce a settlement “must first establish the agreement at issue was set forth ‘in a writing signed by the parties’ (§ 664.6) or was made orally before the court. [Citation.]” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 304.)

Analysis

The facts underpinning Precision’s motion are largely undisputed. The parties participated in mediation on January 18, 2022, which resulted in a signed stipulation for settlement. (Ex. A to Lynch Decl.) Paragraph 2 of the stipulation provides “All parties accept said terms in full settlement and compromise of the action and the parties agree that the payment(s) and/or consideration set forth herein shall fully and forever discharge and release all claims and causes of action, whether now known or now unknown, which all parties have to each other arising out of the subject matter of this action, with the exception of the claims referenced in paragraphs 4 and 5.” (Emphasis in original.)

Paragraph 4 excepts Century’s separate action from the release of claims in paragraph 2.

Paragraph 5 provides a similar exception for certain of Yashar’s claims in this action: “Defendant and Cross-Complainant SHAWN YASHAR does not release and specifically retains all rights against the other defendants related to their work on construction of the property located at 22118th St., Santa Monica, CA 90402, and the releases in paragraphs 2 and 3 are understood to specifically exclude those potential claims.” (Emphasis in original.)

Paragraph 6 provides the settlement contemplated in the stipulation “is entered into subject to further terms and conditions to be outlined in a formal Settlement Agreement and Release (‘Release’) to be drafted by the Defense parties. Counsel for Defendants agree to provide the Release to Plaintiff within 7 calendar days of this stipulation. Plaintiff agrees to sign, acknowledge and deliver to the defendants the Release of all such claims and causes of action and to sign and deliver a standard form of Dismissal with Prejudice. Counsel for Defendants agree to provide the Release to Plaintiff within 7 calendar days of this stipulation.”

Precision and Yashar acknowledge the “Defense parties” have been unable to agree on a formal Settlement Agreement and Release as contemplated by paragraph 6, and no such agreement was provided to Plaintiffs within 7 calendar days of the stipulation. Nonetheless, the specified funds have been delivered to Plaintiffs and Plaintiffs have dismissed their case against all Defendants, leaving the Cross-Complaints remaining in this action.

The parties’ disagreement stems from paragraph 6. Precision argues the Defendants’ failure to agree on a long-form settlement agreement within the 7 days specified in paragraph 6 means the Defendants have waived any right to impose further terms and conditions on the settlement and asks the Court to issue an order dismissing all causes of action and related cross actions in this action with prejudice. Yashar argues the stipulation expressly conditions settlement on terms and conditions to be negotiated by the parties in the future. 

As an initial matter, the stipulation appears to satisfy the requirements of Code Civ. Proc. § 664.6 as a stipulation in writing signed by the parties outside the presence of the court. The Court does note there are irregularities in signature pages on the stipulation which call into question whether all parties executed the same document. Specifically, Precision appears to have signed a different version of the stipulation than the other parties. However, no party contests the validity of the stipulation itself or the signatures thereon.

Upon review of the stipulation, the Court finds it cannot grant the relief requested by Precision. Precision here seeks an order dismissing all cross actions in this action with prejudice. The Court’s power under section 664.6 is limited to entering judgment “pursuant to the terms of the settlement.” Here, paragraph 5 of the stipulation expressly exempts certain causes of action raised in Yashar’s Cross-Complaint from release in the settlement. Precision provides no basis for the Court to dismiss Yashar’s Cross-Complaint in its entirety where the stipulation clearly does not contemplate such a dismissal as part of the settlement between the parties.

Further, paragraph 6 expressly provides the Defendants in this action would continue to negotiate terms and conditions. The settlement contemplated by the stipulation is made “subject to” those terms and conditions. Paragraph 6 does include a time requirement indicating these negotiations would be complete within 7 days from the execution of the stipulation, Precision has not demonstrated this 7-day time limit was material to the parties’ agreement. For example, the stipulation does not contain a provision stating time is of the essence or otherwise provide for any contingency if the parties failed to provide such a long form settlement agreement to Plaintiffs within the 7-day period. Indeed, it appears the parties have continued to negotiate these terms and conditions into March 2022, well after the expiration of the 7-day period contained in the stipulation, suggesting the parties themselves did not understand the 7-day period to be a substantive limitation on the parties’ ability to negotiate further terms.

Accordingly, the Court DENIES Precision’s request for an order dismissing all claims and cross-claims in this action with prejudice.

As to Precision’s request for alternative relief in the form of setting an Order to Show Cause re: dismissal, the Court notes it has been setting such Orders to Show Cause regularly already to ensure this action progresses toward resolution. This began with the Court’s March 3, 2022, order setting an Order to Show Cause for May 12, 2022, which the Court has successively continued. Most recently, the parties were before the Court on August 18 for an Order to Show Cause regarding dismissal. At this hearing, the Court noted the parties had agreed to engage in further mediation to resolve the outstanding issues between them and continued the Order to Show Cause to September 14, 2022. The Court has thus already issued the Order to Show Cause requested by Precision and accordingly Precision’s alternative request is DENIED as moot.

Conclusion

Precision’s motion to enforce settlement pursuant to Code Civ. Proc. § 664.6 is DENIED.