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Steller v. Sears

October 14, 2010


(Super. Ct. No. 1268931) (Santa Barbara County). Timothy J. Staffel, Judge.

The opinion of the court was delivered by: Yegan, Acting P.J.


Counsel attending a mandatory settlement conference in superior court are encouraged to settle all differences between the parties. But, if they want to settle a civil action and a related worker's compensation action, they must obtain approval of the Workmen's Compensation Appeals Board (WCAB). As we explain, the difficulty is not insurmountable and we fashion a remedy which is practical and workable, i.e. the settlement is conditional upon WCAB approval.

Wendy Ann Steller appeals from the judgment enforcing a settlement agreement between her and respondent, Sears Holdings Management Companys. (Code Civ. Proc., § 664.6.)*fn1 She contends that the trial court erroneously interpreted the settlement agreement as encompassing both of her actions against respondent: a civil action for disability discrimination and a workers' compensation action. She argues that the settlement agreement encompassed only her civil action because Labor Code section 5001 requires WCAB approval before a worker's compensation can be settled.

Neither the settlement agreement nor the judgment expressly require that settlement of the workers' compensation claim be approved by the WCAB. But, we construe the judgment as requiring the WCAB's subsequent approval. As so construed, we affirm the judgment. We also conclude that, because the settlement agreement was ambiguous, the trial court should have considered extrinsic evidence of the parties' intent. But this error was harmless and we easily conclude that the trial court would have enforced the settlement even if it had considered the extrinsic evidence.

Factual and Procedural Background

In April 2008 appellant filed a civil action for disability discrimination against respondent. She claimed that respondent had "failed to reinstate her with reasonable accommodation to her disability upon termination of a workers['] compensation leave of absence because of her disability, a bad back." Concurrently with this action, appellant "was pursuing a workers['] compensation proceeding . . . against [respondent] . . . ." The parties were represented by different counsel before the WCAB. Appellant's workers' compensation claim arose "from the same alleged back injury" as the disability discrimination claim.

In April 2009 respondent served appellant with an offer to compromise pursuant to section 998 ("offer"). The offer was made in the civil action and does not expressly mention the workers' compensation action. The offer stated: "In return for the acceptance of the terms of this offer, [respondent] will pay [appellant] the total sum of $95,000." Paragraph 4 of the offer declared that payment of the $95,000 "includes, and shall operate as a satisfaction of all claims for, [appellant's] alleged damages, costs and expenses, attorneys' fees and interest asserted or that could have been asserted by [appellant] in this action, as well as all demands, actions, liabilities, obligations, damages and/or causes of action arising from this lawsuit or relating to [appellant's] employment with [respondent]." (Italics added.) The italicized language appeared at lines 17-18 of paragraph 4. The offer required appellant to "dismiss the above-captioned lawsuit," i.e., the disability discrimination action. But the offer did not expressly mention the workers' compensation action or its case number.

On May 4, 2009, the parties attended a mandatory settlement conference in superior court. After discussing settlement both in and out of chambers, appellant's counsel announced in open court that his client accepted respondent's offer and the matter was settled. In June 2009 appellant filed a section 664.6 motion for entry of a $95,000 judgment in the disability discrimination action. Appellant argued that "the only legally permissible interpretation of the §998 Offer is that it did not include the settlement of the Workers['] Compensation proceeding within the dollar amount contained in the offer." Respondent filed a cross-motion for entry of a judgment specifying "that the offer represents the settlement of [appellant's] . . . disability discrimination suit and . . . [appellant's] related workers' compensation claim." Both parties submitted declarations in support of their motions. The declarations contained extrinsic evidence of the parties' intent.

A hearing on the motions was conducted in August 2009. The trial court ruled that the language of paragraph 4, lines 17-18, unambiguously applied to all claims relating to appellant's employment, including the workers' compensation claim. It did not consider the extrinsic evidence contained in the parties' declarations saying: "The 998 offer was signed in open court by [appellant's counsel], and the court's interpretation of paragraph 4 of the 998, and I don't think we have to go any farther than that. [Sic.] So the declarations and everything else about what was discussed in negotiation we don't need to even consider that. [¶] All we have to consider is the 998 [offer] language, and I'm focused on paragraph 4 in lines 17 and 18, and the court feels that is sufficient enough for the court to grant the motion to compel the settlement brought by [respondent] pursuant to 664.6 . . . ." On September 15, 2009, the court signed a formal order granting respondent's "Motion to Enforce Terms of Settlement Agreement." The order states that the language of paragraph 4, lines 17 and 18, "is sufficient to include any workers' compensation claim [appellant] has arising from this lawsuit or relating to her employment with [respondent]."

Section 664.6 and Labor Code Sections 5001, 5002

Section 664.6 provides: "If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court 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 settlement." " 'Although a judge hearing a section 664.6 motion may receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment [citations], nothing in section 664.6 authorizes a judge to create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.' [Citation.]" (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.)

We construe the judgment as encompassing both the disability discrimination and workers' compensation claims. But, as indicated, pursuant to Labor Code sections 5001 and 5002, the settlement agreement could not compromise or release appellant's workers' compensation claim without the approval of the WCAB.

Labor Code section 5001 provides in relevant part: "No release of liability or compromise agreement is valid unless it is approved by the appeals board or referee." Labor Code section 5002 provides: "A copy of the release or compromise agreement signed by both parties shall forthwith be filed with the appeals board. Upon filing with and approval by the appeals board, it may, without notice, of its own ...

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