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McCormick v. Brzezinski

April 13, 2010

LINDA MCCORMICK, PLAINTIFF,
v.
ROBERT BRZEZINSKI, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Robert H. Cleland United States District Judge

OPINION AND ORDER GRANTING IN PART DEFENDANT'S "MOTION TO REINSTATE THE CASE THOUGH SETTLEMENT ENFORCEMENT AND TO IMPOSE SANCTIONS ON THE PLAINTIFF" AND DENYING PLAINTIFF'S "MOTION TO REINSTATE THE CASE DUE TO DEFENDANT'S VIOLATION OF THE SETTLEMENT AGREEMENT"

Pending before the court are (1) Defendant Robert Leosh's "Motion to Reinstate the Case Through Settlement Enforcement and to Impose Sanctions on the Plaintiff"; and (2) Plaintiff's "Motion to Reinstate the Case due to Defendant's Violation of the Settlement Agreement." For the reasons stated below, the court will grant in part and deny in part Defendant's motion, and it will deny Plaintiff's motion.

I. BACKGROUND

On December 14, 2009, just before jury selection, Defendant Robert Leosh, acting through counsel, and Plaintiff, acting pro se, indicated that they wished to engage in settlement discussions. The parties reached an agreement and the settlement conference was continued on the record. (12/24/09 Settlement Tr. at 1.) The on-the-record portion of the settlement conference lasted approximately 16 minutes. During this discussion, the parties and the court discussed the material terms of the agreement, a proposed confidentiality agreement, the method and timing of the payment to Plaintiff, and how the court would address a failure to memorialize the agreement in writing. (12/24/09 Settlement Tr. at 3-16.)

Specifically, the parties agreed that Defendant would pay Plaintiff the sum of $11,000, and Plaintiff would, in turn, sign a standard release for all claims against Defendant, any other employees and agents of Isabella County, and Isabella County itself. (12/24/09 Settlement Tr. at 3-5, 14-15.) Plaintiff was informed that a check would likely be issued within two to four weeks of her signing the release and that if she failed to sign the release, or if the county failed to issue the check, the court would enforce the settlement agreement. (12/24/09 Settlement Tr. at 4-7, 14-16.)

Following the settlement conference, Plaintiff and Defendant were unable to agree on what terms were included in the settlement. Defendant, therefore, ordered the transcript of the settlement conference. (Def.'s Resp. Br. at ¶ 6.) Plaintiff responded by filing an "Emergency Motion for Protective Order to Seal the Settlement Transcript Regarding Defendant Leosh." [Dkt. # 149] The court denied Plaintiff's Motion and informed Plaintiff that no confidentiality agreement had been included in the settlement.*fn1

(1/6/10 Order).

II. DISCUSSION

Defendant now claims that Plaintiff has failed to abide by the terms of the settlement and requests that the court enforce the settlement agreement. Plaintiff, however, now claims that Defendant has failed to comply with the settlement agreement and that the settlement procedure was unfair; Plaintiff requests that the court reinstate the case and set aside the settlement. Both parties request that the other be sanctioned.

A. Enforcement of Settlement

Plaintiff argues that Defendant has breached the terms of the settlement agreement for several reasons: (1) Defendant did not provide payment within two weeks of the settlement discussions (Pl.'s Mot. at ¶ 9); (2) Defendant included three terms in the settlement agreement regarding tax consequences (Pl.'s Mot. at ¶¶ 11(i)-(iii)); (3) Defendant requested Plaintiff's social security number (Pl.'s Mot. at ¶ 11(iv)); and (4) Defendant disclosed the terms of the agreement (Pl.'s Mot. at ¶ 12). Defendant argues that Plaintiff knew that payment would not be provided within two weeks (Def.'s Resp. Br. at 3); that the language regarding the tax consequences of the settlement is standard language (Def.'s Resp. Br. at 3); that Plaintiff's social security number is required for Defendant to properly follow federal law (Def.'s Resp. Br. at 6); and that the settlement agreement did not include a confidentiality agreement (Def.'s Resp. Br. at 3-4). The court agrees with Defendant. "'It is well established that courts retain the inherent power to enforce agreements entered into in settlement of litigation pending before them.'" Bamerilease Capital Corp. v. Nearburg, 958 F.2d 150, 152 (6th Cir. 1992) (quoting Brock v. Scheuner Corp., 841 F.2d 151, 154 (6th Cir. 1988)). The district court's power to summarily enforce settlements extends to cases where the parties have not reduced their agreements to writing. Brock, 841 F.2d at 154. This inherent power derives from "the policy favoring the settlement of disputes and the avoidance of costly and time- consuming litigation." Kukla v. Nat'l Distillers Prods., Co., 483 F.2d 619, 621 (6th Cir. 1973).

"Agreements settling litigation are solemn undertakings, invoking a duty upon the involved lawyers, as officers of the court, to make every reasonable effort to see that the agreed terms are fully and timely carried out." Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1372 (6th Cir. 1976). As such, courts should uphold settlements whenever equitable and policy considerations allow. See id.

To enforce a settlement, a district court must conclude that agreement has been reached on all material terms. Re/Max Int'l, Inc. v. Realty One, Inc., 271 F.3d 633, 645-46 (6th Cir. 2001); Brock, 841 F.2d at 154. "[W]hether [a settlement agreement] is a valid contract between the parties is determined by reference to state substantive law governing contracts generally." Bamerilease Capital Corp., 958 F.2d at 152 (quoting White Farm Equip. Co. v. Kupcho, 792 F.2d 526, 529 (5th Cir. 1986)). Thus, the court will apply Michigan contract law to determine whether a valid settlement agreement was reached. See Walbridge Aldinger Co v. Walcon Corp., 525 N.W.2d 489, 491 (Mich. Ct. App. 1995) ("An agreement to settle a pending lawsuit is a contract and is to be governed by the legal principles applicable to the construction and interpretation of contracts.").

Under Michigan law, in order to form a valid contract, there must be a meeting of the minds, or mutual assent, with respect to all material terms of the contract. Kamalnath v. Mercy Memorial Hosp. Corp., 487 N.W.2d 499, 503 (Mich. Ct. App. 1992). Further, "[a] meeting of the minds is judged by an objective standard, looking to the express words of the parties and their visible acts, not their subjective states of mind." Id. In making the determination of whether a meeting of the minds occurred, "[t]he court considers the relevant circumstances surrounding the transaction, including all writings, oral statements, and other conduct by which the parties manifested their intent." Barber v. SMH (US), Inc., 509 N.W.2d 791, 794 (Mich. Ct. App. 1994). If the parties reached agreement on all material terms, existing precedent "dictates that only the existence of fraud or mutual mistake can justify reopening an otherwise valid settlement agreement." Brown v. County of Genesee, 872 F.2d 169, 174 (6th Cir. 1989). Once a settlement is reached, it is the party challenging the settlement who bears the burden to show that the settlement contract was invalid based on fraud or mutual mistake. Id. (citing Callen v. Pennsylvania R. Co., 332 U.S. 625, 630 (1948)).

During the settlement conference, the material terms of the agreement were addressed in detail. (12/24/09 Settlement Tr., at 4-7.) In the course of finalizing the agreement during the settlement conference, the court restated the settlement amount and informed Plaintiff that she would be required to sign a standard release. (12/24/09 Settlement Tr., at 13-14.) Plaintiff responded by saying "All right." (12/24/09 Settlement Tr., at 14.) The court then discussed the nature and timeliness of the payment from Defendant; Plaintiff responded by saying "Okay." (12/24/09 Settlement Tr., at 15.) Based on its participation in the settlement conference, and the record of the conference, the court determines that an enforceable contract was created during the settlement conference. Accordingly, during the settlement negotiations, Defendant orally agreed to a settlement amount and a rough time-frame for payment, subject to the County's administrative procedures. And Plaintiff, for her part, agreed to sign a release waiving claims against the County and its agents and employees. For the purposes of Plaintiff's settlement with Defendant Leosh the settlement amount, timing, and agreement to waive claims comprise the material terms of a settlement, and because the parties assented to these terms, an enforceable settlement exists.

Having found that an enforceable settlement agreement, it is next necessary to address the parties' allegations of breach of this agreement. Plaintiff's first claim is that Defendant is in breach because he failed to pay in a timely fashion. During the recorded settlement conference, the court discussed the time frame that is common for payment in settlements of this nature, typically two to four weeks. (12/24/09 Settlement Tr., at 4-5.) But, of course, this time estimate assumes that a written version of the agreement has been signed; here, because ...


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