This action was brought on June 29, 2011 by plaintiffs Naomi Wong and her brother Keith Wong against defendant Jason Lin to recover money plaintiffs allegedly loaned to Mr. Lin. At the time the action was filed, Defendant Lin was married to plaintiffs’ sister Alina Wong, now deceased. The case was settled during a mandatory settlement conference on September 5, 2012. The settlement was placed on the record but not otherwise reduced to writing.

Plaintiff Naomi Wong’s Motion to Enforce Settlement

On January 8, 2014, Naomi Wong brought the instant motion to enforce the September 5, 2012 settlement agreement, pursuant to California Civil Procedure Section 664.6. The settlement agreement required Defendant Lin to pay up front $39,000 and then pay $3,500 per month for a period of time. Defendant Lin opposes the motion, arguing he has upheld his obligations under the settlement agreement since he paid the $39,000 to Naomi Wong’s attorney, Michael Stone, and has made the subsequent $3,500 monthly payments to Keith Wong, an assignee.

In her motion, Plaintiff Naomi Wong argues that: (1) she was tricked into assigning her rights to the settlement money by her brother, Keith Wong, and (2) her previous attorney, Michael Stone, is improperly holding the two initial settlement payments. The instant motion asks this Court to enforce the settlement agreement by (a) ordering Michael Stone to pay her the $39,000 he has received, and (b) ordering all monthly payments hereafter to be paid to Naomi Wong, not Keith Wong.

Analysis:

Code of Civil Procedure Section 664.6 states:

If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court 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. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement. (Emphasis added.)

Furthermore, “[A] judge hearing a section 664.6 motion may receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment, [but] nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.” (In re Clergy Cases I, (2010) 188 Cal.App.4th 1224, 1236, quoting Hernandez v. Board of Education, (2004) 126 Cal.App.4th 1161).

The term “parties to pending litigation” means the litigants themselves. In re Clergy Cases I, 188 Cal.App.4th at 1236 (quoting Kirby v. Southern Cal. Edison Co. (2000) 78 Cal.App.4th 840, 844, 93 Cal.Rptr.2d 223 (2000).)

In Levy v. Superior Court, (1995) 10 Cal.4th 578, the Supreme Court noted that section 664.6 creates certain requirements that “decrease the likelihood of misunderstandings.” The “litigants’ direct participation,” that is, their personal stipulation before the court, protects “against hasty and improvident settlement agreements” and ensures that the settlement is the result of “mature reflection and deliberate assent.” Levy, 10 Cal.4th at 585. Requiring the litigants themselves to stipulate to a settlement agreement “impress[es] upon them the seriousness and finality of the decision to settle, and minimizes the possibility of conflicting interpretations of the settlement.” This reasoning applies to all settlement agreements, whether written or oral. Johnson v. Dep’t of Corr., (1995) 38 Cal.App.4th 1700, 1708.

The parties met for a mandatory settlement conference on September 5, 2012. In Naomi Wong’s mandatory settlement conference statement, submitted prior to the conference, she stated: “since the lawsuit was initiated, the named Plaintiffs [Paul and Naomi] have assigned the note and deed of trust to the real party in interest, their brother [Keith Wong].”

Present at the settlement conference were Naomi Wong and Paul Wong, as well as their brother, Keith Wong. As plaintiffs’ counsel explained on the record, Keith Wong was not a party to the action, but was present since he “also has claims and an interest in the outcome.” The settlement agreement was entered into the record and the parties agreed as follows:

“The plaintiffs agree to cancel the note and the security agreement and release it in exchange for an agreement from the defendant to pay $125,000, payable as follows: $37,000 up front, with $25,000 of that due in 60 days. Another $12,500 due within 30 days after that payment’s made… The balance of the $125,000, being $87,500, will be paid in $3,500 a month payments beginning 30 days after the $12,500 payment.

The note will be secured by a stipulation for judgment in the amount of $168,000, which will not be entered unless the defendant defaults on any of the payments and does not cure that default within 10 days of getting written notice.”

After putting the settlement on the record, all parties stipulated to the agreement being enforceable under California Code of Civil Procedure Section 664.6, rendering the settlement judicially supervised and enforceable.

All parties were voir dired on the record, at which time Naomi Wong testified she understood the agreement, did not have any questions regarding the agreement, and that she agreed to the settlement. Despite not being a party to the action, Keith Wong was also voir dired and stated on the record that he too understood and agreed to the settlement.

After the settlement agreement was reached, counsel for Defendant Lin received conflicting instructions from plaintiffs’ counsel Michael Stone, plaintiff Paul Wong, and Keith Wong regarding to whom his client should pay the settlement proceeds. Ultimately, Defendant Lin submitted the first two installments, totaling $37,000, to the trust account of plaintiffs’ counsel, Michael Stone. Defendant’s counsel, Peter Lindstom, stated in his declaration that the subsequent monthly $3,500 installment payments were made by Defendant Lin to Keith Wong based upon the assignment of rights to the settlement as well as the receipt of filed Substitutions of Attorney. Indeed, the record shows Naomi and Paul Wong did assign their rights to Keith Wong on November 10, 2011.

On March 11, 2013, Defendant Lin filed a motion to enforce the settlement agreement to (1) obtain a release of the deed of trust as required by the settlement agreement, and (2) to receive a court order clarifying to whom the monthly $3,500 payments should be made. The motion was heard on April 2, 2013. At the outset of the hearing the Court clarified that “There’s been an assignment and the payments are now made to the assignee, correct?” Defendant Lin’s counsel replied “That’s right, your honor.” Significantly, Plaintiff’s counsel made no objection to this statement. Plaintiff’s counsel Michael Stone then asked that instead of payments going directly to Keith Wong, the court order payments be made directly to his trust account. However, the Court explained such an order was inappropriate since “that wasn’t part of the agreement that was put on the record, that’s independent so I can’t order that.”

Now Plaintiff Naomi Wong asserts that Michael Stone and her brother Keith Wong tricked her into assigning her rights to Keith Wong, misrepresented the nature of the settlement agreement, and are improperly withholding the settlement money from her. However, Plaintiff Naomi Wong is seeking relief that is inconsistent with what is in record, namely clear evidence she did in fact assign her rights to Keith Wong, and against individuals who are not parties in this action, namely Michael Stone. Essentially, Plaintiff Naomi Wong wants her version of the settlement agreement, that directly conflicts with the record, to be enforced. She asks the court to enter an order This Court cannot and will not do.

For all these reasons, Plaintiff Naomi Wong’s motion for enforcement of the settlement agreement is DENIED.

Decl. McMahon, Ex. A, at 6:20-26.
Id at Ex. A, 7:9-15.
Decl. Lindstrom, ¶ 9.
Id.
Decl. Lindstrom, Ex. A.
MPA ISO Opp to Motion to Enforce Settlement Agreement, 3:8-12.
Decl. Lindstrom, Ex. C, at 3:11-13.
Id, at 4:5-7.