Settlement Agreement and Mutual Release (Short Form) - California

SETTLEMENT AGREEMENT AND MUTUAL RELEASE (SHORT FORM)

State of California

IMPORTANT NOTICE: This document resolves legal claims. California Civil Code § 1542 states the default effect of a general release on unknown claims. Counsel must determine governing law, released-claim scope, clear waiver intent, nonwaivable claims, and current controlling authority; the statute itself does not prescribe a waiver form. This Agreement contains a proposed § 1542 waiver. PAGA settlements involving representative claims require LWDA notification and court approval. Read carefully and consult an attorney before signing.

RECITALS AND PARTIES

This Settlement Agreement and Mutual Release (Short Form) (this "Agreement") is entered into as of [__/__/____] (the "Effective Date") by and between:

PARTY A (Releasing Party / Claimant):
Name: [________________________________]
Address: [________________________________]
City, State, ZIP: [________________________________]
Representative/Counsel: [________________________________]

PARTY B (Released Party / Respondent):
Name: [________________________________]
Address: [________________________________]
City, State, ZIP: [________________________________]
Representative/Counsel: [________________________________]

Party A and Party B are collectively referred to as the "Parties."

CASE/DISPUTE REFERENCE:
Court (if applicable): [________________________________]
Case Name: [________________________________]
Case/Docket Number: [________________________________]
Nature of Dispute: [________________________________]
Date Dispute Arose: [__/__/____]

RECITALS

WHEREAS, a dispute has arisen between the Parties relating to [________________________________] (the "Dispute");

WHEREAS, the Parties desire to resolve the Dispute fully and finally, without admitting liability;

WHEREAS, California Civil Code § 1541 provides that an obligation is extinguished by a release given to the debtor by the creditor, upon new consideration, or in writing with or without new consideration;

WHEREAS, California Civil Code § 1542 provides that a general release does not extend to claims that the releasing party does not know or suspect to exist at the time of executing the release, and the Parties desire to expressly waive the protections of § 1542 to the extent permitted by law;

WHEREAS, the Parties have had the opportunity to consult with counsel and understand this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants, releases, and promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

SECTION 1: SETTLEMENT PAYMENT AND CONSIDERATION

1.1 Settlement Amount.

In full and final satisfaction of all claims described herein, [________________________________] ("Payor") shall pay to [________________________________] ("Payee") the total sum of $[________________________________] (the "Settlement Amount"), subject to the following payment terms:

☐ Lump Sum Payment: The Settlement Amount shall be paid in a single payment on or before [__/__/____], by:

☐ Check payable to: [________________________________]
☐ Wire transfer to account: [________________________________] (routing: [____________________])
☐ Other: [________________________________]

☐ Installment Payments: The Settlement Amount shall be paid in installments as follows:

1.2 Allocation of Settlement Amount (California Wage/Hour/PAGA).
(Complete if any portion of the settlement involves wage/hour or PAGA claims)

1.3 Tax Identification and Reporting.
Payee's Social Security Number / EIN: [________________________________]
(Payments may require IRS Forms W-2 and/or 1099 reporting depending on allocation. Each Party bears its own tax obligations. This Agreement does not constitute tax advice. Consult a tax professional.)

1.4 Attorneys' Fees and Costs.
☐ Each Party shall bear its own attorneys' fees and costs.
☐ Party [____] shall pay Party [____]'s attorneys' fees in the amount of $[________________________________].
☐ Attorneys' fees are incorporated within the Settlement Amount (see allocation above).

1.5 Default on Payment.
If Payor fails to make any payment when due, Payee shall provide [____] days' written notice to cure. If uncured, the full remaining balance becomes immediately due and payable. Under California Code of Civil Procedure § 664.6, either party may move to enforce this Agreement by having judgment entered on it.

SECTION 2: MUTUAL RELEASE OF CLAIMS

2.1 Release by Party A.
Party A, on behalf of itself and its heirs, executors, administrators, successors, assigns, agents, officers, directors, employees, and representatives (collectively, "Party A Releasors"), hereby fully, finally, and forever releases, acquits, and discharges Party B and its heirs, executors, administrators, successors, assigns, agents, officers, directors, employees, insurers, and representatives (collectively, "Party B Releasees") from any and all claims, demands, actions, causes of action, suits, debts, obligations, liabilities, damages, losses, costs, expenses, and attorneys' fees of any kind or nature whatsoever, whether known or unknown, whether in law or equity, whether in contract, tort, statute, or otherwise, arising out of, related to, or connected with the Dispute, through the Effective Date (collectively, "Released Claims").

2.2 Release by Party B.
Party B, on behalf of itself and its heirs, executors, administrators, successors, assigns, agents, officers, directors, employees, and representatives (collectively, "Party B Releasors"), hereby fully, finally, and forever releases, acquits, and discharges Party A and its heirs, executors, administrators, successors, assigns, agents, officers, directors, employees, insurers, and representatives (collectively, "Party A Releasees") from all Released Claims arising out of, related to, or connected with the Dispute through the Effective Date.

2.3 CALIFORNIA CIVIL CODE § 1542 WAIVER — CRITICAL PROVISION.

EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS ATTORNEY OF, AND IS FAMILIAR WITH, THE PROVISIONS OF CALIFORNIA CIVIL CODE § 1542, WHICH PROVIDES:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY."

HAVING BEEN SO ADVISED, EACH PARTY HEREBY EXPRESSLY WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS AFFORDED BY CALIFORNIA CIVIL CODE § 1542 AND ANY OTHER STATUTES OR LAWS OF ANY JURISDICTION THAT ARE SIMILAR, COMPARABLE, OR EQUIVALENT THERETO. EACH PARTY INTENDS TO AND DOES HEREBY RELEASE ALL CLAIMS ARISING FROM THE DISPUTE, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, DISCLOSED OR UNDISCLOSED.

Party A Initials: [____]
Party B Initials: [____]

2.4 PAGA Claims.
(Complete if any PAGA claim is involved)

☐ No PAGA claims are included in this release. This release does not affect any representative PAGA claims.

☐ PAGA claims are included in this settlement. The Parties acknowledge that settlement of representative PAGA claims requires: (a) written notice to the California Labor and Workforce Development Agency (LWDA); and (b) court approval (see Cal. Labor Code § 2699(l)). The PAGA portion of this settlement ($[________]) allocates 65% to the LWDA and 35% to the aggrieved employees. The Parties shall cooperate to obtain required court approval.

2.5 Claims Not Released.
☐ Claims arising from breach of this Agreement.
☐ Claims arising after the Effective Date.
☐ Other excluded claims: [________________________________]

SECTION 3: NO ADMISSION OF LIABILITY

This Agreement constitutes a compromise of disputed claims. No Party admits any liability, fault, negligence, or wrongdoing. This Agreement shall not be admissible as evidence of liability in any proceeding.

SECTION 4: DISMISSAL WITH PREJUDICE

4.1 Obligation to Dismiss.
The Parties shall promptly file notice of settlement under Cal. Rules of Court, rule 3.1385(a). Subject to any court-approval requirement and any conditional-settlement notice under rule 3.1385(c), the parties seeking affirmative relief shall serve and file requests for dismissal within 45 days after settlement, or by this earlier agreed deadline: [____].

☐ File requests to dismiss the claims and cross-complaints each party has authority to dismiss, with prejudice, under Cal. Code Civ. Proc. § 581 and Cal. Rules of Court, rule 3.1385.
☐ Dismissal is conditioned on completion of installments or other terms beyond 45 days; file a conditional-settlement notice stating the anticipated dismissal date under rule 3.1385(c).
☐ Other: [________________________________]

4.2 Filing Responsibility.
Responsible Party/Counsel: [________________________________]

4.3 Retention of Jurisdiction.
☐ The Parties stipulate that the Court shall retain jurisdiction to enforce this Agreement pursuant to California Code of Civil Procedure § 664.6.

4.4 Court Approval.
☐ Not applicable.
☐ Court approval required: ☐ Minor party (Cal. Code Civ. Proc. § 372(a)(3) or Prob. Code § 3500) ☐ Person lacking legal capacity (Cal. Code Civ. Proc. § 372(a)(3)) ☐ PAGA (Cal. Labor Code § 2699(l)) ☐ Other: [________________________________]

SECTION 5: CONFIDENTIALITY

☐ Confidentiality Applies. The existence, terms, and conditions of this Agreement are confidential. Parties agree not to disclose terms to third parties except:
(a) to attorneys, accountants, and advisors under confidentiality obligations;
(b) as required by law, regulation, or court order;
(c) as necessary to enforce this Agreement;
(d) for income tax reporting purposes;
(e) to the LWDA if required in connection with PAGA settlement.

This clause does not restrict disclosure of factual information protected by Cal. Code Civ. Proc. § 1001 or any other nonwaivable disclosure right.

Note: Cal. Code Civ. Proc. § 1001 covers specified sexual assault, sexual harassment, workplace discrimination, and housing harassment or discrimination claims. Review the pleaded or administrative claims before selecting confidentiality; the statute permits confidentiality of the settlement amount.

☐ No Confidentiality Requirement.

SECTION 6: NON-DISPARAGEMENT

☐ Non-Disparagement Applies. Each Party agrees not to make false or disparaging statements — oral, written, or electronic — regarding the other Party, its personnel, products, or services. This does not restrict truthful statements made pursuant to legal obligation or statements protected by California law.

Note: California Government Code § 12964.5 restricts non-disparagement clauses in employment settlement agreements regarding conduct the employee has reason to believe is unlawful. Consult counsel if this Agreement involves employment claims.

☐ No Non-Disparagement Clause.

SECTION 7: REPRESENTATIONS AND WARRANTIES

Each Party represents and warrants that:

7.1 It has full legal authority to enter into this Agreement.
7.2 It has not assigned, transferred, or conveyed any Released Claim to a third party.
7.3 No other legal proceedings related to the Dispute are pending other than as disclosed.
7.4 It has been advised of its right to consult independent legal counsel and has either done so or knowingly waived that right.
7.5 This Agreement is entered into freely, voluntarily, and without duress or coercion.
7.6 It has read and fully understands this Agreement, including the § 1542 waiver.

SECTION 8: MISCELLANEOUS PROVISIONS

8.1 Governing Law.
This Agreement shall be governed by the laws of the State of California, without regard to conflict-of-laws principles.

8.2 Venue.
☐ Exclusive venue in the Superior Court of [________________________________] County, California.
☐ Other: [________________________________]

8.3 Integration.
This Agreement constitutes the entire understanding between the Parties regarding the subject matter hereof. Amendments must be in writing and signed by both Parties.

8.4 Severability.
If any provision is held invalid, the remaining provisions shall continue in full force.

8.5 Counterparts / Electronic Signatures.
This Agreement may be executed in counterparts. Electronic signatures are valid under California law (Cal. Civ. Code § 1633.1 et seq.).

8.6 Enforcement.
Either Party may file a motion to have judgment entered on this Agreement pursuant to California Code of Civil Procedure § 664.6, provided the Court retains jurisdiction.

SECTION 9: CALIFORNIA-SPECIFIC DISCLOSURES

9.1 Workers' Compensation. If any released claim involves a workplace injury, this release may not affect certain rights under the California Workers' Compensation Act. Consult counsel.

9.2 DFEH/CRD Claims. If this Agreement involves claims under the California Fair Employment and Housing Act (FEHA), now enforced by the Civil Rights Department (CRD), consult regarding mandatory agency procedures.

9.3 WARN Act. If any released claim involves a mass layoff, consult regarding the California WARN Act (Cal. Labor Code § 1400 et seq.).

9.4 ADEA/OWBPA. If waiving ADEA claims, the Older Workers Benefit Protection Act requires a 21-day review period, 7-day revocation period, and specific disclosures.

9.5 Minor/Person Lacking Legal Capacity. A compromise of a minor's or incapacitated person's claim requires court approval regardless of the settlement amount. Cal. Code Civ. Proc. § 372(a)(3) governs approval when that person appears through a guardian, conservator, or guardian ad litem; Prob. Code § 3500 governs a minor's disputed claim when the minor has no guardian of the estate. Prob. Code § 3600 et seq. governs disposition of proceeds.

SECTION 10: SIGNATURES

BY SIGNING BELOW, EACH PARTY CONFIRMS IT HAS READ, UNDERSTANDS, AND AGREES TO THIS AGREEMENT IN ITS ENTIRETY, INCLUDING THE CALIFORNIA CIVIL CODE § 1542 WAIVER.

PARTY A:

Signature: [________________________________]
Printed Name: [________________________________]
Title (if applicable): [________________________________]
Date: [__/__/____]

Party A's Counsel (if applicable):

Signature: [________________________________]
Printed Name: [________________________________]
California State Bar Number: [________________________________]
Firm: [________________________________]
Date: [__/__/____]

PARTY B:

Signature: [________________________________]
Printed Name: [________________________________]
Title (if applicable): [________________________________]
Date: [__/__/____]

Party B's Counsel (if applicable):

Signature: [________________________________]
Printed Name: [________________________________]
California State Bar Number: [________________________________]
Firm: [________________________________]
Date: [__/__/____]

OPTIONAL: NOTARIZATION

If either Party requests an acknowledgment, attach a separate completed California Civil Code § 1189 acknowledgment certificate for that signer using the current prescribed form, including its boxed notice and notary certification. Party A certificate attached: ☐ Yes ☐ No. Party B certificate attached: ☐ Yes ☐ No.

EXHIBITS / ATTACHMENTS

☐ Exhibit A — Payment Schedule
☐ Exhibit B — Promissory Note (if installments)
☐ Exhibit C — Request for Dismissal / Stipulation
☐ Exhibit D — PAGA Notice to LWDA (if applicable)
☐ Exhibit E — Other: [________________________________]

SOURCES AND REFERENCES

• California Civil Code § 1542: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=1542.&lawCode=CIV
• California Civil Code § 1541: https://leginfo.legislature.ca.gov/
• Cal. Code of Civil Procedure § 664.6 (Enforcement of Settlement): https://leginfo.legislature.ca.gov/
• California Labor Code § 2699 (PAGA): https://leginfo.legislature.ca.gov/
• California Probate Code § 3600 et seq. (Minor Settlements): https://leginfo.legislature.ca.gov/
• IRS Form 1099 reporting: https://www.irs.gov/forms-pubs/about-form-1099-misc