California Code, Business and Professions Code - BPC § 11417.6

(a) Whenever the court proceeds upon an application under Section 11417.3, it shall order payment out of the Recovery Account only upon a determination that the aggrieved party has a valid cause of action within the purview of Section 11413, and has complied with Section 11417.3.

(b) The bureau may defend any such action on behalf of the Recovery Account and shall have recourse to all appropriate means of defense and review, including examination of witnesses and the right to relitigate any issues material and relevant in the proceeding against the Recovery Account that were determined in the underlying action on which the judgment in favor of the applicant was based.  If the judgment in favor of the applicant was by default, stipulation, consent, or pursuant to Section 594 of the Code of Civil Procedure, or whenever the action against the licensee was defended by a trustee in bankruptcy, the applicant shall have the burden of proving that the cause of action against the licensee was for fraud, misrepresentation, or deceit with intent to defraud.  Otherwise, the judgment shall create a rebuttable presumption of the fraud, misrepresentation, or deceit with intent to defraud.  The presumption shall affect the burden of producing evidence.

(c) The bureau may move the court at any time to dismiss the application when it appears there are no triable issues and the petition is without merit.  The motion may be supported by affidavit of any person or persons having knowledge of the facts, and may be made on the basis that the petition, and the judgment referred to therein, does not form the basis for a meritorious recovery claim within the purview of Section 11413; provided, however, the bureau shall give written notice at least 10 days before the motion.

(d) The bureau may, subject to court approval, compromise a claim based upon the application of an aggrieved party.  The bureau shall not be bound by any compromise or stipulation of the judgment debtor.