Arguably Unauthorized Settlement Is Voidable, Not Void, under Code of Civil Procedure § 437(d).

W. Bradley Electric, Inc. v. Mitchell Engineering, No. A167137 (D1d5 Feb. 28, 2024)

Fatal traffic accident case where the Decedent’s family sued three Defendants—driver, the rideshare company she was working for, and a Contractor who had done some work on the sidewalk where she was walking. Contractor proceeded to cross-claim against two other companies (who appear to be other contractors) for equitable indemnification. As is the usual course in these kinds of things. everybody eventually sued everyone. Plaintiffs eventually settled with the new contractors for $10k a pop.

Contractor’s lawyers propose to their client that they make a similar $10k offer, and then that the settle the remaining contractor cross-claims for and agreement that the settlements are reasonable under Code of Civil Procedure § 877.6, and dismissals and fee waivers. That gets papered and the dismissals filed. Then the rest of the case settles.

Six months later, Contractor moves to vacate the dismissals of the other contractors as, among other reasons*, void under § 473(d), based on an assertion that the client never consented to its attorneys’ agreement to dismiss. The evidence of permission (Contractor appears to have waived privilege) was not entirely clear. But the trial court denied the motion. Contractor appeals.

The Court of Appeal finds that Contractor probably forfeited the § 473(d) by failing to squarely raise it in the trial court. But nonetheless, it reaches the merits. 

Canvassing the authority, the Court finds that a settlement entered without clear permission from a client is probably voidable but not void and thus not subject to vacation under § 473(d). The latter mostly deals with situations where the court never had jurisdiction to act. There’s an outlier case where the Court found that an attorney’s dismissal with prejudice, when the client only authorized a without prejudice dismissal was void under § 473(d). Romadka v. Hoge, 232 Cal. App. 3d 1231 (1991). But subsequent cases have recognized that Romadka really was faced with a case of attorney mistake that could be remedied under § 473(b), and not with an actually void judgment that could be vacated under § 473(d).

And in any event, the Court of Appeal finds that there was adequate evidence that Contractor had actually ratified the dismissal, and also that denying relief under § 473(d) was not an abuse of discretion.

Affirmed.

*Contractor also moved to vacate the dismissal as a result of attorney mistake, surprise, neglect, etc., under § 473(b). The court deals with that in an unpublished part of the opinion, so I’m not going to get into it.