Levy v. Superior Court

896 P.2d 171, 10 Cal. 4th 578, 41 Cal. Rptr. 2d 878, 94 Cal. Daily Op. Serv. 4798, 95 Daily Journal DAR 8216, 1995 Cal. LEXIS 3570

• Court: California Supreme Court
• Decided: June 22, 1995
• Docket: S035538
• Status: Published

Opinions

Opinion

KENNARD, J.

At the time relevant here, Code of Civil Procedure section 664.6 (hereafter section 664.6) provided: “If parties to pending litigation stipulate, in writing 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.” (Italics added.)¹ In this case we address an issue on which the Courts of Appeal have issued conflicting decisions: whether the written stipulation must be signed personally by the litigant, or whether the signature of the litigant’s attorney is sufficient to create a settlement enforceable under section 664.6. We conclude that section 664.6 requires the signature of the litigant.

Background

The following summary of facts is derived from the pleadings and the papers submitted in support of and in opposition to petitioner/litigant Abraham Levy’s motion to enter judgment to enforce the settlement agreement signed by the parties’ attorneys.

Levy invented the “Auto-Shade,” an accordion-fold device that can be placed on a car’s dashboard to protect the interior from the sun. Real party in interest, attorney Joseph H. Golant, represented Levy in a number of matters between 1985 and 1991. During this period, Golant received more than $2.5 million in attorney fees and costs. Following a dispute regarding the amount of attorney fees owed, Golant, represented by Robert B. Owens, filed a lawsuit against Levy on November 20, 1991, to recover $360,000 in attorney fees and costs. Levy, represented by Harvey R. Friedman, filed an answer and a cross-complaint.

Shortly before the scheduled trial date, Attorneys Owens and Friedman started to discuss settlement of the case. The discussion culminated in a five-page letter Friedman faxed to Owens. At Friedman’s request, Owens confirmed the contents of the five-page letter by writing on it, “This document, with the few changes we discussed, is acceptable. [¶] Rob Owens.” When Owens’s client, Golant, refused to sign the formal settlement agreement, Friedman, on behalf of his client, Levy, filed a “Motion for Entry of Judgment to Enforce Settlement and for Sanctions.”

Following a hearing on the motion, the trial court found that it was undisputed that Friedman had sent Owens a letter purporting to confirm a settlement between the parties, that Friedman requested Owens to confirm that the terms of the settlement were acceptable, and that Owens did so confirm. The court then noted a division of authority among the Courts of Appeal on the issue of whether a settlement agreement signed by a party’s attorney, but not by the party, was enforceable under section 664.6. The court denied the motion. It relied on Nicholson v. Barab (1991) 233 Cal.App.3d 1671 [285 Cal.Rptr. 441], a decision of the Second District Court of Appeal, which held that the signature of the attorney alone, without that of the client, is insufficient to create a binding settlement agreement under section 664.6. The trial court observed that because the procedure to enforce a settlement under section 664.6 was not exclusive, the parties could pursue other avenues of relief, such as a motion for summary judgment, a separate suit in equity, or an amendment of the pleadings.

Friedman, on behalf of his client, Levy, sought a writ of mandate from the Court of Appeal, contending that Nicholson v. Barab, supra, 233 Cal.App.3d 1671, on which the trial court had relied, was incorrectly decided and was in direct conflict with another Court of Appeal decision, Diaz v. May (1993) 15 Cal.App.4th 1268 [19 Cal.Rptr.2d 409]. After a summary denial of the petition for writ of mandate, Friedman sought relief in this court. To resolve the conflict among the Courts of Appeal, we issued an alternative writ.

Discussion

At the time relevant here, section 664.6 provided in its entirety: “If parties to pending litigation stipulate, in writing 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.” (Stats. 1981, ch. 904, § 2, p. 3437, italics added.) The sole question before us is whether the term “parties” literally means the litigants personally or whether it also includes the litigants’ attorneys of record. As we mentioned earlier, the Courts of Appeal have reached conflicting decisions on this issue.

The first decision to interpret the term “parties” in section 664.6 was Haldeman v. Boise Cascade (1985) 176 Cal.App.3d 230 [221 Cal.Rptr. 412]. In that case, the Court of Appeal interpreted the term “parties” to mean the litigants as well as their attorneys. In Haldeman, the attorneys for the parties agreed to a settlement at a judicially supervised settlement conference, and then placed the terms of the settlement on the record in court. When the plaintiff, who had not been present at the proceedings, refused to sign the release that was an integral part of the settlement, the trial court granted the defendant’s motion under section 664.6 to compel enforcement of the settlement. (176 Cal.App.3d at pp. 232-233.)

In rejecting the plaintiff’s contention that the settlement could not be enforced because she had not personally agreed to the settlement, the Haldeman court pointed to the statute governing summary judgments (Code Civ. Proc., § 437c [“Any party may move for summary judgment. . .’’]) as an example of certain provisions in our Code of Civil Procedure that use the term “party” but nevertheless have been generally understood to include the litigant’s attorney of record. (Haldeman v. Boise Cascade, supra, 176 Cal.App.3d at pp. 233-234.)

Thereafter, the contrary view—that the stipulation to settle must be signed personally by the party litigants and not solely by their attorneys—was adopted in Gallo v. Getz (1988) 205 Cal.App.3d 329 [252 Cal.Rptr. 193]. In support of its holding, the Gallo court cited two decisions, Datatronic Systems Corp. v. Speron, Inc. (1986) 176 Cal.App.3d 1168, 1175 [222 Cal.Rptr. 658] and City of Fresno v. Maroot (1987) 189 Cal.App.3d 755, 762 [234 Cal.Rptr. 353]. (Gallo v. Getz, supra, 205 Cal.App.3d at p. 333.) The Gallo holding was followed in Nicholson v. Barab, supra, 233 Cal.App.3d 1671, 1681, the decision upon which the trial court in this case based its ruling.

Recently, in Diaz v. May, supra, 15 Cal.App.4th 1268, the Court of Appeal, after noting the conflicting decisions on the issue, sided with the court in Haldeman v. Boise Cascade, supra, 176 Cal.App.3d 230, in concluding that the term ‘“parties’ was intended to have the same meaning in section 664.6 as it generally has in civil procedure, i.e., that it includes the parties acting through their duly authorized attorneys of record.” (Diaz v. May, supra, at p. 1273.)

To resolve this conflict among the Courts of Appeal, we must determine whether the Legislature intended the term “parties” as it appears in section 664.6 (“If parties to pending litigation stipulate ... for settlement of the case . . .”) to mean only the litigants personally or to include the attorneys representing the litigants. To ascertain such intent, we look first to the words of the statute. (Lennane v. Franchise Tax Bd. (1994) 9 Cal.4th 263, 268 [36 Cal.Rptr.2d 563, 885 P.2d 976]; Woods v. Young (1991) 53 Cal.3d 315, 323 [279 Cal.Rptr. 613, 807 P.2d 455].) When the words are susceptible to more than one reasonable interpretation, we consider a variety of extrinsic aids, including the statutory context and the circumstances of the statute’s enactment, in determining legislative intent. (See, e.g., People v. Woodhead (1987) 43 Cal.3d 1002, 1007-1008 [239 Cal.Rptr. 656, 741 P.2d 154]; Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387 [241 Cal.Rptr. 67, 743 P.2d 1323].)

The word “parties” is reasonably susceptible to more than one interpretation. As noted by the Courts of Appeal in Haldeman v. Boise Cascade, supra, 176 Cal.App.3d at pages 233-234, and Diaz v. May, supra, 15 Cal.App.4th at page 1273, the term “party,” as used in a number of our civil procedure statutes, is commonly understood to mean not only the actual litigant, but also the litigant’s attorney of record. (See, e.g., Code Civ. Proc., §§ 437c [“Any party may move for summary judgment”], 438, subd. (b)(1) [“A party may move for judgment on the pleadings”], 2017, subd. (a) [“any party may obtain discovery”].) Motions under these particular statutes are routinely made by attorneys in the course of representing their clients.

But the word “party” is also susceptible of a narrower meaning, namely the specific person or entity by or against whom legal proceedings are brought. (Black’s Law Dict. (5th ed. 1979) p. 1119, col. 2 [defining parties], p. 1122, col. 1 [defining party].) This meaning of the term “party” can also be found in our statutory law. For example, Code of Civil Procedure section 2033, subdivision (g) provides: “The party to whom the requests for admission are directed shall sign the response under oath, unless the response contains only objections.” (Italics added.) When, as in this particular instance, the subject of the statute may affect the substantial rights of the litigants themselves, the term “party” literally means the party litigant, not the litigant’s attorney. (See Brigante v. Huang (1993) 20 Cal.App.4th 1569, 1574-1575 [25 Cal.Rptr.2d 354]; Steele v. Totah (1986) 180 Cal.App.3d 545, 550 [225 Cal.Rptr. 635].)²

Because, as just shown, the term “party” can have more than one meaning, we next examine the statutory context in which it is used, so we can determine legislative intent. Section 664.6 governs the entry of judgment pursuant to the terms of a settlement agreement. Unlike the steps an attorney may take on behalf of the client that are incidental to the management of a lawsuit, such as making or opposing motions, seeking continuances, or conducting discovery, the settlement of a lawsuit is not incidental to the management of the lawsuit; it ends the lawsuit. Accordingly, 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.) As we stated in Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396 [212 Cal.Rptr. 151, 696 P.2d 645, 48 A.L.R.4th 109]: “ ‘[T]he law is well settled that an attorney must be specifically authorized to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise settlement of pending litigation. . . .’” (Id. at p. 404, quoting Whittier Union High Sch. Dist. v. Superior Court (1977) 66 Cal.App.3d 504, 508 [136 Cal.Rptr. 86].)

In Blanton, a medical malpractice action, the plaintiff’s attorney, without his client’s consent, entered into a stipulation with the defendants to submit the case to binding arbitration. We concluded that the attorney’s unauthorized stipulation could not bind the client. We said: “An attorney retained to represent a client in litigation is clothed with certain authority by reason of that relationship. ‘The attorney is authorized by virtue of his employment to bind the client in procedural matters arising during the course of the action .... “In retaining counsel for the prosecution or defense of a suit, the right to do many acts in respect to the cause is embraced as ancillary, or incidental to the general authority conferred, and among these is included the authority to enter into stipulations and agreements in all matters of procedure during the progress of the trial. Stipulations thus made, so far as they are simply necessary or incidental to the management of the suit, and which affect only the procedure or remedy as distinguished from the cause of action itself, and the essential rights of the client, are binding on the client.” [Citation]’ (Linsk v. Linsk (1969) 70 Cal.2d 272, 276-277 [74 Cal.Rptr. 544, 449 P.2d 760].)” (Blanton v. Womancare, Inc., supra, at pp. 403-404.) We went on to say: “An attorney is not authorized, however, merely by virtue of his retention in litigation, to ‘impair the client’s substantial rights or the cause of action itself.’ (Linsk v. Linsk [(1969)] 70 Cal.2d [272,] 276.)” (Id., at p. 404.) We explained that the stipulation to submit to binding arbitration, to which the plaintiff’s attorney had sought to bind his client, involved a substantial right because it would have, without the client’s consent, diverted the dispute from one forum, the court, to a different one, arbitration. (Id. at p. 407.)

In this case, the agreement to settle was signed only by the attorneys for the litigants, rather than the parties themselves. Because the settlement of a lawsuit is a decision to end the litigation, it obviously implicates a substantial right of the litigants themselves. Given this circumstance and section 664.6’s focus on settlements, we conclude that in providing for an enforcement mechanism for settlements by “parties,” the Legislature intended the term to literally mean the litigants personally. This conclusion is also supported by the circumstances preceding and surrounding the enactment of section 664.6.

Section 664.6 was enacted in 1981. (Stats. 1981, ch. 904, § 2, p. 3437.) As this court noted recently in In re Marriage of Assemi (1994) 7 Cal.4th 896, 904-905 [30 Cal.Rptr.2d 265, 872 P.2d 1190], prior to 1981 the Courts of Appeal had expressed conflicting views concerning the proper procedures to enforce settlement agreements in pending litigation.

Under one line of authority, settlement agreements preceding the enactment of section 664.6 in 1981 could be enforced only by a motion for summary judgment, a separate suit in equity, or an amendment to the pleadings. This became the dominant view. (See, e.g., Duran v. Duran (1983) 150 Cal.App.3d 176, 179 [197 Cal.Rptr. 497]; Hastings v. Matlock (1980) 107 Cal.App.3d 876, 880-881 [166 Cal.Rptr. 229].) It was based on the theory that nonstatutory motions to enforce settlements were motions based on facts outside the pleadings and, under this court’s decisions (Vesely v. Sager (1971) 5 Cal.3d 153, 167-169 [95 Cal.Rptr. 623, 486 P.2d 151]; Pianka v. State of California (1956) 46 Cal.2d 208, 211 [293 P.2d 458]), had to be treated as motions for summary judgment that could be granted only if all of the papers submitted showed there was no triable issue of fact. (See, e.g., Duran v. Duran, supra, at p. 179; Hastings v. Matlock, supra, at pp. 880-881.)

A second line of authority permitted motions to enforce settlements based on facts outside the pleadings if the fact of settlement and the terms of the settlement were not subject to reasonable dispute. (Corkland v. Boscoe (1984) 156 Cal.App.3d 989, 993 [203 Cal.Rptr. 356], quoting Gopal v. Yoshikawa (1983) 147 Cal.App.3d 128, 132 [195 Cal.Rptr. 36]; Gregory v. Hamilton (1978) 77 Cal.App.3d 213, 219-220 [142 Cal.Rptr. 563].) The theory underlying this approach was that the statutory means of enforcing settlements by motions for summary judgment, separate suits in equity, or amendments to pleadings were inadequate, and that a court therefore must have authority to enforce settlements as a means of controlling proceedings before the court and protecting the interests of the parties. (Gopal v. Yoshikawa, supra, at p. 132.)

The conflict was resolved in 1981 when the Legislature enacted section 664.6, which created a summary, expedited procedure to enforce settlement agreements when certain requirements that decrease the likelihood of misunderstandings are met. Thus the statute requires the “parties” to stipulate in writing or orally before the court that they have settled the case. The litigants’ direct participation tends to ensure that the settlement is the result of their mature reflection and deliberate assent. This protects the parties against hasty and improvident settlement agreements by impressing upon them the seriousness and finality of the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement. (See In re Marriage of Assemi, supra, 7 Cal.4th at p. 905; City of Fresno v. Maroot, supra, 189 Cal.App.3d at p. 762; Datatronic Systems Corp. v. Speron, Inc., supra, 176 Cal.App.3d at p. 1174.)³ It also protects parties from impairment of their substantial rights without their knowledge and consent. (See Blanton v. Womancare, Inc., supra, 38 Cal.3d at p. 404.)

For the reasons set forth above, we conclude that the term “parties” as used in section 664.6 (“If parties to pending litigation stipulate ... for settlement of the case . . .”) means the litigants themselves, and does not include their attorneys of record.⁴ Because in this case Golant, a party litigant, did not sign the agreement to settle, it is not enforceable under section 664.6.⁵

The peremptory writ is denied and the alternative writ is discharged.

Lucas, C. J., Mosk, J., Arabian, J., Baxter, J., and George, J., concurred.

1 In 1993, the Legislature amended section 664.6 by providing, among other things, that the written stipulation be “signed by the parties outside the presence of the court,” and that the oral stipulation before the court be made “on the record.” (Stats. 1993, ch. 768, § 1.) An amendment to this provision in 1994 deleted the phrase “on the record.” (Stats. 1994, ch. 587, § 7.) These amendments do not affect the resolution of this case.

2 Contrary to the assertion of litigant Golant, the 1993 amendment to section 664.6 does not remove the ambiguity inherent in the Legislature’s use of the word “parties.” Because the amendment (see fn. 1, ante) reiterated the word “parties” without further qualification or explanation, it is not helpful in resolving the ambiguity inherent in the term.

3 This court’s statement in In re Marriage of Assemi, supra, 1 Cal.4th 896, that under section 664.6 trial courts may take evidence to determine if the parties reached a binding mutual accord (7 Cal.4th at p. 905), and its statement referring to a stipulated settlement being “presented orally by the party litigants or their counsel to a judge” (id. at p. 906, italics added), must be read in the context of requiring direct party-litigant participation in the settlement.

4 Haldeman v. Boise Cascade, supra, 176 Cal.App.3d 230 and Diaz v. May, supra, 15 Cal.App.4th 1268, are disapproved to the extent they are inconsistent with the views expressed herein.

5 We note that this statutory procedure is not the exclusive means to enforce a settlement. (See Kilpatrick v. Beebe (1990) 219 Cal.App.3d 1527, 1529 [269 Cal.Rptr. 52].) Alternative procedures are a motion for summary judgment, a separate suit in equity, or an amendment to the pleadings in this action.