Making it stick: How to create and enforce a written or oral settlement agreement under code of Civil Procedure Section 664.6

Imagine it is the eleventh hour of the final day of a multi day settlement conference, and after months of research, accountings, and settlement preparations, the parties reach an agreement. They either sign a written agreement or recite their agreement orally before the court, and all parties go home. But what do you do when, upon drafting the marital settlement agreement, the other side demands additional terms that were not included in the signed settlement agreement or oral agreement before the court, and the terms are unacceptable to your client?

One of your remedies is to bring a motion to enforce the settlement under the Code of Civil Procedure section 664.6. Will you prevail? If the agreement you are seeking to enforce is a signed written agreement, you will prevail if (1) the agreement is signed by the parties; (2) the terms are clear and unambiguous; and (3) there are no other procedural flaws. If the agreement you are seeking to enforce is an oral agreement, you will prevail if (1) the agreement is made “orally before the court”; and (2) the parties confirm their agreement.

II. Overview of Code of Civil Procedure Section 664.6

Every family lawyer must understand and know how to apply the requirements of section 664.6 to ensure a settlement reached will be enforceable.

Code of Civil Procedure section 664.6 states:

  1. If parties to pending litigation stipulate, in a writing signed by the parties outside of 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.
  2. For purposes of this section, a writing is signed by a party if it is signed by any of the following:
    1. The party.
    2. An attorney who repre- sents the party.
    3. If the party is an insurer, an agent who is authorized in writing by the insurer to sign on the insurer’s behalf.

    Accordingly, if parties stipulate to settlement terms in writing or “orally before the court,” a judge may enter judgment pursuant to the terms of that settlement upon a properly filed motion to enforce under Code of Civil Procedure section 664.6. On a motion to enforce, the court may interpret the settlement terms and conditions, but it cannot impose terms to which the parties did not agree.² Interpretation of the agreement is governed by the legal principles applied to contracts generally.³ Therefore, when hearing a motion brought under section 664.6, a judge may determine the terms upon which the parties agreed, but nothing in the statute authorizes a judge to create the material terms of a settlement.⁴

    A. History of Code of Civil Procedure Section 664.6

    Prior to the enactment of Code of Civil Procedure section 664.6 in 1981, California’s Court of Appeal had expressed conflicting views concerning the proper procedure to enforce settlement agreements in pending litigation.⁵ One line of authority in the Court of Appeal held a settlement agreement could only properly be enforced through a motion for summary judgment under Code of Civil Procedure section 437, subdivision (c),⁶ through a separate suit in equity to enforce the agreement, or through an amendment to the pleadings with the settlement as an affirmative defense.⁷ Another line of authority recognized the inherent power of a court, through a non-statutory motion for entry of judgment enforcing a settlement agreement, to enforce a settlement agreement presented by the parties in the course of judicially supervised proceedings.⁸

    The conflict between the two lines of authority was resolved in 1981, when the state Legislature enacted Code of Civil Procedure section 664.6, and thus created a procedure to enforce settlement agreements when certain requirements are met.⁹ This section allows for the court to enter judgment on a stipulated settlement without the need for a new lawsuit.¹⁰

    In 2020, the Consumer Attorneys of California (“CAOC”) authored and sponsored Assembly Bill No. 2723 (2019-2020 Reg. Sess.), which would allow attorneys to sign settlement agreements on behalf of their clients and to bind the clients to the terms of the agreement. The Southern California Chapter of the American Academy of Matrimonial Lawyers opposed the bill, “based on a concern that allowing judgments to be entered based on a writing signed by an attorney only will eliminate important consumer protection safeguards available to family law and other litigants under the current language of Code of Civil Procedure section 664.6.”¹¹ After negotiations and further consideration, the CAOC agreed to include a further proposed amendment to section 664.6, which would limit its application in certain categories of cases. The further proposed amendment added subdivision (c), which made the statute’s grant of authority to attorneys to bind clients to settlement agreements not applicable to civil harassment actions, any action brought under the Family Code , any action brought under the Probate Code, or any matter that is being adjudicated in juvenile or dependency court. Assembly Bill No. 2723 (2019-2020 Reg. Sess.) was passed as amended, and the current version of section 664.6 became effective January 1, 2021.¹²

    B. Purpose of Code of Civil Procedure Section 664.6

    The purpose of Code of Civil Procedure section 664.6 is to permit a court, through a summary proceeding, to finally dispose of an action when the existence of the agreement or the terms of the settlement are not subject to reasonable dispute, which was not permissible before the statute’s enactment.¹³ This statutory procedure is intended to benefit not only the parties, but also the justice system, relieving it of the burden of more time consuming and expensive processes.¹⁴ Furthermore, because a settlement stipulation affects the client’s substantial rights, in providing for a statutory enforcement mechanism for stipulated settlements by “parties,” the Legislature intended the term to literally mean the litigants personally, and not their attorneys.¹⁵

    III. Benefits and risks of a 664.6 Settlement

    A. The Benefits of a Section 664.6 Settlement

    The primary benefit of putting an oral settlement on the record or creating a term sheet or memorandum of under- standing signed by both parties is that it creates a binding legal agreement. If the requirements for an agreement to be enforceable under section 664.6 are met, the statute creates a mechanism to enforce the agreement in the event an opposing party disputes the settlement terms.

    Binding settlements are particularly helpful if there is a pattern of one side changing their mind or “going sideways” on a settlement. If your client wants certainty and finality, your duty as an attorney is to take all steps necessary to ensure the settlement is enforceable.

    B. The Risks of a Section 664.6 Settlement

    However,creatinganenforceablesettlementalsocarries risks. Term sheets completed under intense time pressure (or late at night after a long settlement conference) may inadvertently contain language that is ambiguous, which may lead to litigation around the interpretation of the settlement and whether there truly was a “meeting of the minds.” Sometimes counsel may include well-intentioned language such as “standard boiler plate provisions will be included in any MSA,” which later creates conflict when neither side can agree on what “standard boiler plate provisions” means.

    IV. What does Code of Civil Procedure Section 664.6 require for a settlement to be enforced?

    Section 664.6 permits courts to enter a judgment under the terms of a settlement agreement, and, if requested, to retain jurisdiction to enforce the settlement.¹⁶ To accommodate the growing reliance on alternative dispute resolution, section 664.6 is interpreted broadly so as to not limit it to proceedings before a judge.¹⁷

    On a motion to enforce a settlement agreement, the trial court has authority to determine whether the parties have entered into a valid and binding settlement of all or part of the case.¹⁸ The court assesses whether the material terms of the settlement were reasonably well-defined and certain, and whether the parties expressly acknowledged that they understood and agreed to be bound by those terms.ⁱ⁹ If the court determines that the parties entered into an enforceable settlement, it should grant the motion and enter a formal judgment pursuant to the terms of the settlement.²⁰

    A. What constitutes an enforceable signed and written agreement?

    A written settlement agreement is enforceable under section 664.6 if it is signed by all of the parties to the agree- ment. “[S]ettlement is such a serious step that it requires the client’s knowledge and express consent.”²¹ The right to settle a case is a substantial right, and a written stipulation to settle a case and enter judgment must be signed by the party litigant, rather than by the litigant’s attorney.²² A written agreement must also contain the material terms of the settlement which are reasonably well-defined and certain.²³

    Practice Tip: Bring to any settlement conference a check list of key terms that must be negotiated. Pre-draft the “shell” of a term sheet that includes the Code of Civil Procedure section 664.6 language. To simplify drafting on the fly, have a community property balance sheet already prepared that can be revised at the conference and attached as an exhibit. The term sheet and the attached balance sheet should both be signed by the parties.

    B. What does “orally before the court” mean?

    An oral stipulation for settlement made “before the court” is enforceable under section 664.6 if:²⁴ (1) The court officer was empowered to act with an adjudicatory function, and (2) The court officer did, in fact, act in that capacity.²⁵

    1. What must be stated on the record for an oral stipulation to be enforceable under section 664.6?

    An oral agreement recited to a judge by the parties in the course of a settlement conference supervised by that judge satisfies the “before the court” requirement.²⁶ Normally, this process involves the judge reciting the terms of the settlement agreement or asking one of the attorneys to do so. The judge typically then asks the parties and their attorneys to confirm that the recitation correctly stated their agreement, that they intend for the agreement to take effect immediately, and that they understand the effect of the agreement.

    2. A court reporter is not required for enforceability, but is a good idea

    The lack of a court reporter at judicially-supervised non-mediation proceedings does not automatically make an agreement unenforceable under section 664.6. However, the presence of a court reporter will strengthen any enforceability argument.

    3. Only the parties (not attorneys) can confirm the terms of the stipulated agreement to meet the party-litigants requirement

    Prior to 1995, the term “parties” as used in section 664.6 included the individual litigants and/or their attorneys of record acting on their behalf.²⁷ However, as the California Supreme Court made clear in Levy v. Superior Court, a trial court properly denied enforcement of a settlement agreement where the agreement was signed or orally agreed to by the attorneys for the plaintiff, but not by the plaintiff himself.²⁸ The Levy court made clear that the term “parties” as used in section 664.6 means the litigants themselves, and does not include their attorneys of record.²⁹

    The Levy ruling was applied in In re Marriage of Assemi, where a retired judge acted in “a quasi-judicial capacity as arbiter of controverted issues.”³⁰ After the parties’ respective attorneys recited the terms of their settlement, the trial court asked the parties individually whether they understood and agreed to the terms as recited on the record, to which both parties replied affirmatively.³¹ The Assemi court then explained that,

    [I]n ruling upon a section 664.6 motion for entry of judgment enforcing a settlement agreement, and in determining whether the parties entered into a binding settlement of all or part of a case, a trial court should consider whether (1) the material terms of the settlement were explicitly defined, (2) the supervising judicial officer questioned the parties regarding their understanding of those terms, and (3) the parties expressly acknowledged their understanding of and agreement to be bound by those terms.³²

    The court ruled the parties expressly acknowledged their understanding of the agreement, since the judge, in “the presence of a certified reporter, questioned the parties whether they understood and agreed to the terms as explicitly defined and recited on the record, and the parties replied affirmatively.”³³

    Practice Tip: It is common practice for parties to engage private settlement judges. Typically, the judges have each side in their own “breakout rooms” and the judge uses “shuttle diplomacy” to broker an agreement. If there is no written agreement, it is essential that counsel have the judge bring all parties into the same room (ideally with a court reporter, though one is not required), recite the settlement terms, and confirm each party’s acceptance of the terms of the settlement. It is not sufficient for the judge to confirm settlement terms separately in each “breakout room” because it then is unclear whether there has been “a meeting of the minds.”

    V. Best practice tips to ensure enforceability

    A. Before the Settlement Conference

    B. During the Settlement Conference

    C. After the Settlement Conference

    VI. Conclusion

    Ensuring fundamental steps are taken throughout the Settlement Conference process—both before, during, and after—can prevent hard-fought settlement agreements from falling apart, and, through Code of Civil Procedure section 664.6, will contractually bind the parties to the actual agreement that was made.

    1. Code Civ. Proc., § 664.6.
    2. Estate of Jones (2022) 82 Cal.App.5th 948, 952.
    3. In re Marriage of Hasso (1991) 229 Cal.App.3d 1174, 1180.
    4. Steller v. Sears, Roebuck & Co. (2010) 189 Cal.App.4th 175, 180.
    5. In re Marriage of Assemi (1994) 7 Cal.4th 896, 904.
    6. Duran v. Duran (1983) 150 Cal.App.3d 176, 179.
    7. Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 993.
    8. Gopal v. Yoshikawa (1983) 147 Cal.App.3d 128, 132-133.
    9. Levy v. Superior Court (1995) 10 Cal.4th 578, 585.
    10. Bowers v. Raymond J. Lucia Companies, Inc. (2012) 206 Cal. App.4th 724, 732.
    11. 2020 Cal. Legis. Serv. Ch. 290 (Assem. Bill No. 2723 (2019- 2020 Reg. Sess.)).
    12. Code Civ. Proc., § 664.6 (added by stats. 2020 ch. 290 § 1).
    13. Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 206.
    14. Provost v. Regents of University of California (2011) 201 Cal. App.4th 1289, 1298.
    15. Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1579.
    16. Graylee v. Castro (2020) 52 Cal.App.5th 1107, 1113.
    17. Murphy v. Padilla (1996) 42 Cal.App.4th 707, 712.
    18. In re Marriage of Hasso, supra, 229 Cal.App.3d at p. 1180.
    19. In re Jones (2022) 82 Cal.App.5th 948, 952.
    20. Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1182.
    21. Levy v. Superior Court, supra, 10 Cal.4th at p. 583.
    22. Knabe v. Brister (2007) 154 Cal.App.4th 1316, 1324.
    23. Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110, 1123.
    24. Conservatorship of McElroy (2002) 104 Cal.App.4th 536, 551.
    25. In re Marriage of Assemi (1994) 7 Cal.4th 896, 909.
    26. Casa de Valley View Owner’s Assn. v. Stevenson (1985) 167 Cal.App.3d 1182, 1189.
    27. Haldeman v. Boise Cascade (1985) 176 Cal.App.3d 230, 233-234.
    28. Levy v. Superior Court (1995) 10 Cal.4th 580, 585-586.
    29. Id. at p. 586.
    30. In re Marriage of Assemi, supra, 104 Cal.App.4th at p. 909.
    31. Id. at p. 902.
    32. Id. at p. 911.
    33. Id. at p. 909.