On March 29, 2019, a California Court of Appeal held that a trial court did not retain jurisdiction under Code of Civil Procedure section 664.6 to enforce a settlement agreement after dismissal of the underlying lawsuit because the parties did not comply with the strict requirements of section 664.6. At first blush, the decision in Mesa RHF Partners, L.P. v. City of Los Angeles (Mesa) may not seem significant; however, the court’s holding now requires litigants and their counsel to consider modifying the procedures they typically use to settle and dismiss cases, at least to the extent they want the trial court to retain jurisdiction to later enforce their settlement agreements if that becomes necessary.

Section 664.6 allows for parties to file a stipulate to allow a trial court to retain jurisdiction over a dismissed case to enforce a settlement agreement “in a writing signed by the parties.” In Mesa, the parties resolved a dispute and indicated in their settlement agreement that “[t]he Court shall retain jurisdiction pursuant to [section 664.6] to enforce the terms of the Settlement Agreement.” As is often done, counsel for the plaintiffs then signed and filed a request for dismissal on a printed court form. Counsel even went so far as to insert language on the form that stated the trial court would retain jurisdiction to enforce the settlement under section 664.6.

A dispute eventually arose between the parties relating to the terms of the settlement agreement, and the plaintiffs filed a motion under section 664.6 to have the trial court enforce the agreement. The trial court, however, denied the motion, and the plaintiffs appealed. The Court of Appeal held that the trial court did not have jurisdiction to enforce the settlement agreement because “[t]he requests for dismissal were not signed by the parties (or even a single party) as that term in section 664.6 has been uniformly construed by California courts.”

Because the voluntary dismissal of litigation terminates the court’s jurisdiction over the matter, the Court of Appeal stated that section 664.6 requires “strict compliance” to invoke the power of the court to later enforce a settlement agreement. Strict compliance with section 664.6 requires three things: the request must be made (1) while litigation is still pending – not after the case has been dismissed; (2) by the actual parties – not their attorneys; and (3) either in a writing signed by the parties (not just their counsel) or orally in open court. The Court of Appeal then suggested that in settling their case, the parties could have filed a stipulation requesting that the trial court retain jurisdiction under section 664.6 and could have done so either (1) by attaching the settlement agreement (which had the actual parties’ signatures) or (2) by having the parties signing the stipulation themselves.

In sum, because many settlement agreements include confidentiality provisions, the settling parties may not want to make their agreements publicly available by filing them, just to later invoke the court’s jurisdiction to enforce them. Therefore, for parties to ensure a trial court retains jurisdiction to enforce their settlement agreements, if necessary, the parties themselves, not simply their counsel, need to sign stipulations requesting that the trial court retain jurisdiction to enforce the settlement agreement, either at the same time or before they request that the court dismiss the case. If this procedure is not followed and the settlement agreement is later breached, the aggrieved party may have to file a separate legal action, which could turn out to be more time consuming and costly than if the parties had properly asked the court in the first place to retain jurisdiction to enforce the settlement agreement.