Settlement agreements are contracts and the legal principles which apply to contracts generally apply to settlement contracts. (Canaan Taiwanese Christian Church v. All World Mission Ministries (2012) 211 Cal.App.4th 1115, 1123-1124.) Settlement agreements are enforceable in a number of ways, including a motion pursuant to Code of Civil Procedure section 664.6, by motion for summary judgment, by separate suit in equity, or by amendment of the pleadings to raise the settlement as an affirmative defense. (Gorman v. Holte (1985) 164 Cal.App.3d 984, 989.)

Statutory Requirements

“Section 664.6 provides in pertinent part that ‘[i]f parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court... for settlement of the case,... the court, upon motion, may enter judgment pursuant to the terms of the settlement.’” Sully-Miller v. Gledson (2002) 103 Cal.App.4th 30, 35-36. “Aside from the signed writing requirement, the writing must embody an enforceable contract between the parties: ‘A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts.’” Id. citing Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, at 810-811.

“CCP §664.6 was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.” Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810. “Under California law, Courts may continue jurisdiction over parties and their litigation, for the purpose of enforcing their settlement agreement, despite a suit's having been dismissed, only when the parties request the retention of jurisdiction in a manner that satisfies the requirements of CCP section 664.6.” Wackeen v. Malis (2002) 97 Cal.App.4th 429, 433.

Compliance Standard for Section 664.6

“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. “Accordingly, ‘parties’ under section 664.6 means the litigants themselves, not their attorneys.” Levy v. Superior Court (1995) 10 Cal.4th 578, 586 (holding “we conclude that the term ‘parties’ as used in section 664.6 means the litigants themselves, and does not include their attorneys of record”). “Additionally, the settlement must include the signatures of the parties seeking to enforce the agreement, and against whom enforcement is sought.” J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 985.

Signature Requirements

“[A] party cannot satisfy section 664.6's signature requirement simply by adding its signature to a document that does not call for it. Sully-Miller v. Gledson (2002) 103 Cal.App.4th 30, 37. The purpose of section 664.6's signed writing requirement— to provide unequivocal proof of the parties' intent to enter a binding settlement —would be frustrated if courts enforced written agreements pursuant to that section.... Id. “Section 664.6 requires the parties' signatures because ‘settlement is such a serious step that it requires the client's knowledge and express consent.’” 1 Witkin, Cal. Procedure (3d ed. 1985) Attorneys, § 194, pp. 221-222; Levy v. Superior Court (1995) 10 Cal. 4th 578, 583. “A party's signature fails to convey such knowledge and consent unless it is contained in a document that was clearly intended by that party to be a binding settlement agreement.” Sully-Miller v. Gledson at 37.

Jurisdiction Stipulation Requirement

“[A] valid request for the trial court to retain jurisdiction under section 664.6 must be made:

1. During the pendency of the case, not after the case has been dismissed in its entirety;
2. By parties themselves; and
3. Either in a writing signed by the parties or orally before the court”

Mesa RHF Partners, L.P., v. City of Los Angeles, et al., (2019) 33 Cal.App.5th 913, 917.

“[A] request for dismissal filed with the trial court [is] not a proper request for the trial court to retain jurisdiction because it had only been signed by an attorney – not the parties.” Id. at 918. “In addition, [a] settlement agreement, which contained a similar provision, [is] not a proper request because [if] it was never presented to the trial court before the case was dismissed.” Id.

Settlement Agreements and Claims of Duress

Civil Code section 1689 permits a party to a contract to rescind the contract if the consent of the party rescinding, was obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party. Chan v. Lund (2010) 188 Cal.App.4th 1159, 1174. Accordingly, “a party who enters into a contract under duress may obtain rescission against another contracting party, who, although not responsible for the duress, knows that it has taken place and takes advantage of it by enforcing the contract, particularly a contract made with inadequate consideration.” Id. citing Leeper v. Beltrami (1959) 53 Cal.2d 195, 206.

In Chan, although the Court found that the signature had been induced by duress it held that this was not grounds to rescind the settlement agreement because the attorney was not a party to the settlement agreement. Id. Further, the Court found no evidence that the opposing counsel had conspired with the party’s attorneys to exert the pressure or that the opposing party was aware of the alleged duress. Id. As a result, the Court held that, even assuming the attorney exercised duress upon the party, and that this duress caused him to sign the settlement agreement, this presented no legal grounds for rescission. Id.