Trial Magazine

From the beginning of a case, we investigate, conduct discovery, collect information, and interview witnesses with the intention of trying our cases. In reality, most cases are settled before trial—whether by counsel negotiation, formal mediation, some other alternative dispute resolution program, or court-ordered settlement conference. Settlements succeed for our clients only if the defendant satisfies all obligations that the settlement terms require. Here are some ways to negotiate and draft settlements with potential post-settlement problems in mind and what to do if you need to enforce a settlement in court.¹

Before beginning settlement discussions, set yourself up for success. Ensure that all necessary parties are present; federal and state courts typically require that everyone with the authority to settle a case personally attend any mandatory settlement conference.² Rules vary from jurisdiction to jurisdiction, but at a minimum, every party must be represented by an attorney with the authority to settle at pretrial or settlement conferences or be specifically excused by the court from attending in person.³

In one case, when I had to subsequently move to enforce the ­settlement, I noted the unexcused absence of the defendant’s insurance adjuster as an example of the party’s bad faith in the settlement process. Along with the motion and request for sanctions, I filed a detailed declaration. It set forth the specific facts of the adjuster’s failure to comply with the mandatory settlement conference attendance rules and my attempts to contact defense counsel by email and phone to get the settlement payment for my client, which were ignored. After I filed the motion and before the hearing, my client received full payment and additional money for sanctions to take the motion off-calendar. In that case, the filing of the motion alone elicited immediate performance.

Always check the local court rules and your judge’s standing orders for any additional requirements. Be prepared for a long day (and sometimes night) in any settlement conference or mediation. Advise your clients in advance that the process takes hours and that the judge or mediator most likely will have everyone stay until the case is settled. Since there is often a lot of wasted time, I always bring a template settlement agreement with me and update it as we move along during the settlement negotiations.⁴

Drafting Settlement Agreements

While there’s generally plenty of time to finalize terms during the mediation session, in my experience, it is much better to leave with a signed full agreement than to sign a term sheet only and negotiate the full agreement later. I find that my settlement and release template is a good starting point for any settlement conference or mediation—and I make sure to get the finalized agreement signed on the spot once the parties reach a settlement. Depending on how contentious the defense attorney is, I either send my template to that person ahead of time or wait until the attorney tires toward the end of mediation.

There are always changes to my template, but I have found that starting off with it is much faster than waiting for defense attorneys to draft a ­settlement agreement after the fact. As we move along during the negotiations, I either type or write in small changes on the spot, or my assistant back in the office revises the agreement and emails it to me so the parties can sign the final revised agreement­. My template anticipates several post-settlement problems in some important ways.

Timetable for obligations. Once the parties have agreed on a payment amount and any other obligations, negotiate the shortest timetable you can for the defendant’s settlement obligations (sometimes called a “quick pay” if the client needs to have the money quickly). I rarely agree to payment beyond 30 days, and when possible, I attempt timetables of 10–15 days for payment. Also, always consider whether your settlement will or will not require court approval—that impacts the timetable and adds an important additional condition precedent to performance and enforcement.

Be strategic about triggering events. For example, base the triggering of the defendant’s obligations on when your client signs the agreement. If you allow payment and other obligations to be triggered only after everyone signs, you run the very real risk that the defendant will sit on your agreement without signing while days (and possibly weeks) go by. To avoid that kind of delay, in my settlement agreement template I ask for payments within 10 days from when my client signs the agreement.

Have the court retain jurisdiction until obligations are fulfilled. In various jurisdictions, it is possible to have the court enforce the settlement when the agreement specifies that the court has retained jurisdiction over the matter.⁵ It is much easier to ensure a court has continued jurisdiction over the matter rather than being forced to file a new case for breach of contract to enforce the settlement. If you have to return to court to enforce the settlement or if it blows up completely, leaving you back at square one, the retention of jurisdiction means you do not have to start over. 

I also have used retained jurisdiction as leverage with defense counsel when trying to get defendants to comply with settlement obligations. Your assigned judge may be very familiar with the case, and this can work in your favor if the defendant has willfully breached an obligation that was part of the court-ordered settlement agreement.

In certain types of actions, you may be required to get court approval of the settlement.⁶ If that’s the case, include in the agreement that all obligations accrue only after court approval has been obtained or that the settlement is void or moot if the court does not approve it. For example, you may want to include a provision that you are not required to dismiss the action until court approval of the settlement is obtained.

Enforcement costs. Include a provision that the plaintiff is entitled to attorney fees and costs in any action to enforce the settlement. An attorney fee provision for the plaintiff only is preferred, but usually defense counsel requests that it be mutual. I typically agree to the mutual covenant because it is usually the plaintiff who is forced to file a motion to enforce the settlement. My template includes this clause to address fee-shifting in any enforcement proceedings:

Each party agrees to take all acts necessary to enforce this Agreement and to defend the contents and terms of this Agreement from attack by any third party or person. If Plaintiff prevails in any action to enforce any provision(s) of this Agreement, Plaintiff shall be entitled to attorneys’ fees and costs in addition to any damages or other relief awarded in any such action.

And while your agreement likely will include a general covenant not to sue, be sure to include an exception to that covenant: any action to enforce the terms of the agreement. A poorly drafted covenant not to sue without that exception could mean a waiver.

Obligations for dismissal. If the defendant requires the plaintiff to agree to dismiss the action once the settlement is effectuated, make sure the dismissal obligation arises only after the defendant has completely satisfied all of its obligations under the agreement. If you are settling with a single defendant, ensure your dismissal obligation is limited to that defendant alone and does not apply to the entire action. 

If the agreement imposes other obligations on the defendant beyond payment (such as signing a deed, resigning as a trustee, or relinquishing a beneficial interest in a bank account), be sure that all of the defendant’s obligations are satisfied before dismising the action.

If I am settling with only one defendant and other parties remain in the suit, I add a provision stating that the plaintiff is settling only with the defendant identified in the agreement and that the settlement with that defendant in no way affects the plaintiff’s claims against the other defendants. If the settlement needs court approval, I include in the notice and throughout the moving papers that the settlement is only with the identified settling defendant and that the settlement (or the court order approving it) in no way affects the plaintiff’s claims against the other defendants remaining in the case.

Entry of judgment against the defendant. Include a provision whereby the defendant agrees that the court may enter judgment on the settlement. Having a judgment entered on your settlement can facilitate collection efforts by levy or garnishment. Although specific rules and standards (regarding evidence of the parties’ consent, for example) apply, all jurisdictions authorize their courts to enter judgments on settlements.⁷ In my template, I reference the specific California statute providing for entry of judgment in my choice of law provision:

Should any dispute arise between the parties regarding the interpretation or enforcement of this Agreement, said dispute shall be resolved by motion under Code of Civil Procedure §664.6 or its successor statute for the court to “enter judgment pursuant to the terms of the settlement.” This Agreement shall be interpreted under the law of the State of California, including, but not limited to, Code of Civil Procedure §664.6, both as to interpretation and performance.

Confidentiality. Confidentiality provisions in settlements should be avoided, if possible. Confidentiality clauses keep other consumers and vulnerable parties from discovering issues that could affect their health or well-being—the defendant’s wrongful conduct is hidden, and the public cannot learn of the wrongdoing. 

If defense counsel insists on a confidentiality clause, I make sure it is drafted as narrowly as possible. Fortunately, in California where I practice, state law disfavors confidentiality provisions in the elder abuse cases I handle,⁸ as well as in other types of cases, including those involving sexual harassment.⁹ The same holds true in other jurisdictions.¹⁰ Check to see whether your jurisdiction has a similar statute or case law disfavoring confidential settlements in the type of case you are settling, and use that to press for no confidentiality or only a very limited confidentiality clause, if the defendant insists.

Enforcing the Defendant’s Obligations

Once the settlement agreement is fully executed, calendar all of the defendant’s obligations. These obligations typically include payment of the settlement consideration but also may include the cancellation of the plaintiff’s contractual obligations, restitution from defendants, return of the plaintiff’s property, or changes in a defendant’s business practices (such as additional licensing or training of staff, an increase in liability insurance coverage, mandatory sexual harassment or racial bias training, or required substance abuse rehabilitation or drug and alcohol counseling). Keep track of all obligations; defense counsel will not volunteer if a defendant is late on an obligation or has failed to sign a critical document.

I have experienced defense counsel basically disappearing after a settlement agreement is executed and being uncommunicative and uncooperative when it is time to provide payment or comply with other settlement terms. In one case I handled, a defendant missed a payment deadline and was unresponsive to inquiries until I filed a motion to enforce the settlement—the defendant then made the required payment before the hearing.

In another case, a defendant delayed executing other documents required by the settlement, but we were finally able to obtain all the signed documents from the defendant. Maintain a record of all of your efforts by phone, email, letter, or personal meetings to solicit compliance—you’ll need this evidence in your motion to enforce the settlement and to secure any sanctions for bad faith under the relevant sanctions rule in your jurisdiction.¹¹

While you may have to return to court to enforce the settlement, if you have anticipated enforcement actions and included built-in penalties such as interest and attorney fees and costs in the agreement, your post-settlement enforcement motions will be much easier.¹² In most jurisdictions, a motion to enter a judgment on a settlement or similar motion is the first step in enforcing a settlement.¹³ Courts enforce settlements as a matter of law by motion in most situations,¹⁴ and in many jurisdictions, courts attempt to give effect to the terms of a settlement agreement and require specific performance.¹⁵

For example, in California, a plaintiff can move for summary enforcement of the settlement if the defendant has a ­post-settlement change of heart (that is, does not want to pay).¹⁶ California courts have recognized that the state legislature adopted this statute to provide a cost-effective method of enforcing settlements.¹⁷ New York also allows parties to move to enforce a written settlement agreement.¹⁸

But no matter where you find ­yourself, there likely is a summary method for enforcing the settlement when you need the court’s help. For enforcement, I bring a motion to enforce settlement and for sanctions, as described above. In my experience, the filing of the motion and the request for sanctions has sufficed to compel performance of a defendant’s obligations.

If you have drafted your settlement agreement properly, it will recite the two essential elements for your motion: that the parties have stipulated for settlement of the case and that they have agreed that the court has retained jurisdiction over the lawsuit. In the motion, focus on the provisions you are seeking to enforce against the defendant (payment or other obligations).

In the accompanying declaration, recite all of your attempts to persuade the defendant to comply with the terms of the agreement. Your declaration also should recite the facts about when the settlement was reached, that all parties were represented, and that all parties consented to the settlement and the particular terms of the agreement.¹⁹ Attach as exhibits copies of all letters and emails you sent trying to elicit compliance with the settlement terms.

The best way to avoid ­post-settlement enforcement issues is to draft a strong agreement that anticipates attempts by defendants to shirk their obligations. Hold defendants to their word: Have the court retain jurisdiction over the matter until the settlement is concluded and the lawsuit is dismissed, have the defendant agree to a summary proceeding for enforcement, and include a provision granting attorney fees and expenses to the prevailing party in any enforcement action.

Ingrid M. Evans is the founder of Evans Law Firm in San Francisco and can be reached at ingrid@evanslaw.com.

Notes

1. The statutory references in this article are largely to California where I practice, but the drafting tips apply to most jurisdictions. The alternative dispute resolution rules, mandatory settlement conference guidelines, and enforcement options probably have analogous rules and procedures in most jurisdictions.
2. See, e.g., Ariz. R. Civ. Proc. 16.1(c); Calif. R. Ct. 3.1380(b); Fla. R. Civ. Proc. 1.720 (b); E.D.N.Y. Loc. Civ. R. 83.8(c)(1); S.D.N.Y. Loc. R. 83.9(c)(3) (referencing Procedures of the Mediation Program, S.D.N.Y. (Dec. 9, 2013), https://tinyurl.com/uh2p3kd; 231 Pa. Code §212.5(b) (2011).
3. See, e.g., Fed. R. Civ. P. 16(c); Calif. R. Ct. 3.1380(b); N.Y. Comp. Codes R. & Regs. tit. 22, §202.26 (2006); Ohio Civ. R. 16; Tex. R. Civ. P. 166.
4. Some sections of my template are quoted in this article, and the entire template can be viewed at www.justice.org/EvansSettlementTemplate. You also can contact me for a complete version.
5. Infinite Sec. Solutions, L.L.C. v. Karam Props. II, Ltd., 37 N.E.3d 1211 (Ohio 2015) (a trial court may enforce a settlement on motion if dismissal expressly retained jurisdiction for that purpose); Stricklin v. Flavel, 43 P.3d 1116 (Or. Ct. App. 2002) (trial court retained jurisdiction to enforce the settlement agreement terms). See also Cal. Civ Proc. Code §664.6 (1994).
6. See, e.g., Cal. Civ. Proc. Code §372 (2015) (court approval needed for settlement entered into by a conservator or guardian ad litem); 755 Ill. Comp. Stat. 5/19-8 (1976) (court approval required for compounding, compromising, or exchanging personal estate in a probate case); Ohio Rev. Code §2111.18 (2010) (court approval required for settlement entered into on behalf of a ward).
7. See, e.g., Cal. Civ. Proc. Code §664.6 (court may enter judgment pursuant to the terms of a settlement); 735 Ill. Comp. Stat. 5/2-2301(e) (2014) (Illinois imposes penalties on defendants who are late in providing settlement payment); N.Y. C.P.L.R. §3215(i) (2019) (New York procedure for entry of judgment on settlement).  
8. See Cal. Civ. Proc. Code §2017.310 (2005) (“Notwithstanding any other provision of law, it is the policy of the State of California that confidential settlement agreements are disfavored in any civil action the factual foundation for which establishes a cause of action for a violation of the Elder Abuse and Dependent Adult Civil Protection Act.”).  
9. Cal. Civ. Proc. Code §1002 (2020).
10. See, e.g., N.J. Stat. Ann. §10:5-12.8(a) (2019) (any provisions “concealing details” relating to claims of “discrimination, retaliation, or harassment” are unenforceable); N.Y. Gen. Oblig. Law §5-336 (2019) (condition of confidentiality is only enforceable if it is the plaintiff’s preference).  
11. See, e.g., Cal. Civ. Proc. Code §128.5 (2017).  
12. Federal and state courts encourage settlement over continued litigation regardless of whether you are prepared to try your case on public policy grounds. See, e.g., Frew v. Hawkins, 540 U.S. 431 (2004); Dansby v. Buck, 373 P.2d 1, 8 (Ariz. 1962) (“[i]t has always been the policy of the law to favor compromise and settlement”); Yaekle v. Andrews, 169 P.3d 196, 200 (Colo. Ct. App. 2007) (describing Colorado’s “strong policy favoring dispute resolution rather than continued litigation”); Snyder v. Tompkins, 579 P.2d 994, 998 (Wash. Ct. App. 1978) (Washington courts favor amicable settlement of disputes).
13. See, e.g., Spiegel v. H. Allen Holmes, Inc., 834 So.2d 295, 298 (Fla. Dist. Ct. App. 2002); 735 Ill. Comp. Stat. 5/2-2301 (2014); N.Y. C.P.L.R. §3215(i) (2019). 
14. Massey v. Town of Branford, 985 A.2d 335, 340 (Conn. App. Ct. 2009) (“[A] trial court may summarily enforce a settlement agreement within the framework of the original lawsuit as a matter of law when the parties do not dispute the terms of the agreement.”); see also Paulucci v. Gen. Dynamics Corp., 842 So.2d 797, 803 n.5 (Fla. 2003); City of Chi. v. Ramirez, 852 N.E.2d 312, 323–24 (Ill. App. Ct. 2006); Oppenheim v. Ultimate Servs. For You, Inc., 958 N.Y.S.2d 647 (table), 2011 WL 9578, at *3 n.1 (N.Y. Sup. Ct. 2011); Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009). 
15. For example, a California court ordered escrow account closing to occur by a certain date to enforce the parties’ settlement (Osumi v. Sutton, 151 Cal.App.4th 1355, 1360–61 (Cal. Ct. App. 2007). See also Brundage v. Estate of Carambio, 951 A.2d 947, 961 (N.J. 2008) (New Jersey courts “strain to give effect to the terms of a settlement agreement wherever possible”); Peter G. ­Eikenberry, Specific Performance of Settlement Agreements, 2 N.Y. Prac., Com. Litig. in N.Y. St. Cts. §10:11 (4th ed. 2019).
16. Cal. Civ. Proc. Code §664.6.
17. See Levy v. Super. Ct., 10 Cal. 4th 578, 584–85 (Cal. 1995); In re Marriage of Assemi, 7 Cal. 4th 896, 911–12 (Cal. 1994).  
18. Hallock v. State of N.Y., 64 N.Y.2d 224, 230 (N.Y. 1984) (a party can move to enforce a settlement agreement pursuant to N.Y. C.P.L.R. §2014: “in writing subscribed by [the party] or his attorney or reduced to the form of an order and entered”).
19. See, e.g., Paragraphs I, VI, VII, VIII, IX, XIV, and XVII of my template.