You’ve got a settlement agreement in your personal injury case, but the other side won’t pay. How do you enforce it?

You’ve got a settlement agreement in your personal injury case, but the other side won’t pay. How do you enforce it?

There is nothing better than coming to a fair and final resolution in our clients’ bicycle, motorcycle, pedestrian and auto accident cases. However, on rare occasions we run into insurance companies (or self-insured defendants) who don’t want to cut the settlement check right away, even though our clients have released them from liability by signing a settlement agreement. The opposing party will make excuses for their untimely payment, but ultimately the settlement agreement will be enforced by the court and the other party must pay.

The Law Enforcing Settlement Agreements

All personal injury attorneys should be familiar with California Code of Insurance Regulations section 2695.7, and the Code of Civil Procedure section 664.6, which work together in this instance to create a compelling demand for the settlement to be paid in a timely manner. Section 2695.7 sets out a 30 day timeframe for settlements to be paid and section 664.6 gives the Court power to enforce this timeframe. More on these below.

Our Lesson

Recently, we had a motorcycle accident case where the third party (a self-insured entity) told us that they would not be able to pay us within 30 days, but that they would pay within 45-60 days. However, their delays continued and this timeframe got longer and longer. We learned our lesson the hard way. Now, when the other party tells us they will not be able to pay a settlement on time, we immediately use the enforcement tools set out in the California Code of Insurance Regulations, rather than wait for the 30 days to expire before warning the other side that we will drag them in front of a judge to enforce the settlement if we have to.

How to Enforce the Settlement Agreement

California Code of Insurance Regulations section 2695.7(h) states, “upon receipt of releases, the insurer must tender payment immediately, or within thirty days from receipt of the release.” In other words, once the victim of a personal injury case releases his or her rights by signing a settlement agreement (aka settlement release), the other party must pay the settlement within thirty days of their receipt of the settlement release. If the other party does not pay within the 30 day period, they are considered to be in breach of contract and can be brought into court to answer for this breach. Not only can the judge enforce the settlement agreement, but it can award the plaintiff damages (i.e. pay plaintiff’s costs and attorneys’ fees to enforce the settlement) for the other party’s failure to pay the settlement monies in a timely manner.

Also, California Code of Civil Procedure section 664.6 sets out that if both parties have stipulated to the settlement agreement, the court has the power to enforce that settlement. This provision puts the power of the Court behind the plaintiff, which is a powerful tool when communicating with the other side and getting them to pay the settlement.

Let the Other Side Know You Expect Timely Payment of the Settlement Funds

If you find yourself in a situation where the other party is refusing to pay the settlement in a timely manner, write a letter stating that they are in violation of Insurance Code section 2695.7(h) by refusing to disburse the settlement proceeds within 30 days and that the court (under CCP 664.6) can enforce that settlement and award damages to the plaintiff for the insurance company’s breach of contract and delay in payment. It is important to stand up to these insurance companies.