Zurich American Insurance Company v. Petersen-Dean, Inc., 4:13-cv-05758

Zurich insured Petersen-Dean under multi-year policies and sued after Petersen-Dean stopped paying premiums; litigation began in December 2013.
Parties entered a Collateral Agreement (Feb 2015) requiring Petersen-Dean to post $1.35M in collateral; Petersen-Dean failed to make the final $175,000 installment and the court ordered payment in May 2016.
After a court-ordered settlement conference, parties executed a written Settlement Agreement (Nov 2016) where Petersen-Dean agreed to pay $1.8M in 22 installments; the Agreement provides a five-day cure period after written notice and an express term that court retains jurisdiction to enforce and enter judgment upon default.
Petersen-Dean paid $400,000 (first four installments) but missed the April 1, 2017 $100,000 installment; Zurich served a Notice of Default on April 7, 2017 and Petersen-Dean did not cure.
Zurich moved under Rule 60(b)(6) to vacate the dismissal and to enter judgment for $1.4M (the $1.8M settlement amount minus $400,000 paid). The court held a hearing and granted Zurich’s motion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Court jurisdiction to reopen and enforce settlement	Settlement includes clause retaining court jurisdiction; repudiation of settlement justifies Rule 60(b)(6) relief	Settlement cannot confer continuing jurisdiction; Rule 60(b)(6) requires "extraordinary circumstances"	Court has authority: repudiation is an extraordinary circumstance; court may reopen and enforce settlement
Entitlement to judgment on default clause	Contract provides automatic judgment for $1.8M minus amounts paid upon uncured default; Zurich seeks $1.4M	Default occurred but Zurich should not get judgment because other remedies (collateral) exist or Zurich abused discretion	Judgment for $1.4M granted per unambiguous default provision and retained jurisdiction clause
Use of collateral	Zurich could and properly declined to apply collateral; settlement governs remedies	Zurich should have used collateral to satisfy settlement payments; failure to do so is abuse of discretion causing claimed damages	Paragraph 5 does not require Zurich to use collateral for settlement payments; it reserves Zurich’s discretion; argument fails
Reformation for mistake / oral assurances	Settlement is integrated writing; Zurich’s written terms control	Petersen-Dean alleges verbal assurances that Zurich would draw on collateral and seeks reformation under Cal. Civ. Code § 3399	No reformation: agreement is unambiguous, integrated, signed by parties, and does not reflect the alleged oral promise

Keeling v. Sheet Metal Workers Int’l Ass’n, 937 F.2d 408 (9th Cir. 1991) (repudiation of a settlement that terminated litigation can justify vacating dismissal under Rule 60(b)(6))
Dacanay v. Mendoza, 573 F.2d 1075 (9th Cir. 1978) (court has inherent power to summarily enforce settlement agreements in pending actions)