Kelly A. Knight is an attorney and mediator based in Los Angeles, CAlifornia. He handles matters throughout California.

Sayta v. Chu: yet another reminder to lawyers that retention of jurisdiction under section 664.6 of the Code of Civil Procedure must be sought from the trial court before dismissal

I've given multiple talks on this issue, but it's worth yet another reminder: if you settle a case, you must submit a request to the court signed by the parties (not the lawyers) to trigger retention of jurisdiction under Code of Civil Procedure section 664.6.

Sayta v. Chu, 17 Cal. App. 5th 960 (Nov. 29, 2017) (slip opinion linked here; Google Scholar linked here), is the latest case illustrating this point. In Sayta, the parties entered into a settlement agreement and dismissed the case. The settlement agreement included a confidentiality provision that included liquidated damages for breach.

Later, the plaintiff moved to enforce the settlement agreement under section 664.6, alleging that one of the defendants breached the confidentiality provision. The trial court denied the motion, and the plaintiff appealed. (If you're not familiar with section 664.6, a nice overview is contained in Hines v. Lukes, 167 Cal. App. 4th 1174 (2008), starting at page 1182.)

On appeal, the Sayta court ordered the parties to provide supplemental briefing on whether the trial court retained any jurisdiction to enforce the settlement agreement, then ultimately held that the trial court did not retain jurisdiction over the matter and had no jurisdiction to enter relief under section 664.6.

The Sayta court noted language in Wackeen v. Malis, 97 Cal. App. 4th 429 (2002), and other sources that a trial court may only retain jurisdiction to enforce a settlement agreement under section 664.6 if the parties have requested that retention. As noted in Wackeen and quoted by the Sayta court, a request to retain 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." Sayta, 17 Cal. App. 5th at 966, citing Wackeen, 97 Cal. App. 4th at 440. If the parties include language regarding retention of jurisdiction in a settlement agreement that is not communicated to the court, the settlement agreement does not trigger the trial court's retention of jurisdiction. Sayta, 17 Cal. App. 5th at 967. Instead, if parties include in a settlement agreement that the trial court will retain jurisdiction to enforce the agreement, a request to do so must be submitted to the trial court to retain jurisdiction prior to dismissal. Id.  

Since the parties never presented a request to retain jurisdiction to the trial court prior to dismissing the action, the trial court lost jurisdiction upon dismissal and had no jurisdiction to entertain a 664.6 motion. Id.

I've been saying it before, and I'll say it again. The lesson is clear: submit a stipulation and proposed order to the court before submitting your request for dismissal or else you will end up having to file a new breach-of-contract action to enforce your settlement agreement.

This admonition isn't just for defendants who may one day need to enforce confidentiality or other provisions. Why defendants would want to ensure retention of jurisdiction is obvious (finding out that not all property is returned, getting an injunction to remedy a potential trade-secret violation, etc.). But it can also be important for plaintiffs.

Take, for example, plaintiffs in employment cases. The plaintiff sues for wrongful termination, and the case ultimately settles, with the plaintiff agreeing to dismiss the case with prejudice in exchange for a confidential monetary payment plus a mutual nondisparagement clause and neutral reference. The money comes in and clears, and the plaintiff dismisses the case with prejudice. No problem, right? 

The plaintiff later learns that the employer has been badmouthing the plaintiff to prospective employers. What to do? File a motion to enforce under section 664.6, right? Wrong. The plaintiff never submitted a request to the trial court, signed by the parties, to retain jurisdiction. No jurisdiction. The plaintiff is now looking at major hoops to jump through to get an injunctive order, including a brand new lawsuit, a motion for injunctive relief (e.g., preliminary injunction pending trial and ultimate judgment), and all the attendant costs of all this brand new litigation. And all of this will take a lot of time, money, and stress. 

Instead, to ensure the agreement is summarily enforceable, one of the parties should have insisted that the settlement agreement also call for cooperation in securing retention of jurisdiction before a request for dismissal is filed, including, for example, submitting a stipulation and proposed order to the trial court, signed by the parties; then, if that doesn't work, a motion or expedited procedure to secure an appearance before the court to make the request.

The misconceptions around retained jurisdiction under section 664.6 abound. For example, I've actually heard a suggestion that counsel can just add a line of text onto the request-for-dismissal form that the court is to retain jurisdiction under box 1(b)(6). Huh? The request-for-dismissal form (Form CIV-110, linked here) is not a form that is signed by the parties and is not submitted to the trial court for approval prior to entry of dismissal---it's a form submitted to the clerk of the court. No order to retain jurisdiction will follow. Don't do this.

So lawyers, take heed of Sayta and the other opinions guiding us on this issue. A slightly longer procedure (e.g., drafting and getting party signatures) and a few extra dollars for your attorney service and your $20 stip-and-order fee will be well worth it should you ever need to enforce your settlement agreement.

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