Anyone whose only exposure to litigation is via television and movies is likely to believe that every case is battled to the end. But that's far from the truth. Most cases – including some 95 percent of personal injury cases – settle before trial. That means that the parties agree on some outcome that they both can live with.
One way of compromising a case is by agreeing to a stipulated judgment, often called a consent judgment. This type of settlement is more common in some areas of litigation than others, like divorce cases, eviction cases and credit card debt cases.
What Is a Stipulated Judgment?
The intent of the judicial system is to provide an equitable and nonviolent way that people can resolve disputes. The court system allows anyone who has a legal dispute with another party to bring a lawsuit against that person setting out his allegations. Each side presents its case before a judge and sometimes jury. When the outcome is reached, the court enters a judgment describing the result.
Yet, not every judgment follows a bitter court struggle. Sometimes the parties agree to settle the case somewhere between the demands and the denials. This can take the form of a negotiated resolution out of court followed by a motion to dismiss a civil case or a divorce action.
In other cases, the parties, or their lawyers, shortcut the process by agreeing on how the judgment should look. They draft it up, stipulate to it, and ask the court to enter it. This type of settlement is called a stipulated judgment.
Read More: What is a Stipulated Agreement?
Why Do Parties Enter Into a Stipulated Judgment?
Although people often go into a lawsuit bristling with irritation at the outrageous conduct of the person sued or determined to show the world how despicably a company behaved, these high emotions don't last forever. The constant combat can wear down a party's enthusiasm for the fight, and those mounting legal bills also shadow the court case. A party can just decide that she wants it all to go away on almost any terms.
Alternatively, parties may decide to agree to a stipulated judgment when they have competing claims against each other. A case begins when one party (called the plaintiff) files a complaint against the other (termed the defendant), setting out facts and allegations suggesting the defendant's liability for the damages of the plaintiff. But the defendant has the right to file a counterclaim against the plaintiff if she has facts that establish one, in which case, each party is seeking recovery in the case. A consent judgment often splits the baby somewhere down the middle, giving each of the parties some measure of victory.
Another possible scenario resulting in a stipulated judgment is when a party's attorney advises him that the other side's positions are strong and will likely prevail in court. Faced with the inevitable, the party opts for a stipulated judgment, giving the other side the things they want most but getting a few concessions in return for stopping the litigation.
Stipulated Judgments in Divorce Actions
Stipulated judgments tend to occur more often in some particular types of civil litigation, one of which is divorce (or dissolution of marriage) cases. Divorce cases can be hard-fought, with child custody frequently causing the greatest conflict. Courts in many states including California pressure the parties to find common ground, since a bitter divorce dispute can wound the kids as well as the parents. In California, parents fighting over child custody issues are required to attend mediation or arbitration to attempt to find an amicable resolution to questions of parenting time.
The parties have an incentive to find compromise in a divorce case, since the final judgment and orders made by the Family Court will impact the entire family for years to come. Matters like property division usually are final and cannot be modified in future years, while rulings that can be modified, like child support, require a showing of material change of circumstance for the court to even consider it.
In California, an agreement between divorcing parties can be set out in a Marital Settlement Agreement that is incorporated into a Judgment of Dissolution or in a stipulated judgment. Both consent documents will include orders resolving child custody, visitation, child support, spousal support and division of property matters. These orders can be enforced by law enforcement as well as the family court.
Stipulated Judgments in Eviction Cases
In California, the process a landlord must use to remove a tenant from a rented dwelling unit is termed eviction, but the actual lawsuit the landlord files is called an unlawful detainer. Many unlawful detainer actions are resolved by stipulated judgments.
Eviction in California is not always a quick or straightforward matter. Some of the state's landlord-tenant laws protect tenants, and these are supplemented in many cities by rent control ordinances. A California landlord is prohibited from using any self-help measures and must take his case through the court process of unlawful detainer before unwilling tenants can be expelled. Tenants are allowed to present a variety of different defenses, including arguing that the landlord is retaliating against them for reporting code violations.
The tenant protections often mean that eviction cases take much longer than one might expect. Because of that, landlords can be willing to cede the tenants some extra time in the apartment or even give the tenants some financial assistance with moving expenses in exchange for their vacating the premises. Stipulated judgments work well in these cases, since they can turn all of the agreed-upon terms between parties into an enforceable court order.
Stipulated Judgments in Debt Cases
A debtor who doesn't make payments on a debt may be sued by the creditor. Once the creditor wins the case and obtains a money judgment against the debtor, the creditor has access to a number of ways of collecting the debt, including seizing bank accounts and garnishing the debtor's paychecks.
A debtor who is party to a court action by a creditor may seek to avoid these harsh methods of debt collection by agreeing to a stipulated judgment. In the case of a creditor/debtor, a stipulated judgment is a legally-binding agreement under which the debtor agrees to make set payments to the creditor on a specified timeline. Creditors sometimes agree to accept a reduced sum of money or forgive late fees and interest charges in order to arrive at a settlement.
Consequences of Stipulated Judgments for Debts
Of course, once a stipulated judgment is entered, the debtor is legally bound to make all of the payments as agreed upon. If she fails to do so, she may forfeit all the advantages she got through the stipulation and may be faced again with the threat of wage garnishment and bank account seizure.
A stipulated judgment is likely to address what will happen if the debtor party does not uphold her agreement. In most cases, when a debtor fails to adhere to the payment plan agreed upon in a stipulated judgment, she will be liable for the entirety of the original debt, including interest and fees, with a credit given for those sums already paid back.