Datatronic Systems Corp. v. Speron, Inc.

• Court: California Court of Appeals
• Writing for the Court: ARGUELLES
• Citation: 222 Cal.Rptr. 658,176 Cal.App.3d 1168
• Parties: DATATRONIC SYSTEMS CORPORATION, Plaintiff and Appellant, v. SPERON, INC., dba Addresses Unlimited, Defendant and Respondent. B014674.
• Decision Date: 28 January 1986

Page 658

222 Cal.Rptr. 658 176 Cal.App.3d 1168 DATATRONIC SYSTEMS CORPORATION, Plaintiff and Appellant,
v.
SPERON, INC., dba Addresses Unlimited, Defendant and Respondent. B014674. Court of Appeal, Second District, Division 4, California. Jan. 28, 1986.

[176 Cal.App.3d 1169]

Page 659

Louis A. Sackin & Associates and Louis A. Sackin, Los Angeles, for plaintiff and appellant.

Katz, Hoyt, Seigel & Kapor and Scott H. Jacobs, Los Angeles, for defendant and respondent.

[176 Cal.App.3d 1170] ARGUELLES, Associate Justice.

This is an appeal from a judgment entered pursuant to settlement as authorized by Code of Civil Procedure section 664.6 (herein sometimes referred to as "the section"). Plaintiff and appellant Datatronic Systems Corporation (Datatronic) contests the validity of a settlement agreement purportedly entered with defendant and respondent Speron Inc., doing business as Addresses Unlimited (Speron), pursuant to litigation arising from a contract between the parties. We reverse the judgment.

FACTS

The instant action arises from a 1979 contract between the parties for computer equipment and other goods to be sold or leased by Datatronic to Speron and accounting, computer and related services to be performed by Datatronic for Speron. A dispute developed, and on November 10, 1983, Datatronic sued Speron for breach of contract; goods sold and delivered; work, labor and services; open book account; account stated; and quantum meruit. Speron answered and cross-complained against Datatronic and its president, Michael Milane (Milane).

On January 19, 1984, Datatronic took the deposition of Speron's vice-president. After several hours of examination on that date, the deposition was recessed and settlement negotiations commenced between the respective attorneys for Datatronic and Speron. Both attorneys then conferred privately with their clients. Afterward, in the presence of the parties, the attorney for Datatronic made a settlement offer of $3,200, which was accepted by Speron. The oral agreement was recorded by the court reporter present. Both parties stated on the record that they understood the terms of the agreement and agreed to be bound thereby.

The declarations made thereafter by Milane state that he was not informed of the settlement figure prior to his attorney's offer made in the presence of the other party, but was merely informed that his attorney had arranged what he considered to be the best settlement agreement to be hoped for. Milane has further contended that he "did not understand the terms, nature, scope or effect of the purported settlement agreement," and was pressured by his attorney who did not fully comprehend his position or the lack of merit of Speron's cross-complaint.

On February 1, 1984, counsel for Datatronic forwarded to counsel for Speron an unsigned written stipulation he had prepared, which substantially reiterated the terms of the settlement agreement set down by the court reporter at the January 19, 1984, deposition. Counsel for Speron responded [176 Cal.App.3d 1171] on February 8, 1984, by proposing modifications in the stipulation pertaining to warranties as to delivery of

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records and as to the payment of costs and attorney's fees.

By letter dated February 9, 1984, counsel for Datatronic accepted the suggested changes. On March 7, 1984, counsel for Speron enclosed the modified stipulation and a request for dismissal, both of which had been signed by his client, and the settlement check. After several months, when an executed version of the stipulation was not forthcoming, Speron's attorney made inquiry of counsel for Datatronic and negotiations over the exact terms of the settlement recommenced. Effective October 31, 1984, Datatronic's attorney withdrew as attorney of record, in part due to the fact that Datatronic's president, Milane, refused to sign the settlement agreement. Milane never executed any of the various versions of the written settlement agreements, either individually or as president of Datatronic.

On November 1, 1984, Speron filed a motion for judgment pursuant to terms of settlement under the section. After a continuance, judgment was granted on April 1, 1985; the court finding that on January 19, 1984, Speron, Datatronic and Milane had entered into a "settlement" within the meaning of the section. Datatronic filed a timely notice of appeal on May 29, 1985.

CONTENTIONS

Datatronic contends: (1) it was an abuse of discretion to enter judgment pursuant to the settlement agreement because it was not a "valid and binding agreement"; (2) that judgment so entered was an abuse of discretion because the settlement was not "before the court"; and (3) that the policy favoring trial on the merits militates in favor of overturning this judgment. We do not consider the final contention, as the judgment must be reversed for failure to comply with the statutory prerequisites.

DISCUSSION

Code of Civil Procedure section 664.6 provides: "If parties to pending litigation stipulate, in writing 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...