Jackie Hatten claimed she and Smith walked in on Stern and one-time love rival Larry Birkhead during a romantic clinch and the incident was reported in Rita Cosby's book, Blonde Ambition: The Untold Story Behind Anna Nicole Smith's Death.
Stern sued both Hatten and Cosby for defamation.
He settled with the author several years ago and now his case against Hatten has been settled too, according to TMZ.com.
The terms of the agreement are confidential.
Ironically, Stern and Birkhead are now friends after battling over custody of Smith's daughter Dannielynn following the actress/model's death in 2007.