Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-01245/USCOURTS-casd-3_10-cv-01245-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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1

 At the March 13, 2012, evidentiary hearing, Defense counsel objected to Plaintiff’s exhibit

I, on the grounds that it is irrelevant. The objection was sustained. Exhibit I, which is a complaint

filled against Defendants in the Middle District of Tennessee, is not relevant to this action. 

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ONDRE SELTZER, an individual,

Plaintiff,

CASE NO. 10CV1245 JLS (BLM)

ORDER DENYING MOTION TO

ENFORCE AGREED

SETTLEMENT AND DISMISS

ACTION

(ECF No. 29)

vs.

HEADS AND TAILS, INC., a California

Corporation; ANTHONY LOIACONO, an

individual; and Does 1 through 10, Inclusive,

Defendant.

Presently before the Court is Defendants Heads and Tails, Inc. (“Heads and Tails”), and

Anthony Loiacono’s (“Loiacono,” and collectively, “Defendants”) motion to enforce agreed

settlement and dismiss action. (Mot. to Enforce, ECF No. 29) Also before the Court are Plaintiff

Ondre Seltzer’s (“Seltzer” or “Plaintiff”) response in opposition, (Resp. in Opp’n, ECF No. 35),

and Defendants’ reply in support, (Reply in Supp., ECF No. 28). Concluding that the motion

could not be granted on the papers, declarations, and exhibits alone, (Order, Feb. 22, 2012, ECF

No. 39), the Court set this matter for an evidentiary hearing, which was held on March 13, 2012. 

After considering the parties’ arguments, the evidence submitted,1

 and the law, the Court DENIES

Defendants’ motion.

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2

 Pin cites to citations to the parties’ exhibits correspond to the page numbers assigned by

CM/ECF. The lettering of Plaintiff’s exhibits corresponds to the order of the exhibits filed with

Plaintiff’s response in opposition, not those provided to the Court during the evidentiary hearing.

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BACKGROUND

Seltzer filed the original complaint in this action on June 10, 2012, asserting claims for

breach of contract, fraud, promise without intent to perform, rescission of contract, declaratory

relief, and permanent injunctive relief. (Compl., ECF No. 1) The dispute arises out of a funding

agreement whereby Seltzer provided Defendants with a $200,000 loan. (Id. ¶ 12)

Defendants answered the complaint on November 4, 2010, (ECF Nos. 15, 16), and the

parties conducted discovery thereafter. Beginning in July or August of 2011, the parties

commenced settlement negotiations. (Mot. to Enforce 3, ECF No. 29); (Resp. in Opp’n 2, ECF

No. 35) Pursuant to these negotiations, several telephone discussions were had and several letters

were exchanged. Permeating these discussions and letters was the suggestion that Defendants

were experiencing “severe financial difficulties,” (Decl. of David P. Beitchman ISO Resp. in

Opp’n (“Beitchman Decl.”) Ex. C, at 13, ECF No. 35-1),2

 and Plaintiff’s consistent request for

verification of Defendants’ financial situation, (id. Exs. A, B, E). 

Eventually, on October 25, 2011, Plaintiff’s counsel sent a letter “confirm[ing] the

settlement agreement reached between the parties,” indicating that “[t]his agreement represents the

essential agreed terms.” (Decl. of Dennis F. Donovan ISO Mot. to Enforce (“Donovan Decl.”) Ex.

2, ECF No. 29 (“Settlement Confirmation letter”)) And, on October 26, 2011, Plaintiff filed a

Notice of Settlement, indicating that “a settlement has been reached . . . with regard to all claims

and issues against defendants.” (Not. of Settlement 1, ECF No. 26) That same day, Magistrate

Judge Major issued an Order confirming settlement and setting deadline to file joint motion for

dismissal. (Order, Oct. 26, 2011, ECF No. 27) The parties failed to file a joint motion for

dismissal by the Court’s deadline, and informed Magistrate Judge Major that there was “a dispute

regarding the allegedly previously agreed upon settlement.” (Order, Dec. 16, 2011, ECF No. 28) 

As a result, Defendants filed the instant motion to enforce agreed settlement and dismiss action on

January 12, 2012. (Mot. to Enforce, ECF No. 29)

//

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LEGAL STANDARD

“It is well settled that a district court has the equitable power to enforce summarily an

agreement to settle a case pending before it.” Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987). 

The Court “may enforce only complete settlement agreements,” however. Id. Thus, “[w]here

material facts concerning the existence or terms of an agreement to settle are in dispute, the parties

must be allowed an evidentiary hearing.” Id.; see also Russell v. Puget Sound Tug & Barge Co.,

737 F.2d 1510, 1511 (9th Cir. 1984) (“Summary enforcement of a settlement agreement ‘is illsuited to situations presenting complex factual issues related either to the formation or

consummation of the [settlement] contract, which only testimonial exploration in a more plenary

proceeding is apt to satisfactorily resolve.’” (alteration in original) (quoting Autera v. Robinson,

419 F.2d 1197, 1200 (D.C. Cir. 1969))). 

“‘The construction and enforcement of settlement agreements are governed by principles of

local law which apply to interpretation of contracts generally.’” United Commercial Ins. Serv.,

Inc. v. Paymaster Corp., 962 F.2d 853, 856 (9th Cir. 1992) (quoting Jeff D. v. Andrus, 899 F.2d

753, 759 (9th Cir. 1989)). Accordingly, the Court applies California law regarding the formation

and interpretation of the parties’ alleged settlement agreement.

ANALYSIS

Here, the parties contest only the existence of any settlement agreement. Defendants

contend that the parties entered into an enforceable settlement agreement as of the October 25,

2011, Settlement Confirmation letter. But Plaintiff argues the parties never entered into a mutual

settlement agreement, and even if they had, any agreement would be unenforceable due to

Defendants’ fraudulent misrepresentations of fact. Because the Court finds that the parties lacked

the requisite intent to be bound by the agreement as set forth in the Settlement Confirmation letter,

it does not reach whether there are any grounds for rescission under California Civil Code section

1689(b)(1). 

As the Court indicated to the parties prior to the start of the evidentiary hearing, the Court

was unable to resolve the factual issue whether the parties intended to be bound as of the date of

the Settlement Confirmation letter, or whether they intended to be bound only upon the execution

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of a final, written and signed instrument, based on the parties’ briefing, affidavits, and exhibits

alone. And yet, Defendants—who, as the moving parties, bore the burden to establish the requisite

intent, see Olam v. Congress Mortg. Co., 68 F. Supp. 2d 1110, 1137 n.39, 1140 (N.D. Cal.

1999)—nevertheless submitted based on only the evidence as set forth in the moving papers.

Defendants contend that the Settlement Confirmation letter, drafted after several months of

negotiations and reciting the “essential agreed terms” of the settlement agreement, constitutes an

enforceable contract under California law. Referring to Stephan v. Maloof, 79 Cal. Rptr. 461,

463–64 (Cal. Ct. App. 1969), Defendants contend that even if the parties intended to execute a

more formal written document, the mere contemplation of further documentation does not render

the October 25 agreement unenforceable. (Mot. to Enforce 5, ECF No. 29) But unlike in Stephan,

where it was “not contended that all of the material conditions and terms were not agreed upon,”

id. at 463, here further negotiations were contemplated before the parties intended to be bound. 

Indeed, as was the case in Callie, 829 F.2d at 890, the Settlement Confirmation letter

indicates that the agreement was contingent upon the execution of a stipulated judgment in the

amount of $100,000. (Donovan Decl. Ex. 2, at 16, ECF No. 29) No such document was ever

drafted. The letter additionally indicates that the agreement would contain bankruptcy protection

provisions. (Id. at 17) No such provisions were ever drafted. And finally, the phrasing of the

Settlement Confirmation letter itself contemplates the execution of a more detailed agreement in

the future: “The settlement agreement shall include all other relevant and necessary terms to be

mutually agreed upon.” (Id.) A later draft of the settlement agreement was indeed circulated,

(See Beitchman Decl. Ex. F), but was never signed. 

Moreover, Plaintiff testified at the evidentiary hearing that the settlement agreement was at

all times contingent upon Defendants’ verification of their apparently dire financial situation. 

Plaintiff asserts that he never intended to enter into a settlement agreement until he was satisfied

that it was his best course of action—in other words, that it would be better to settle for less than

he feels he is owed now, rather than risk receiving nothing later, should Defendants go into

bankruptcy. Despite engaging in extended settlement negotiations, because Plaintiff never

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3

 The sole document provided to Plaintiff regarding Loiacono’s financial status was an October

3, 2011, faxed copy of Loiacono’s April 5, 2011, notice of home foreclosure. (Beitchman Decl. Ex.

D, ECF No. 35-1) Of note, however, by the time this document was faxed to Plaintiff, the notice of

foreclosure had been rescinded, on August 23, 2011. (Id. Ex. G) 

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received reliable documentation of Defendants’ financial difficulties,3 Plaintiff states that he did

not—and indeed would not—commit to any settlement agreement.

On the basis of this evidence, the Court must conclude that the parties did not mutually

intend to be bound as of the October 25 Settlement Confirmation letter, and as such no enforceable

settlement agreement existed. Defendants’ motion is therefore DENIED.

CONCLUSION

For the reasons stated above, Defendants’ motion to enforce agreed settlement and dismiss

action is DENIED. The pretrial dates as set forth in Magistrate Judge Major’s December 16,

2011, Order remain in effect. (ECF No. 28) 

IT IS SO ORDERED.

DATED: March 14, 2012

Honorable Janis L. Sammartino

United States District Judge

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