2017-00207419-CU-OR

Travis Doster vs. Aztec Foreclosure Corporation

Nature of Proceeding: Motion to Enforce Settlement and for Entry of Judgment

Filed By: Guy, Janet S.

Plaintiffs Travis and Bonnie Doster’s motion to enforce settlement is denied.

In this foreclosure action, Plaintiffs move to enforce a settlement pursuant to CCP § 664.6. Apparently the settlement was confidential. Plaintiff contends that they entered into a settlement with Defendants Nationstar Mortgage, LLC, et al (“Defendants”) pursuant to which they would receive an offer for a permanent modification of their loan if they complied with the terms of a Trial Period Plan (“TPP”). They contend that they complied with the TPP but that Defendants offered a permanent modification that differed from the terms of the settlement agreement. The settlement agreement provided that it was made pursuant to CCP § 664.6.

The Court notes that both parties have lodged their papers conditionally under seal though neither side has yet made any motion to seal as required by Rules of Court

2.550, 2.551. Plaintiffs at least have filed a redacted version of their documents while Defendant has simply lodged everything under seal and did not even file a redacted copy with the Court despite the fact that the vast majority of the opposition contains nothing which could even be considered material that could potentially be sealed. As a result, unless either party files a motion to seal within 10 days from the date of this order, the documents which have been lodged conditionally under seal will be filed by the clerk in the Court’s public file. In addition, no later than February 4, 2019, Defendant shall file and serve a redacted version of its opposition memorandum of points and authorities.

The first thing to understand about settlement agreements is that they are, just like any other contract, subject to the law of contracts. Nicholson v. Barab, (1991) 233 Cal. App. 3d 1671, 1681; Gopal v. Yoshikawa, (1983) 147 Cal. App. 3d 128, 132 ; Barndt v. County of Los Angeles, (1989) 211 Cal. App. 3d 397, 403-06.) Whether oral or written, a settlement agreement is enforceable by several means. It can be enforceable by summary judgment, a suit for breach of contract, a suit in equity, ( Robertson v. Chen, (1996) 44 Cal. App. 4th 1290, 1293), as an affirmative defense, ( Thompson v. Williams, (1989) 211 Cal. App. 3d 566, 571) or by using Code of Civil Procedure Section 664.6.

Pursuant to CCP § 664.6, “[i]f parties to pending litigation stipulate in writing signed by the parties outside the presence of the court…, for settlement of the case,…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.” (CCP § 664.6.) On a 664.6 motion the “trial court merely resolve[s] questions about the settlement.” ( Malouf Bros. v. Dixon (1991) 230 Cal.App.3d 280, 284.) “[N]othing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what the parties themselves have previously agreed upon.” (J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 984.)

CCP § 664.6 “was enacted to provide a summary procedure for specifically enforcing a settlement contract without the need for a new lawsuit.” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 809.) “In order to be enforceable pursuant to the summary procedures of section 664.6, a settlement agreement must either be entered into orally before a court [ ] or must be in writing and signed by the parties.” (Id. at 810.) The Court cannot rewrite the settlement agreement, but can only determine based on the evidence submitted the terms of the settlement agreement and whether those terms have been complied with by both parties.

Here, Plaintiffs contend that while they complied with the terms of the settlement, in that they made the three payments required by the TPP, Defendants failed to comply with the settlement when they then offered a permanent loan modification on terms other than what was agreed to in the settlement.

The settlement agreement indicated that Plaintiffs were approved for a TPP and set forth specific amounts of principal and interest payments, the interest rate, the current balance and the new balance. It also contained a forbearance amount. Preceding the forbearance amount was a (-). Plaintiffs contend that the (-) preceding the forbearance amount indicates that the parties agreed to a principal reduction in that amount. They argue that Defendants permanent loan modification improperly included the forbearance amount as a balloon payment at the end of the loan and therefore differs from the terms set forth in the settlement.

On the facts and evidence provided, the Court agrees with Defendants that the instant motion would not result in an enforcement of the settlement agreement but would instead result in rewriting the agreement. To that end, the settlement simply provided that Plaintiffs were approved for a TPP and that Defendant would offer a permanent modification if Plaintiffs complied with the TPP. The settlement does not state that the permanent modification would not include the forbearance amount or even that the terms of the permanent modification would be identical to the TPP. Indeed, the fact that the settlement agreement refers to a forbearance amount with a (-) in front of it, in the section discussing the TPP, does not show that the parties agreed that such amount would be permanently forgiven. Rather, as Defendants persuasively argue, it suggests that the forbearance amount (sum of late payments, interest, etc.) was a non -interest bearing amount not included on the total unpaid balance of the loan.

The Court would note that not only did the settlement agreement not contain such a term [forgiveness], but the discussions of the parties preceding the execution of the settlement indicates that Plaintiffs’ counsel requested clarification on the amount of the forbearance and Defendants’ counsel specifically stated that it would be a balloon payment paid at the time of maturity. (Hernandez Decl. Exh. 6.) Moreover, Plaintiffs’ counsel was informed, again prior to execution of the settlement agreement, and again after the execution, that the specific numbers set forth were for the TPP and that the permanent loan modification numbers were not available until the TPP was completed. (Id. Exhs, 3, 7.)

The suggestion now that the parties did not discuss the forbearance and/or that Defendants agreed to forgive that amount is not borne out by the plain language of the settlement or the circumstances surrounding negotiation of the settlement. In determining the motion, the Court’s decision must rest on a determination of what the parties expressly agreed upon in the written settlement agreement. The Court’s decision must not rest on the creation of an unwritten term in the settlement agreement. In order to find that Defendants have not complied with the settlement the Court would have to rewrite the agreement, something which it is not permitted to do. Again, the Court may not create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon. “Thus, a trial court cannot enforce a settlement under section 664.6 unless the trial court finds the parties expressly consented, in this case writing, to the material terms of the settlement. [Citation.]” (Bowers v. Raymond J. Lucia Companies, Inc. (2012) 206 Cal.App.4th 724, 732.)

The motion is denied.

The minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.