J.P.P. Inv. Partners V. Fair

First District
12/05/14
Enforcing Settlement Agreements

To enforce settlements the agreements must be signed by the parties. What about settlements consummated via email and the evolving issue of electronic signatures?

The trial court granted a motion to enforce a settlement between plaintiffs and defendants. The trial court found that defendant Fair’s printed name at the end of his email where he had agreed to settlement terms set forth in an email from plaintiffs’ counsel was an “electronic signature” within the meaning of California’s Uniform Electronic Transactions Act (Civ. Code, 1633.1) and what it referred to as the “common law of contract” or “contract case law.” The court of appeal reversed the order enforcing the settlement: the agreement was not signed by plaintiffs and the trial court erred in determining that Fair’s printed name at the end of his email was enforceable. Since plaintiffs are not the prevailing party, they are not entitled to attorney fees.

“Code of Civil Procedure section 664.6 provides: “If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court . . . for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement.” “Because of its summary nature, strict compliance with the requirements of [Code of Civil Procedure] section 664.6 is prerequisite to invoking the power of the court to impose a settlement agreement.” (Sully-Miller Contracting Co. v. Gledson/Cashman Construction, Inc. (2002) 103 Cal.App.4th 30, 37 (Sully-Miller).) Settlement of a lawsuit implicates a substantial right of the litigants; therefore, the Supreme Court has concluded that “parties” in Code of Civil Procedure section 664.6 means the litigants personally and does not include their attorneys of record (Levy v. Superior Court (1995) 10 Cal.4th 578, 584, 586), even if the parties expressly authorized the agent to enter into a settlement on their behalf (see Gauss v. GAF Corp. (2002) 103 Cal.App.4th 1110, 1162-1164). “The litigants’ direct participation tends to ensure that the settlement is the result of their mature reflection and deliberate assent.” (Levy, at p. 585.) Thus, the statute “require[s] the signatures of the parties seeking to enforce the agreement under [Code of Civil Procedure] section 664.6 and against whom the agreement is sought to be enforced.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 305.)”

“Attributing the name on an e-mail to a particular person and determining that the printed name is “[t]he act of [this] person” is a necessary prerequisite but is insufficient, by itself, to establish that it is an “electronic signature.” (§ 1633.9, subd. (a).) As counsel and the court seemed unaware, UETA defines the term “electronic signature.” Subdivision (h) of section 1633.2 states that ” ‘[e]lectronic signature’ means an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.” (Italics added. See also Cal. Civ. Jury Inst. No. 380 [party suing to enforce an agreement formalized by electronic means must prove “based on the context and surrounding circumstances, including the conduct of the parties, that the parties agreed to use [e.g., e-mail) to formalize their agreement”].)”

“We have independently reviewed the record and conclude, as a matter of law, that it does not show that Fair printed his name at the end of his e-mail with any intent to formalize an electronic transaction. Indeed, substantial evidence in the record refutes such a finding.”

“Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct. . . .” (§ 1633.5, subd. (b).) The absence of an explicit agreement to conduct the transaction by electronic means is not determinative; however, it is a relevant factor to consider.”