The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge
ORDER: DENYING AGREEMENT DEFENDANTS' MOTION TO ENFORCE A SETTLEMENT
Presently before the Court are Defendants' motion to enforce a settlement agreement [Doc. No. 67]; Plaintiffs' opposition [Doc. No. 69], and Defendants' reply [Doc. No. 70.] For the following reasons, the Court DENIES Defendants' motion.
Bank of America, N.A. ("Bank of America") started loaning money to Mohamed sometime before 1987. Salico Farms, Inc. and 4-M Farms, Inc. ("Salico Farms and 4-M Farms") guaranteed payment of Bank of America's loans to Mohamed.
In February 2003, Bank of America assigned Mohamed's loan obligations, including the guaranties and security interests, to Bank of America Strategic Solutions, Inc. ("BASSI").
In March and August 2005, BASSI sent notices under California Commercial Code Section 9406 to a number of partnership and limited liability companies ("LLCs") in which Mohamed was believed to own an interest. The purpose of these "9406 Notices" was to inform these partnerships and LLCs that BASSI had a security interest in Mohamed's general intangibles, and to compel the partnerships and LLCs to pay all partnership and LLC distributions due to Mohamed to BASSI.
Mohamed, Salico Farms, and 4-M Farms (collectively the "Judgment Debtors"), Bank of America, and BASSI arbitrated their claims in September 2006, with the Hon. Gerald Lewis (Ret.) presiding. Justice Lewis issued a final Arbitration Award on February 20, 2007. On April 10, 2007, the Judgment Debtors stipulated to a judgment (the "Judgment") based on the Arbitration Award. [Doc. No. 7.] On April 24, 2007, the Judgment was amended. [Doc. No. 10.] On July 20, 2007, after unsuccessful efforts to collect on the Judgment, BASSI filed a motion for an appointment of a post-judgment receiver. [Doc. No. 35.] On September 25, 2007, this case was reassigned from Judge Thomas J. Whelan to this Court. [Doc. No. 46.] On November 21, 2007, this Court made findings as to the motion for a receiver, deferred issuing a ruling, and gave BASSI 30 days to move for a charging order. [Doc. No. 47.] BASSI timely filed that motion. [Doc. No. 48.]
On January 4, 2008 and on January 14, 2008, BASSI, the Judgment Debtors, and others met with Magistrate Judge Anthony J. Battaglia to discuss settlement. At the conclusion of the second settlement conference, the parties generally agreed on a settlement, and memorialized the terms in BASSI's counsel's handwritten notes. The precise settlement terms were not read into a court record. Even though the parties never completed documenting their settlement, the Judgment Debtors timely paid BASSI a portion of the settlement, and BASSI performed on some of its duties pursuant to the settlement terms.
After the settlement conferences, Mohamed's counsel prepared a settlement agreement, and BASSI's counsel prepared a limited release. The parties exchanged multiple drafts of the settlement agreement and ultimately failed to come to an agreement on the exact terms. On March 18, 2008, the parties appeared again before Judge Battaglia, but they did not resolve their differences. [See Pls.' Opp. at 1-9.] On April 8, 2008, Plaintiffs filed the instant motion seeking to enforce the oral "agreement" made in front of Judge Battaglia. [Doc. No. 67.]
I. The Material Terms are Not Reflected on the Record
A district court may enforce an oral settlement agreement when the parties placed the material terms of the settlement agreement on the record in open court. In Doi v. Halekulani Corp., 276 F.3d 1131, 1134 (9th Cir. 2002), the parties had negotiated a settlement that was placed on the record before the district court. The parties agreed that they would sign a written agreement memorializing the settlement, as well as a stipulation dismissing the action. Id. at 1135. The plaintiff subsequently declined to sign the agreement or stipulation, seeking instead to renegotiate the terms of the settlement. Id. Thereafter, the district court granted the defendant's motion to enforce the settlement agreement and awarded sanctions against plaintiff. Id. at 1136. The Ninth Circuit affirmed the ruling, holding that the district court had not abused its discretion in enforcing the settlement agreement because the parties clearly entered into a binding agreement in open court. The Ninth Circuit agreed with the district court that the terms and existence of the agreement were on the record and that the parties' written agreement accurately reflected the terms of the agreement on the record. Id. at 1139-40.
Following Doi, numerous district courts have enforced oral settlement agreements under similar circumstances. As in Doi, in these cases, the terms of the oral settlement agreement were read into the court record. Armstrong v. City & County of San Francisco, 2004 U.S. Dist. LEXIS 24505, *8-12 (N.D. Cal. June 15, 2004); Hubbard v. Yardage Town, Inc., 2005 U.S. Dist. LEXIS 40404, *6-10 (S.D. Cal. Nov. 29, 2005); Doe v. Washoe County, 2006 U.S. Dist. LEXIS 95312, *25-26 (D. Nev. Oct. 13, 2006); Schiff v. City & County of San Francisco, 2007 U.S. Dist. LEXIS 50532, *6-11 (N.D. Cal. July 12, 2007). Due to this record, the reviewing courts were able to analyze whether the oral agreements were consistent with the subsequent written agreements. In contrast, here, the only evidence of the actual terms agreed upon are the handwritten notes of one of the attorneys. [Giacinti Decl., Ex. ...