ADR Case Updates
CCP 664.6 Requires Signatures of Principals, Not Agents, 10/01/06
A property manager and insurer of a Homeowners' Association may not bind the HOA to a settlement, according to the recent and attached Court of Appeal opinion in Elnekave v. Via Dolce Homeowners Association, filed September 12, 2006 (2006 DJDAR 12336). Plaintiffs were the owners of a condominium that had sustained mold damage from a water leak. After settlement was reached at a settlement conference, the parties could not agree on the scope of the release to be included in a subsequent and formal settlement agreement. Over the objection of the HOA, Plaintiffs successfully brought a motion under CCP section 664.6 to enforce the settlement that had been put on the record at the settlement conference.
Reversed. The term "parties to the litigation" in section 664.6 is strictly construed to mean the parties themselves, not their lawyers, property managers, or insurers. Here, the settlement had to be approved on the record by a member of the HOA's corporate board or officer with settlement authority. Otherwise, the settlement was not enforceable.
This decision brings home the point that principals, and not agents, must approve a settlement either on the record at an MSC or by signing a stipulation for settlement at mediation. In order to insure enforceability, make sure parties attend with full settlement authority. If that is not possible, consider arranging to have principals who are not physically present at the mediation available and near a fax machine so their signatures can be obtained by fax if a settlement is negotiated by their representatives and reduced to writing. A small amount of pre-mediation planning can avoid this type of problem - an ounce of prevention may truly be worth a pound of cure.
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