The Role of the Settlement Judge

By Nate Bernstein, Managing Attorney, and Moriah Foreman, Summer Intern of LA Real Estate Law Group

If you are negotiating settlement in an unlawful detainer (eviction) case in Court, outside of the courtroom, attending mediation, or attending a mandatory settlement conference the process of negotiating a settlement agreement in an unlawful detainer with a tenant is usually rushed and is an “inexact science.” Sometimes in court, parties are constrained because there is usually very little time to negotiate and draft the agreement.

In general, I would keep the language of the settlement agreement simple and easy to understand – try to minimize the legal ease. There needs to be specific tasks and specific dates for compliance. The settlement agreement should be drafted so the average property manager with a high school education will understand what is required. Ask your judge for help. The Court should review the agreement with the tenant, so the tenant understands what they are signing and what their obligations are. The tenant needs to personally sign the agreement and get a copy of it. You or your attorney should ask the judge assigned to the case to set a mandatory settlement conference in the courtroom assigned or before another judge. Judicial assistance is very important in trying to achieve an expeditious written settlement.

When resolving an unlawful detainer case through settlement negotiation, the written agreement must address more than just the tenant’s move-out date. It should serve as a complete and enforceable contract that protects the landlord’s property rights, minimizes legal risk, and ensures finality. Address “worst case scenarios.” It is highly recommended that you discuss any proposed settlement agreement and stipulation in detail with your own attorney to address all the provisions and any issues you are concerned about.

The Psychology of Settlement in an Unlawful Detainer Action

It takes both sides to agree in writing to a settlement, and in this environment, that is challenging to achieve. In unlawful detainer cases, landlords always want to settle cases as soon as possible. Settlement provides certainty on the issue of possession and saves on legal fees. For tenant defendants, they are usually not in a settlement mindset early in the case, and have access to paralegals, attorneys, legal aid and public interest law firms to work the system.

Because tenants are typically not paying rent during the pending unlawful detainer proceedings, they will want to delay the notion of settlement, will use the system and the calendaring of law and motion hearings to drag out the case, delay a trial date, and may not want to settle the case until they are in “settlement mindset.” Tenants usually want a “cash for keys” deal of some sort – it may or may not be reasonable. Tenant’s demand for a jury trial, and the calendaring of a jury trial will provide the tenant with procedural and calendar leverage on the settlement decision and negotiation.

The concept of “leverage” in the negotiation of a settlement is very important. If a jury trial date is set, landlords will not have settlement leverage and need to take action to shift that leverage back to the plaintiff’s side. Two useful strategies are to serve some written discovery on the tenant, and, in the appropriate case, to calendar and file a motion for summary judgment which can be heard on 5 court days’ notice.

Having a mandatory settlement conference with a judge in the courthouse can also be positive action to shift some leverage back to the landlord. The tenant will not want to listen to the landlord’s attorney, but the tenant may listen carefully to everything a judge says, including the suggestion of important settlement terms. If the tenant is tired of receiving discovery from the landlord and is fatigued from being in the court system, with the help of the settlement judge, the tenant may change his or her mindset to be in frame of mind and be ready for settling the case.

Ask the Judge to Take Action in an Active Role Help Settle the Case

You can ask the judge in the case or another judge in the courthouse to conduct a Mandatory Settlement Conference. Some judges may be interested in conducting a judicial settlement conference with the parties and attorneys present at a date in the near future. It is best to have this conference early in the case before the parties incur the expense of preparing for a bench or jury trial. Some judges may also take the position that their time is well spent trying to help the parties settle the case. A judicial settlement conference can be conducted at any stage of the case, and even during the trial itself. Judges would rather spend an hour conducting a settlement conference than have a trial that could last for several hours or days if it is a jury trial. Judges are interested in using court time efficiently consistent with the concept of “judicial economy.” Judges are also very protective of juror’s time spent at the courthouse.

It is my experience that judges have more power, clout, and influence in conducting a judicial settlement conference, and can push the tenant to come to an agreement with reasonable terms. Judicial settlement conferences may be more effective than having an attorney mediate the case. Judges can meet with both sides separately to conduct “shuttle diplomacy,” and narrow the issues. Having a judicial settlement conference is less costly than private mediation. Judges can also give their views about issues such as entry of judgment based on tenant’s non-compliance, dismissal of the case with prejudice or without prejudice, retaining jurisdiction under Cal. C.C.P. 664.6, and the confidentiality of the file. The Court can also set a future hearing to monitor compliance with the terms and conditions of the settlement agreement.

If the Parties Come to an Agreement on Settlement Terms, the Court Should Take an Active Role in the Process

If the tenant is not represented by an attorney or even if the tenant has an attorney in Court, it’s best practice to have the judge review the specific terms of the settlement agreement on the record in court with the tenant. The judge should ask the tenant if they understand all the terms and conditions of the agreement and what their obligations and responsibilities are pursuant to the terms of the settlement agreement. The Court should review on the record in open court the tenant’s move out date and other time sensitive requirements, like payment due dates. The court should explain in plain English that the parties are waiving certain rights, such as the right to a jury trial and or affirmative defenses. The Court is providing actual notice to the tenant of the terms and conditions, and the tenant will receive a copy of the written settlement agreement.

This protective measure prevents the tenant from later claiming with any credible argument they didn’t understand the terms or were pressured into signing. Judges will typically ask a few specific questions to confirm the tenant understands what they are agreeing with, and if the parties have personally signed the stipulated agreement, if the parties have any questions, and if the parties understand their obligations. This makes the stipulated settlement agreement much harder to challenge later. After the settlement agreement has been signed, the Court can set a follow-up hearing to monitor the status of the settlement, and to see if the tenant has vacated and to determine what else needs to be done.

Some Final Thoughts on Achieving a Resolution

Attorneys and parties to an unlawful detainer action should get the Court involved in the settlement process. The best way is to schedule a judicial settlement conference early in the case. Unrepresented tenants may want this process, so they have some additional safeguards and protection. By addressing specific settlement terms and issues, landlords can strive for settlement agreements that are well drafted, that help you achieve the goals of the case and specific situation, avoid costly surprises, and that can limit exposure to future claims. These provisions help avoid post-settlement disputes, reduce the likelihood of a successful tenant challenge of a settlement provision, and provide a clear roadmap for regaining control of the premises and enforcement of judgments. Since settlement is a more cost-effective alternative to completing a jury trial or a bench trial, the details matter — and every agreement should be drafted with precision and foresight, and with assistance of your own counsel.

Nate Bernstein, Esq., is the Managing Partner of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estate title litigation, commercial litigation, landlord tenant law, employment law, and bankruptcy matters. Attorney Bernstein served as in house corporate litigation counsel at Fidelity National Title Insurance Company and represented the company subsidiaries and insured institutional lenders. He is a 31-year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise in bankruptcy law, the federal bankruptcy court system, creditor’s rights and out-of-court workout solutions. He serves as an expert witness on real estate, title, joint venture, and other business issues. He is a frequent speaker at AAGLA seminars and has been a featured speaker with the California Associations of Realtors, Apartment Owners Association, the Collateral Lenders Association, and the Beverly Hills Bar Association. He created www.laquiettitleattorney.com, a leading educational resource on quiet title real estate litigation. LA Real Estate Law Group handles litigation in Los Angeles, Ventura County, Orange County, Inland Empire, and San Diego. For more information or to schedule a professional consultation, please contact the office at (818) 383-5759, or email natebernstein44@gmail.com.