Judge: Mark H. Epstein, Case: 20SMCV01331, Date: 2023-12-21 Tentative Ruling

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Case Number: 20SMCV01331    Hearing Date: December 21, 2023    Dept: I

Plaintiff filed an action to recover on an alleged debt.  The major defense was based on the statute of limitations.  On the eve of trial the parties reached a settlement agreement with the help of a mediator.  The trial was vacated.  Plaintiff has now moved to enforce the settlement pursuant to Code of Civil Procedure section 664.6.  That statute allows a settlement to be enforced by way of motion—even where the facts are disputed—rather than by way of amending the complaint to state a cause of action based on the new contract (which would itself require a trial or that there be no disputed facts).  To come within that statute, the settlement must be signed by the parties or their counsel or recited in open court.

Here, the parties attended a mediation.  The mediator submitted a mediator’s proposal.  It provided that defendants would pay plaintiff $950,000 within 90 days after defendants received written releases.  The releases required “Plaintiff and Richard Weintraub [to] generally release the Defendants in writing from all claims known or unknown, suspected or unsuspected arising before the date of this mediator’s proposal pursuant to and in accordance with Civil Code section 1542.”  To the court’s eye, this is a broad form release.  It allows the parties to part company as to anything of any sort that plaintiff (and her husband) might claim against the defendants up to the date of the proposal.  The release is not, however, mutual; defendants release nothing.  The mediator’s proposal assumed a “long form” agreement would be drafted, but the proposal stated that if the parties could not agree on language, the mediator’s proposal would control.  Specifically, the proposal stated “If the parties cannot agree on the language of the formal settlement agreement, this Mediator’s Proposal will constitute the binding agreement of the parties, effective on the date of its acceptance.  Plaintiff and Richard Weintraub shall sign a standard form release prepared by counsel for Defendants.”

Negotiations over the form of the release fell apart, with each side claiming the other was over-reaching.  That said, no one disputes that the parties did both agree to the mediator’s proposal and that there is a settlement.  The court notes that the evidence of it is from the mediator—that is, there is not a term sheet containing the signatures of both sides.  However, in light of the apparent agreement that there is a deal and that the mediator’s proposal was accepted (and no one has raised this issue, thus waiving it), the court will agree to that much and proceed with the motion.

The key language is that the 90 day clock starts to tick only when defendants receive the signed release.  However, plaintiff (and her husband) need not sign any release defendants can dream up.  They need to sign a standard form release, nothing more.  Plaintiff claims that this was done, but defendants still will not pay.  Defendants contend that they are still waiting for the signed release and will pay on time once the release is in hand.

It appears that the mediator sent over a standard form draft release, which the defense edited in a manner that appears to be consistent with the accepted mediator’s proposal on October 4.  Plaintiff states that the mediator’s proposal is acceptable to them.  Defendants state that they had to edit the mediator’s release because the October 4 draft was mutual, which was not the deal.  Defendants claim that with that sole change, they are fine with the release, but that plaintiff will not sign it.  The edited proposal is Exhibit C to the opposition declaration and Exhibit 32 to plaintiff’s declaration.  The court agrees with the defense that the edits are appropriate and were necessary.  The mutuality edit, for example, was needed to make the draft language consistent with the parties’ agreement.

It does not appear that plaintiff and her husband have signed and transmitted this release to the defense.  Only when that has been signed and transmitted does the clock start to tick.  The court is aware that plaintiff contends that the delay was caused by the defense, but the contract is clear as to what starts the clock.  As soon as plaintiff (and her husband) sign and return the document, the time to pay begins.  The court notes that the mediator’s proposal did not require plaintiff to defend defendants if defendants were sued on a released claim or anything like it; to the extent defendants insist on such a term, they overreach.  However, the release is broad.  If defendants secretly slashed plaintiff’s tires the day before the mediator’s proposal and no one knew about it, that is released.  The edited form seems to do what it needs to do.