Wednesday, January 26, 2005
C.A., Citing Policy Terms, Upholds Judgment Enforcing Settlement Agreed to by Insurer But Not Insured
By PATSY MOORE, Staff Writer
The presence of insurance representatives before the court when defense counsel agreed to terms of the settlement as stated on the record, without any objection, was sufficient to render the settlement enforceable under Code of Civil Procedure Sec. 664.6, this district’s Court of Appeal has ruled.
The justices affirmed Los Angeles Superior Court Judge Richard Neidorf’s ruling that the lack of consent to the settlement by the named defendants was irrelevant where they were bound by an insurance policy authorizing the carrier to settle on their behalf.
The opinion by Los Angeles Superior Court Judge Steven C. Suzukawa, sitting in Div. One by assignment, was filed Dec. 23 and ordered published on Monday.
Presiding Justice Vaino Spencer and Justice Robert M. Mallano concurred in the opinion.
The plaintiff Robert Fiege, was a passenger in a vehicle driven by Michael Wooldridge that was involved in a traffic accident. Fiege sued defendants Norman Cooke and Robert Ellis, as did Wooldridge.
After numerous pleadings were filed by the parties, including a complaint in intervention by an insurance company, the parties went to a mandatory settlement conference, where Fiege sought compensation from Cooke, Ellis and Wooldridge.
Cooke, Ellis and Wooldridge were all insured under policies that provided the insurers the right to enter binding settlement agreements on behalf of the insured parties without their consent. The insurer for Cooke and Ellis agreed to pay $135,000 on their behalf, and the insurer for Wooldridge agreed to pay $25,000 on his behalf. Cooke, Ellis and Wooldridge themselves were not present at the settlement conference.
The trial court obtained Fiege’s oral consent to the settlement totaling $160,000, including payment of two liens, on the record. Fiege later sought to escape the judgment claiming it was unenforceable under Sec. 664.6 because the defendants were not present and did not agree to the settlement themselves, either in writing or before the court.
Fiege argued that Sec. 664.6 required that parties agree to a settlement either in a signed writing or orally before the court for a judgment to be entered pursuant to that settlement. He cited Levy v. Superior Court (1995) 10 Cal.4th 578, which held that the term parties meant the litigants themselves, not their attorneys.
Suzukawa relied on dicta in Robertson v. Chen (1996) 44 Cal.App.4th 1290, which he termed “persuasive,” for the determination that Levy’s requirement of direct participation by the litigants is designed to protect the parties from impairment of their substantial rights.
However, when a defense is provided by an insurance carrier without reservation, a settlement within policy limits does not prejudice the substantial rights of the insured, and in fact the insured is precluded from interfering with settlement negotiations, Suzukawa explained. “Not only are the insured’s ’substantial rights‘ not prejudiced, but the consent of the insured is usually superfluous,” Suzukawa said.
If an insured person was required to sign an insurance funded settlement, the insured person would be required to attend all mandatory settlement conferences, Suzukawa opined. Instead, present practice allows insured persons to avoid that expense and inconvenience, requiring only the attorney and the insurance adjuster to appear.
Suzukawa disposed of plaintiff’s reliance on Levy because that case did not involve an insurance-funded settlement. Levy did not preclude “enforcement pursuant to section 664.6 of an insurance-funded settlement reached by an authorized insurance defense counsel or adjuster when the carrier has the contractual right to settle,” Suzukawa said.
In addition, the insurance representatives’ presence at the settlement conference when their attorneys pledged to pay $160,000 was persuasive evidence that the insurance representatives agreed to the settlement orally before the court, especially since they did not object when the settlement judge put the terms of the settlement on the record and asked if anyone disagreed with the terms, Suzukawa said.
Fiege was represented by Bruce Gelber and Andrew Taylor of Fensten GelberReyna Martinez. Wooldridge was represented by Bruce M. Butler of Crandall, Wade & Lowe. Cooke and Ellis were represented by John Gardner Hayes and Barry M. Wolf.
The case is Fiege v Cooke, 05 S.O.S. 361.
Copyright 2005, Metropolitan News Company