Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02558/USCOURTS-caed-2_08-cv-02558-10/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DALE M. WALLIS, D.V.M., JAMES

L. WALLIS, and HYGIEIA

BIOLOGICAL LABORATORIES, INC.,

a California Corporation,

Plaintiffs,

 v.

CENTENNIAL INSURANCE COMPANY,

INC., a New York corporation,

ATLANTIC MUTUAL INSURANCE CO.,

INC., a New York Corporation, 

Defendants. /

AND RELATED COUNTER-CLAIMS AND

THIRD-PARTY COMPLAINT.

NO. CIV. 08-2558 WBS GGH

ORDER RE: MOTION TO ENFORCE

SETTLEMENT AGREEMENT

 /

----oo0oo----

Plaintiffs Dale M. Wallis (“Dr. Wallis”), James L.

Wallis (“Mr. Wallis”), and Hygieia Biological Laboratories, Inc.

(“Hygieia”) brought this action against defendants Centennial

Insurance Company Inc. and Atlantic Mutual Insurance Co. Inc.

(collectively referred to as “Centennial”) alleging breach of

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insurance contract, breach of the implied covenant of good faith

and fair dealing, and breach of fiduciary duty relating to

plaintiffs’ veterinarian professional liability policy

(“Policy”). 

All proceedings unrelated to the Cumis1 fee dispute

have been stayed since the court issued its December 9, 2009

Order granting plaintiff’s motion for a stay. (Docket No. 74.)

On July 20, 2009, the parties signed an untitled, handprinted

document which purported to set forth the terms of a settlement

but contained the provision that “this release will be reduced to

a formal release to be executed by all parties.” The document

went on to state, however, that “this agreement is binding upon

all signators, whether or not the parties execute a formal

agreement.”

On January 20, 2010, the court denied a motion by

plaintiffs to enforce the terms of the July 20, 2009 handwritten

document, as the parties were working on submitting a final

global release. (Docket No. 87.) Since the court issued its

January 20, 2010 Order, the parties have tried and failed to

negotiate a formal settlement and stipulation to dismiss the

pleadings. 

Centennial now moves the court for an order enforcing

the handwritten document and dismissing this action in its

1 San Diego Navy Fed. Credit Union v. Cumis Ins. Soc'y,

Inc., 162 Cal. App. 3d 358 (1984). The court granted defendants’

motion to compel binding arbitration with respect to attorneys’

fees owed Cumis counsel on April 15, 2009. (Docket No. 41.)

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entirety.2 (Docket No. 93.) 

“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). To be enforceable, a settlement must meet two

requirements. First, it must be a completed agreement. Callie,

829 F.2d at 890-91. Second, both parties must have either agreed

to the terms of the settlement or authorized their respective

counsel to settle the dispute. Harrop v. Western Airlines, Inc.,

550 F.2d 1143, 1144-45 (9th Cir. 1977). The July 20, 2009

document meets neither requirement. 

First, the court cannot conclude with any degree of

certainty that the handwritten July 20, 2009 document was

intended to be a completed agreement. The parties clearly

anticipated that it would be reduced to a more formal agreement

at a later date. It could thus be interpreted as more of an

agreement to agree, and the language to the effect that it is

binding on all parties could be construed to mean that the

agreement to agree was binding on all parties. Second, the

parties now dispute what the terms of the agreement were to be. 

Specifically, they do not agree whether the release was intended

to include those claims in this action that the court has sent to

arbitration. 

This court was neither a party to the so-called

settlement agreement nor did this court approve it. The whole

2 Plaintiffs also request the court take judicial

notice of various filings in the underlying state court action. 

(Docket No. 108.) The court will take judicial notice of such

filings. See Fed. R. Evid. 201(b)(2).

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concept of a settlement is that it is a voluntary agreement

between the parties to resolve a lawsuit on mutually acceptable

terms. That concept is defeated when the court imposes terms on

one of the parties which that party did not intend to accept. 

Here, it appears that the parties never had a meeting of the

minds. If they cannot agree on what their purported settlement

covered then they do not have a settlement agreement.

IT IS THEREFORE ORDERED that Centennial’s motion to

enforce the settlement agreement be, and the same hereby is,

DENIED.

DATED: June 24, 2010

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