Arbitration/Settlement/CCP 664.6: Fourth District, Division 2 Affirms Judgments, Finding Settlement Agreement Is Not Too Uncertain To Enforce

A Roadmap For Drafting An Enforceable Settlement Agreement

     In our next case, the factors supporting enforceability of a settlement agreement provide a roadmap for drafting an enforceable agreement.

     Defendants appealed two identical judgments entered in related lawsuits, arguing that the trial court should have not enforced a settlement agreement because, among other things, it was too uncertain. Hiatt v. Elite Leather Company and Huntington Industries, Inc. v. Elite Leather Company, Case No. G047980 consolidated with G047980 (4th Dist. Div. 3 Dec. 19, 2013) (Rylaarsdam, Acting P.J., author) (unpublished).

     A settlement agreement is enforceable under CCP section 664.6 only if the parties agreed to all material settlement terms.  Plaintiffs argued the settlement agreement was not uncertain as to material terms, whereas defendants argued that the agreement was uncertain and just an “agreement to agree” that was never sufficiently nailed down.

     Here, the agreement contained a procedure for choosing a forensic accounting expert; a methodology; a provision for what would happen if either party disputed the finding on what was owed under an asset purchase agreement; binding arbitration if a party rejected the accountant’s conclusion; an agreement to confer with the mediator concerning selection of an accountant; and a provision that the agreement was enforceable even without further written provisions.  That was sufficient to concluded the agreement was not void for uncertainty as to material settlement terms.

     Additional points weighed in favor of enforceability:  the parties had signed the agreement; counsel had approved the agreement as to form; an insurance company’s signature was not necessary, as the insurer was not a party; plaintiffs timely submitted the names of three experts, but defendants failed to do so; both parties participated equally in the drafting; the terms were read aloud by plaintiff’s counsel with plaintiff’s co-counsel and defense counsel and the mediator present; and, the agreement explicitly stated, “this document is intended to be fully enforceable . . . .”

     The opinion is particularly helpful for a discussion of cases in which an agreement has failed or succeeded to be enforced under 664.6.

     Both judgments were affirmed.