Judge Kerry Bensinger, Case Number: 22STCV17243, Date: 2024-01-29 Tentative Ruling

On June 25, 2022, Plaintiff, Douglas Lalonde, filed a complaint against Defendants, Val-Pro-Inc. dba Valley Fruit & Produce Company, Carrie Lalonde, and Donald J. Lalonde, arising from business disputes and wage and hour violations.

On April 4, 2023, the parties attended a mediation. The parties purportedly reached a settlement.

On April 25, 2023, Plaintiff filed a Notice of Settlement. The Notice indicated that the settlement was conditional and that a request for dismissal would be filed no later than June 26, 2023. The court set a hearing for OSC re Dismissal for July 14, 2023.

On July 7, 2023, Plaintiff filed Response to the OSC re Dismissal, stating that the matter should remain on calendar because no settlement was reached. Plaintiff did not dismiss the case.

On July 14, 2023, at the hearing for the OSC re Dismissal, the court stated that California Rules of Court permitted the court to dismiss the action if the court determined the settlement was enforceable. The parties were directed to brief the enforceability of the settlement agreement.

On October 11, 2023, Defendants filed this Motion to Dismiss Pursuant to Settlement.

On November 2, 2023, Defendants submitted the purported settlement agreement as Exhibit A to the Second Declaration of Craig D. Nickerson.

The motion was heard on November 3, 2023. The court issued an order stating it could not determine whether the settlement agreement was enforceable because even if the parties presented the court with the settlement agreement at the hearing, the court could not make a reasoned decision on the spot.[1] The court continued the matter to January 29, 2024.

“If 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.¿ 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.”¿ (Code Civ. Proc., § 664.6.)¿¿¿

In hearing a section 664.6 motion, 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 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).¿ 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 [holding that a letter confirming the essential terms of a settlement agreement was not a “writing signed by the parties” sufficient to satisfy the requirements of Section 664.6].)¿

Plaintiff raises evidentiary objections to the Declaration of Craig D. Nickerson.

The court declines to rule on the objections because the court does not rely on the challenged information.

Defendants seek to dismiss this action pursuant to the parties’ purported settlement agreement. Defendants have submitted the agreement for review. (See Second Nickerson Decl., Ex. A.) Prior to reaching the issue whether the court should enter judgment and dismiss the matter or dismiss the case and retain jurisdiction to enforce the settlement agreement, the court must first determine whether there is an enforceable settlement agreement.

“When a dispute arises on whether a binding settlement of a pending action has been reached, the party asserting the settlement has several options. If applicable, the proponent may use the summary procedures of a motion to enforce settlement under Code of Civil Procedure section 664.6. Another option is to move for summary judgment. If a party chooses to bypass these summary procedures, the settlement proponent may amend his or her pleadings to assert the settlement, or bring a separate action for breach of contract or equitable relief. [Citation.] When the party asserting settlement prevails under section 664.6, on a summary judgment motion, or at trial, the Legislature has specifically authorized the trial court to enter judgment in accordance with the agreement. [Citation.].” Irvine v. Regents of University of California (2007) 149 Cal.App.4^th 994, 1000-1001

Here, Defendants seek to avail themselves of the summary procedures outlined in CCP section 664.6. As a threshold matter, Defendants must establish there is a binding settlement agreement, and “a settlement agreement drafted during mediation must be admissible before a court can reach the issue of enforceability.” (Fair v. Bakhtiari (2006) 40 Cal.4th 189, 199 (Fair).) (Emphasis added.)

“Section 664.6 permits the trial court judge to enter judgment on a settlement agreement without the need for a new lawsuit. It is for the trial court to determine in the first instance whether the parties have entered into an enforceable settlement. In making that determination, the trial court acts as the trier of fact, determining whether the parties entered into a valid and binding settlement. Trial judges may consider oral testimony or may determine the motion upon declarations alone.” (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360 [Cleaned up].)

Here, the oral discussions at the mediation are confidential. (See Evid. Code, section 1118-1119. To succeed Defendants must therefore establish the admissibility and enforceability of the “Settlement Term Sheet.”

Defendants argue there is an enforceable settlement agreement. Plaintiff disagrees. Plaintiff says the document upon which Defendants rely is nothing more than a settlement term sheet and, pursuant to Evidence Code section 1123, that term sheet is inadmissible.

A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if the agreement is signed by the settling parties and any of the following conditions are satisfied:

(a) The agreement provides that it is admissible or subject to disclosure, or words to that effect.

(b) The agreement provides that it is enforceable or binding or words to that effect.

(c) All parties to the agreement expressly agree in writing, or orally in accordance with Section 1118, to its disclosure.

(d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute.

Here, the document is entitled “Settlement Term Sheet” and is signed and dated by Plaintiff Douglas Lalonde and Defendants Carrie Lalonde and Donald J. Lalonde. However, the document does not satisfy any of the four criteria under Evid. Code, §1123. The agreement does not provide that it is admissible; does not provide that it is enforceable or binding; does not provide that it can be disclosed; and is not being used to show fraud, duress, or illegality. On its face, the document is inadmissible, and cannot form the basis for an enforceable settlement agreement.[2]

Defendants argue the Term Sheet is an enforceable agreement because the agreement satisfies Evid. Code section 1123(b). Defendants argue the “agreement provides that it is enforceable or binding or words to that effect.” In support, Defendants contend the document states the parties “agree” to perform certain acts.[3]

The court is not persuaded. In Fair v. Bakhtiari (2006) 40 Cal.4th 189, a case with strikingly similar facts, the California Supreme Court stated repeatedly:

“[t]he writing must make clear that it reflects an agreement and is not simply a memorandum of terms for inclusion in a future agreement. The writing need not be in finished form to be admissible under section 1123(b), but it must be signed by the parties and include a direct statement to the effect that it is enforceable or binding.”

“The phrase “words to that effect” in section 1123(b) refers to language that conveys a general meaning or import, in this instance the meanings of “enforceable or binding.” (American Heritage Dict. (4th ed.2000) p. 570.) Under section 1123(b), the use of such language will exempt a written settlement agreement from the general rule that documents prepared during mediation are inadmissible in future proceedings. The Legislature's goal was to allow parties to express their intent to be bound in words they were likely to use, rather than requiring a legalistic formulation. The Legislature also meant to clarify the rules governing admissibility and reduce the likelihood that parties would overlook those rules. To meet these objectives, we must balance the requirements of flexibility and clarity, without eroding the confidentiality that is “essential to effective mediation.” [Citation.]

In order to preserve the confidentiality required to protect the mediation process and provide clear drafting guidelines, we hold that to satisfy the “words to that effect” provision of section 1123(b), a writing must directly express the parties' agreement to be bound by the document they sign.”

“Thus, to satisfy section 1123(b), a settlement agreement must include a statement that it is “enforceable” or “binding,” or a declaration in other terms with the same meaning.”

Here, the Term Sheet lacks the necessary language to satisfy Evid Code section 1123(b). The “agree” language in the Settlement Term Sheet appears only in Paragraph 3, titled “Sale of L&L Property”. Such language does not appear anywhere else in the agreement, nor does it alone express the parties’ agreement to be bound by the document they sign.

The Settlement Term Sheet is inadmissible. It is not a written settlement agreement. As such, there is no settlement agreement for the court to enforce.

Accordingly, the Motion to Dismiss Pursuant to Settlement is DENIED. The court will place the matter back on the trial calendar. The court will discuss appropriate dates with the parties.

[1] The settlement agreement was electronically filed on November 2, 2023, one day before the hearing. The bench office likely did not see the filing as it often takes several days before an electronic filing reaches the court’s docket.

[2] Moreover, even if the court were to consider the term sheet it would not help the defendant because it is little more than a recitation of seven summary terms. It lacks the indicia of a final settlement agreement. It also fails to include the operative language that the court may retain jurisdiction to enforce the agreement once the matter is dismissed.

[3] Defendants also argue Plaintiff should be judicially estopped from denying the enforceability of the agreement because Plaintiff filed a notice of settlement. Defendants rely upon Blix Street Records, Inc. v. Cassidy (2010) 191 Cal.App.4th 39. In Blix Street, after picking a jury, the parties settled. The trial court terminated the trial and discharged the jury based upon the parties’ representation, made on the record, that they had entered into a signed and enforceable settlement agreement. Later, counsel for one of the parties objected to the settlement. The trial court determined the case was over. The court of appeal agreed. Blix Street is factually distinguishable. Filing a notice of settlement is a far cry from representing to the court, on the record, that the parties entered into a written and enforceable settlement agreement, and based upon those representations, the court dismissed the jury. Here, no jury was picked; no such representations about an enforceable written agreement were made to the trial court; no jury was dismissed based upon the parties’ representations; and no court had the opportunity to inquire about the terms and the agreement. The trial court did not rely upon the notice of settlement to dismiss the case. Instead, the court set an OSC to inquire. Notably, the parties in Fair also filed a case management report notifying the court that the case settled in mediation. (Fair, supra, at p. 193.) That fact did not influence the California Supreme Court’s decision nor make the term sheet admissible.