Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-02069/USCOURTS-ca10-88-02069-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FI LED 

United States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS AUG 9 1989 

ROBERT L. HOECKER 

Clerk 

I 

TENTH CIRCUIT 

FIRST FEDERAL SAVINGS BANK, 

Plaintiff-Appellee, 

vs. 

) 

) 

) 

) 

) 

) 

SPENCER SAVINGS & LOAN ASSOCIATION) 

and THE FARMERS' & MECHANICS' ) 

SAVINGS & LOAN ASSOCIATION, ) 

Defendants-Appellants, 

& 

FEDERAL SAVINGS & LOAN INSURANCE 

CORPORATION, as receiver for FIRST 

FEDERAL OF MARYLAND, FSA 

fka 

First Federal Savings & Loan 

Association, 

Defendant. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

NO. 88-2069 

(D.C. No. 85-M-2347) 

(D. Colo.) 

ORDER AND JUDGMENT* 

Before LOGAN, SEYMOUR and BALDOCK, Circuit Judges.** 

* This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit, except 

for purposes of establishing the doctrines of the law of the case, 

res judicata, or collateral estoppel. 10th Cir. R. 36.3. 

** After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a): 10th Cir. R. 34.1.9. This cause therefore is ordered 

submitted without oral argument. 

Appellate Case: 88-2069 Document: 01019974465 Date Filed: 08/09/1989 Page: 1 
Plaintiff-appellee First Federal Savings Bank (First Federal) 

pursued this Colorado diversity action in the district court 

against defendants-appellants Spencer Savings & Loan Association 

(Spencer) and Farmers' and Mechanics' Savings & Loan Association 

(Farmers), and defendant First Federal of Maryland, FSA acting 

through the Federal Savings & Loan Insurance Corporation (FSLIC), 

alleging breach of a ''Buy-Sell Agreement." At the conclusion of a 

bench trial, but prior to closing arguments and the court's final 

ruling, the district judge made the following comments: 

Well, I strongly suggest that while the lawyers are 

preparing their arguments that some of the principals 

talk about settling this matter because, as counsel here 

are aware, I'm not a settlement judge. It is not 

something that I urge because I am sort of old 

fashioned. You come in and fight it out. Somebody wins 

and somebody loses, and somebody appeals, but it would 

seem to me from following this case to the extent that I 

have at the moment, and looking at these briefs that we 

have some rather unusual problems, some rather unusual 

questions. 

It is also pretty clear to me that the defendants are 

going to owe something, but I don't know how much, and 

it would seem to me, given the nature of your 

businesses, and the fact that you don't want to have 

these things cluttering up your ballot [sic] sheet one 

way or the other as to--since you are all regulated 

institutions. 

It is to great interest to have this problem resolved 

once and for all, recognizing that my resolution of it 

will certainly be subject to review by the Court of 

Appeals in this circuit, and recognizing the amount of 

time that it takes to get through an appeal, and I am 

not faulting the judges of the Court of Appeals, they 

are over-burdened just like the trial judges are in our 

Courts. Today you are talking probably another two to 

three years before final resolution of this war. It 

isn't a war--dispute, so I would think that it would be 

to the great interest of every body to talk about a 

negotiated settlement. 

You can do what you want to. I'll do my homework 

anyway, so you submit the deposition transcript, and 

I'll meet again here in the courtroom with counsel to 

hear closing arguments at 2:00 tomorrow afternoon. 

-2-

Appellate Case: 88-2069 Document: 01019974465 Date Filed: 08/09/1989 Page: 2 
Subsequently, Spencer and Farmers each paid First Federal $3.5 

million in settlement of the case. FSLIC and First Federal, 

however, did not reach a settlement. Four months later, the 

district court ruled in favor of FSLIC. Five months after that 

ruling, Spencer and Farmers moved the district court pursuant to 

Fed. R. Civ. P. 60(b)(l) to set aside the settlement agreement on 

the ground that the court had unfairly induced a settlement which 

was based upon a mutual mistake of fact. Spencer and Farmers now 

appeal the denial of their Rule 60(b) motion. Our jurisdiction to 

review this controversy arises under 28 u.s.c. § 1291. 

Under Rule 60(b)(l), a court may relieve a party from a final 

judgment, order or proceeding for mistake. The district court is 

vested with a "great deal'' of discretion in determining whether to 

grant or deny the motion. Its determination will not be 

overturned absent a clear showing of an abuse of that discretion. 

Otoe County Nat'l Bank v. W & P Trucking, Inc., 754 F.2d 881, 883 

(10th Cir. 1985). Accord Republic Resource Corp. v. ISI Petroleum 

West Caddo Drilling Program 1981, 836 F.2d 462, 465 (10th Cir. 

1987). Although we do not condone the district judge's remark 

that "[i]t is also pretty clear to me that the defendants are 

going to owe something," taken in the context of his surrounding 

remarks, we are unable to find an abuse of discretion, and 

consequently affirm. 

As a general rule, where a mutual mistake materially effects 

the execution of a contract, the contract is voidable by the party 

adversely affected by the mistake. Restatement (Second) of 

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Appellate Case: 88-2069 Document: 01019974465 Date Filed: 08/09/1989 Page: 3 
Contracts§ 152 (1981). But a party bears the risk of mistake if 

"he is aware at the time the contract is made that he has only 

limited knowledge with respect to the facts to which the mistake 

relates but treats his limited knowledge as sufficient." Id. 

§ 154. Moreover, mutual mistake of material fact must be clearly 

established on the record. Highway Prod, Inc. v. United States, 

530 F.2d 911, 923 (Ct. Cl. 1976). 

In this instance, the district judge did indicate that a 

ruling in favor of First Federal seemed probable, but also stated 

that he had homework yet to do on the case and the parties should 

do what they felt appropriate. We cannot fault the judge for 

encouraging settlement. Clearly, the judge expressed no certainly 

as to his final decision. Otherwise, the FSLIC most likely would 

have settled as well. Spencer and Farmers cannot now be heard to 

cry foul over a settlement purportedly arising as a result of a 

trial judge's tentative instinct while time still remained on the 

clock. 

AFFIRMED. 

-4-

Entered for the Court 

Bobby R. Baldock 

Circuit Judge 

Appellate Case: 88-2069 Document: 01019974465 Date Filed: 08/09/1989 Page: 4