Most litigators are generally familiar with Section 664.6 of the California Code of Civil Procedure, which provides a summary procedure to enforce a settlement agreement after dismissal of a lawsuit. Without such a provision, a non-breaching party would have to file a new lawsuit for breach of contract (the settlement agreement itself), which could then take months or even years to resolve, and thus frustrating the purpose of the underlying settlement. Many settlement agreements therefore contain a provision specifically providing for the Court to retain jurisdiction under Section 664.6. However, the California Court of Appeal clarified last week that such a provision is likely insufficient.
In Sayta v. Chu, an opinion issued on November 29, 2017 by the California Court of Appeal, the First Appellate District set forth clear and express requirements for invoking Section 664.6. The underlying dispute, which arose from the termination of a tenancy, was subsequently resolved by written settlement agreement, and the lawsuit dismissed. Following an alleged breach by defendant, plaintiff brought a motion to enforce the settlement agreement pursuant to Section 664.6. The trial court denied the motion, a decision which was affirmed by the Court of Appeal. This is because the parties failed to request, before dismissal, that the trial court retain jurisdiction to enforce the settlement, or alternatively, seek to set aside the dismissal.
Settlements are very often reached in confidence and therefore there may not be the opportunity to request that the Court retain jurisdiction. It remains to be seen how the impact of Satya will be addressed in practice. However, if there is any risk that the opposing side may breach the settlement agreement, the practitioner would be well advised to request that the Court retain jurisdiction on the record or in a minute order.