Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment and order of the Superior Court of San Diego County No. GIC 829326, Patricia A. Y. Cowett, Judge.
HALLER, J.
Anna Yeung and her mother Anne Lee (defendants) appeal a judgment ordering them to pay $125,000 plus attorney fees to plaintiff Gregory Cuddeback. The court entered the judgment based on the terms of the parties' written settlement agreement. (Code Civ. Proc., § 664.6.) On appeal, defendants contend: (1) the court had no jurisdiction to enter judgment because Cuddeback had voluntarily dismissed the action before he moved to enforce the settlement agreement; and (2) the court abused its discretion in granting Cuddeback's section 473 motion to vacate the dismissal.
All further statutory references are to the Code of Civil Procedure.
We conclude the court had jurisdiction to enter the judgment despite the voluntary dismissal. Under section 664.6, a court retains jurisdiction to rule on a section 664.6 motion to enforce a settlement if the parties requested the court to retain jurisdiction before the dismissal was filed, and the court agreed to do so. These conditions were satisfied in this case. Based on this conclusion, we do not reach the issue whether additional grounds supported the court's vacating the dismissal under section 473.
We deny Cuddeback's motion to dismiss the appeal on the ground that defendants have no standing because they allegedly accepted benefits from the settlement and thus were not "aggrieved" parties.
FACTUAL AND PROCEDURAL SUMMARY
In April 2004, Cuddeback sued Anna Yeung for breach of a real estate contract in which Yeung had allegedly agreed to sell a residence to Cuddeback. Cuddeback later amended the complaint to add Yeung's mother, Lee, as a defendant.
In November 2005, the parties notified the court that they had reached a settlement, and the court dismissed the case in December 2005. However, in May 2006, Cuddeback moved to vacate the dismissal based on defendants' alleged fraud in inducing his assent to the settlement. In June 2006, the court granted the motion and vacated the dismissal.
The court then set the matter for trial. The trial call was scheduled for Friday January 5, 2007. On that date, Judge Patricia Cowett, who had presided over the case for three years, asked whether the parties had settled the matter. Counsel for Yeung and Cuddeback were present, and Lee, who was representing herself, was also present. Cuddeback's counsel responded to the court's inquiry by stating that the parties had reached a settlement agreement, memorialized in a four-page document ("Stipulation"), but that one of the parties (Yeung) had not yet signed the agreement. Noting the prior failed settlement and the fact that the case was three years old, the court expressed substantial concern as to whether the matter would actually settle and was reluctant to withdraw the case from the trial calendar.
After a brief recess, both counsel reconfirmed that the parties had agreed to a settlement, and explained that defendant Yeung had not yet signed the agreement because she was working in another city. In response, the court made clear the case was going to trial unless the court was provided with a settlement agreement signed by each party and counsel. The court emphasized: "I need signatures. I don't need it just on the record. I need signatures from each of the parties and from counsel representing parties. And if someone is pro per, as Ms. Lee, is, then she can sign it as well."
At the conclusion of the hearing, Cuddeback's counsel handed Judge Cowett a copy of the Stipulation that was missing one signature (Yeung). Later that day, Yeung signed the Stipulation. Thus, by the end of the day on January 5, all parties had agreed to the settlement terms and had signed the Stipulation.
Three days later, on Monday, January 8, Cuddeback's counsel filed a copy of this fully executed Stipulation with the court. In the Stipulation, defendants agreed to pay Cuddeback $125,000, and agreed they would pay $25,000 within seven days of executing the agreement. Defendants agreed to pay the remaining $100,000 by a secured note with a two-year maturity date, and that a breach of the agreement would result in all sums coming due immediately. In exchange for receipt of the $125,000 payment, Cuddeback agreed to dismiss the action with prejudice.
The Stipulation also provided: "The parties agree and acknowledge that this Stipulation shall be binding and enforceable and request under Code of Civil Procedure § 664.6 that the Court retain jurisdiction to implement and enforce this settlement if the case is dismissed before all terms of the settlement are satisfied. . . . " (Italics added.) The Stipulation stated that the parties "agree to cooperate with each other" to fulfill the objectives of the agreement, and that the parties contemplated entering into a more formal agreement, but until this agreement was executed, the Stipulation "shall be fully enforceable and constitute the full settlement agreement between the parties."
On January 8, the same date that Cuddeback filed the fully executed Stipulation, Cuddeback's attorney filed a request for a dismissal without prejudice of the action. Although he had intended to file a notice of conditional settlement, he was told the court required a dismissal without prejudice to take the matter off the trial calendar. The court clerk entered the dismissal later that day.
Thirty-seven days later, on February 14, Cuddeback moved to enforce the Stipulation under section 664.6. Cuddeback filed his counsel's supporting declaration stating that defendants did not pay the $25,000 that was due in mid-January.
Defendants (represented by new counsel) opposed the motion, arguing that the court did not have jurisdiction to enforce the Stipulation because Cuddeback had voluntarily dismissed the action. Defendants also argued that they had not fully understood the settlement terms when they signed the Stipulation.
Because defendants do not reassert this latter ground as a basis for appeal, we do not detail their arguments in this opinion.
In response to defendants' jurisdictional arguments, Cuddeback maintained that he had fully complied with the requirements of section 664.6 for the retention of jurisdiction. Cuddeback stated that by requiring each party to sign the Stipulation and then requiring a dismissal without prejudice of the action, the court intended that the Stipulation would remain enforceable under section 664.6 after the dismissal. Cuddeback alternatively moved to vacate the dismissal under section 473, arguing that independent grounds existed to vacate the dismissal, including mistake, inadvertence, surprise, and/or excusable neglect. (§ 473, subd. (b).)
In support of his section 664.6 and section 473 motions, Cuddeback filed his attorney's lengthy declaration explaining the various reasons why he had dismissed the action before defendants had fully complied with the settlement terms. Of relevance here, Cuddeback's counsel stated: "On or about January 8, 2007, the Court required that Plaintiff file a dismissal without prejudice before the Court would deem the matter settled. When [Cuddeback] requested that he be allowed to file a Notice of Conditional Settlement . . ., [Cuddeback's] counsel was informed that [this notice] would not be sufficient and that absent a dismissal the matter would proceed to trial the following day." (Italics added.) Cuddeback's counsel also stated he filed the dismissal after consulting applicable authorities, "including Wackeen v. Malis (2002) 97 Cal.App.4th 429."
At the hearing on Cuddeback's section 664.6 and section 473 motions, Judge Cowett stated she had understood at the January 5 hearing that the court was retaining jurisdiction to enforce the settlement after a dismissal, and referred to the Stipulation's provision requesting the court to retain jurisdiction to enforce the agreement. After defendants' counsel repeatedly objected that the parties could not confer jurisdiction by their agreement, the court asked Cuddeback's counsel to respond. Cuddeback's counsel stated: "Your Honor [is] correct. I don't think the court ever lost jurisdiction . . . . [¶] . . . [¶] [Y]ou had the [S]tipulation in your hand when we were discussing this at the January 5th hearing. . . . [¶] It says [section 664.6] right on the face of the [S]tipulation . . . . There is a reservation of jurisdiction in the [S]tipulation. We filed the [S]tipulation with the court. Your Honor wouldn't deem this matter settled until we had all signatures on the document."
The court responded, "That's correct [¶] . . . [¶] I never lost jurisdiction of the case. The only reason it was taken off the trial call is because it was represented that there was an executed settlement agreement. I required it—be executed by all the parties. I received it; retained jurisdiction when I dismissed it without prejudice to set it aside and enter a judgment on the terms of the settlement if necessary, and that's what the court is prepared to do at this time. . . . The court never lost jurisdiction." (Italics added.)
At the conclusion of the hearing, the court made the following additional observations: "[I]t's about time that this settlement be entered. These parties have, frankly, been abusing the process of the court in this case to an extreme. And I don't say that with any lightness. The parties have represented innumerable representations to the court that this case was settled when it really wasn't settled. And this is certainly not a case—and, [defense counsel], it is not your fault that this case has taken so long to get to this point. You came in very late in the case, and I think I tried to warn you as to some of what you were getting yourself into, but this has a long and tortured history and, frankly, is a case where the parties have abused the process of the court. . . . "
The court then entered an order vacating the dismissal, and granted Cuddeback's motion to enforce the settlement under section 664.6. The court entered judgment in Cuddeback's favor for $125,000 plus $13,952.50 in attorney fees and costs.
DISCUSSION
I. Jurisdiction to Enforce Settlement Agreement Under Section 664.6
Section 664.6 provides a summary procedure to enforce a settlement agreement executed during a pending litigation. The Legislature created this procedure to avoid the cumbersome process of requiring parties to bring an independent action to resolve a dispute in a matter that had been settled by the parties. (See Wackeen v. Malis (2002)97 Cal.App.4th 429, 432 (Wackeen); Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.)
Before 1993, section 664.6 read: "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." In 1989, a Court of Appeal held this procedure could only be invoked while a case was still pending. (Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 207.) The court reasoned that once the case was dismissed, the court lacked subject matter jurisdiction to enforce a settlement agreement unless the parties first moved to set aside the dismissal under section 473. (Ibid.; see also Casa de Valley View Owner's Assn. v. Stevenson (1985) 167 Cal.App.3d 1182, 1192.)
In response to this jurisdictional problem, in 1993 the Legislature amended section 664.6 by adding a second sentence: "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." (§ 664.6; see Wackeen, supra, 97 Cal.App.4th at p. 439.) In Wackeen, the court held "the effect of that amendment is to provide courts with continuing jurisdiction over parties and their litigation, for the purpose of enforcing their settlement agreement, despite a suit's having been dismissed after the execution of the agreement." (Id. at p. 433, italics added.) But the Wackeen court interpreted the statutory amendment to permit continued jurisdiction after a dismissal only if certain procedural "formalities" were satisfied. (Ibid.) "Like section 664.6 motions themselves, requests for retention of jurisdiction must be made prior to a dismissal of the suit. Moreover, like the settlement agreement itself, the request must be made orally before the court or in a signed writing, and it must be made by the parties, not by their attorneys, spouses or other such agents." (Ibid.) Thus, the request to continue jurisdiction must be made "(1) during the pendency of the case, not after the case has been dismissed in its entirety, (2) by the parties themselves, and (3) either in a writing signed by the parties or orally before the court." (Id. at p. 440.)
In explaining these requirements, the Wackeen court stated: "While a written or oral request for retention of jurisdiction may, but need not be, a part of the settlement agreement itself, that request must be express, not implied from other language, and it must be clear and unambiguous. A court should not have to resolve doubts or disputes as to whether an intention to retain jurisdiction is found in the provisions of a writing or an oral statement. . . . [¶] Requiring these formalities not only promotes judicial economy and the integrity of the summary enforcement process provided by section 664.6, but also protects the litigants [and] the reasonable expectation of settling parties that the dismissal of an action will put an end to the litigation." (Wackeen, supra, 97 Cal.App.4th at pp. 440-441, italics added.)
Applying these principles, the Wackeen court held the trial court erred in enforcing a settlement under section 664.6 because the matter had been dismissed and the parties did not make clear "in their settlement agreement," or in any other writing or orally to the court, that they were requesting the court to retain jurisdiction for purposes of enforcing the settlement agreement. (Wackeen, supra, 97 Cal.App.4th at p. 441, italics added.)
Unlike in Wackeen, the factual circumstances here satisfy section 664.6 requirements for the retention of jurisdiction. At the January 5 hearing, the parties gave the court a copy of the Stipulation, which contained a specific provision "request[ing] under Code of Civil Procedure § 664.6 that the Court retain jurisdiction to implement and enforce this settlement if the case is dismissed before all terms of the settlement are satisfied." (Italics added.) Although one defendant had not yet signed the agreement at the time of this hearing, she did sign the document later that day. The trial judge, who had actively presided over the case for three years, was aware of a previous unsuccessful attempted settlement and of defendants' repeated tactics seeking to avoid a final resolution of the case. Based on this knowledge and experience, the court made it very clear that the case would not be withdrawn from a trial assignment unless and until the court had all signatures from all parties on the Stipulation, and then later required that the matter be dismissed without prejudice. In later setting forth its understanding of the import of the January 5 hearing, the court recalled receiving the Stipulation and noted that it had never lost jurisdiction of the case.
We reasonably infer from this record that the court understood from the clear and unambiguous recital in the parties' settlement agreement that the parties were making a "request" under section 664.6 for the court to retain jurisdiction after the dismissal, and that the court accepted this request and intended to retain jurisdiction despite a dismissal of the case. "The trial court's factual findings on a motion to enforce a settlement pursuant to section 664.6 'are subject to limited appellate review and will not be disturbed if supported by substantial evidence.' " (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.)
Despite this record showing the court intentionally retained jurisdiction, defendants rely on Hagan Engineering, Inc. v. Mills (2003) 115 Cal.App.4th 1004 (Hagan Engineering) to support their position. In Hagan Engineering, the parties entered into a global settlement agreement requiring the dismissal of all claims with prejudice. (Id. at p. 1006.) The settlement agreement provided that the parties agreed the superior court would retain jurisdiction after a dismissal of the action to enforce the agreement under section 664.6. (Hagan Engineering, supra, at p. 1006.) But the reviewing court held this provision was insufficient to support a retention of jurisdiction because there was no evidence that the parties made the trial court aware of this provision, or that the court treated this provision as a request for continuing jurisdiction. The court emphasized that defendants' appellate counsel had "conceded at oral argument" that "the trial court in this case was never presented with a request to retain jurisdiction." (Id. at p. 1010.) Relying on this concession, the Hagan Engineering court concluded the superior court did not retain jurisdiction, stating "Wackeen does not stand for the proposition that parties may confer jurisdiction on trial courts by including language in a settlement agreement but not asking the court to retain jurisdiction." (Ibid.)
We agree with Hagan Engineering that the mere fact that a settlement agreement contains a provision for section 664.6 enforcement after a dismissal is not necessarily sufficient to satisfy the statutory requirement for continuing jurisdiction. "Subject matter jurisdiction cannot be conferred by consent, waiver or estoppel." (Hagan Engineering, supra, 115 Cal.App.4th at p. 1008.) But this principle does not mean that the parties cannot rely on a contract provision to make their request to the court. As the Wackeen court stated, the "request for retention of jurisdiction may . . . be part of the settlement agreement itself . . . " if the language is "express," "clear," and "unambiguous." (Wackeen, supra, 97 Cal.App.4th at p. 440.) In this case, the request was unambiguously stated in the Stipulation and, unlike in Hagan Engineering, it was presented to the trial court, which agreed to retain jurisdiction.
Moreover, in this case, the retention of jurisdiction was consistent with the parties' intent. In Wackeen, the court expressed concern that a party should not be placed in the position of relying on representations that a dismissal of an action will put an end to the litigation, and then be subject to the court's continuing jurisdiction. (Wackeen, supra, 97 Cal.App.4th at p. 441.) In this case, the parties expressly agreed to continued jurisdiction in the event of a dismissal, and also expressly agreed that the case would not be dismissed until the $125,000 payment was paid by the defendants. Under these terms, Cuddeback's counsel did not intend to file a final dismissal of the action until the consideration had been paid. However, as stated in the declaration filed by Cuddeback's counsel, the court required Cuddeback's counsel to file a voluntary dismissal without prejudice to avoid a trial. In these circumstances, enforcement of the agreement through section 664.6 procedures does not defeat the parties' reasonable expectations. The dismissal appears to have been required by the court for administrative efficiency and convenience, and was never intended to defeat the express intent of the parties and the court to retain jurisdiction of the matter to enforce the settlement agreement.
We reject defendants' evidentiary objections to counsel's explanation for the reason he filed the dismissal. Defendants argue counsel's statements were inadmissible because counsel did not identify the individual who told him of the court's requirement that a dismissal be filed. The trial court presumably had first hand knowledge of the events, and therefore had a reasonable basis to accept his statement as true.
To reach a contrary conclusion would elevate form over substance. Although we agree with Wackeen that adherence to "formalities" is important to promote judicial economy and the integrity of section 664.6's summary settlement enforcement process, the formal procedures should not be used to perpetuate a fraud on the court or to ignore the plain and obvious intent of the court and the parties to retain jurisdiction despite a voluntary dismissal.
The court's retention of jurisdiction under section 664.6 was a sufficient basis to vacate the voluntary dismissal and to enter judgment on the Stipulation. Thus, we do not reach defendants' arguments asserting that no independent statutory basis existed to vacate the judgment under section 473.
DISPOSITION
Order and Judgment affirmed. Appellants to pay respondent's costs on appeal.
WE CONCUR: NARES, Acting P. J., IRION, J.