Young v. Keele

Opinion

HASTINGS, J.

The novel issue on this appeal is whether a judgment debtor at his judgment debtor’s examination can refuse to answer questions related to settlement negotiations that occurred after the judgment.

On November 7, 1984, a judgment was entered against Michael L. Keele and Michael L. Keele Enterprises, Inc. (collectively Keele) for $484,000. The judgment was in favor of Harry S. Young, Jai H. Young, Harold Singh, Benita I. Singh, Syed A. Ali and Anita A. Ali (judgment creditors). Pursuant to Code of Civil Procedure section 708.110, subdivision (a)

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judgment creditors set for hearing a judgment debtor’s examination. After numerous postponements and motions, the examination of Keele commenced on January 22, 1986. The examination was continued to February 6, 1986. Between January 22 and February 6 the parties engaged in settlement negotiations. They tentatively reached an agreement under which Keele was obligated to make a total payment of $370,000 to judgment creditors payable $25,000 concurrently with the execution of the agreement and $25,000 by February 20, 1986, and the balance in 16 consecutive quarterly payments. Shortly before February 6, 1986, Keele reneged on the agreement.

[1092]

During the course of the February 6 judgment debtor’s examination, counsel for judgment creditors asked Keele questions regarding the proposed settlement agreement and in particular the source of funds to be used. Under advice of counsel Keele refused to answer the questions,

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citing Evidence Code sections 1152 and 1154.

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The trial court overruled Keele’s objections, ordered Keele to answer the questions, and stayed the judgment debtors examination for 30 days pending appeal of this issue.

The issue before us is one of first impression. The parties have cited no cases directly or even inferentially in point, and our research has also been fruitless. It is Keele’s position that the public policy consideration (settlement of lawsuits) behind sections 1152 and 1154 is so broad that it prohibits any evidence concerning conduct or statements made in settlement negotiations in any type of legal proceedings. To bolster this argument Keele cites California Code of Civil Procedure section 708.130.