Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-04183/USCOURTS-cand-5_05-cv-04183-2/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:201 Fair Labor Standards Act

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United States District Court

For the Northern District of California

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ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT—No. C-05-04183 RMW

SPT

United States District Court

For the Northern District of California

E-FILED on 3/6/07

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MARIA SANGERMAN, TERESA ORDUNO,

RICARDO ROJAS & ROSA DELGADO,

Plaintiffs,

v.

THERIAULT ENTERPRISES INC., LEO

THERIAULT & DOES 1-10,

Defendants.

No. C-05-04183 RMW

ORDER GRANTING MOTION TO

ENFORCE SETTLEMENT AGREEMENT

[Re Docket No. 24]

Plaintiffs Maria Sangerman, Teresa Orduno, Ricardo Rojas, and Rosa Delgado ("plaintiffs")

move for the court to enforce a settlement agreement. Plaintiffs also move for monetary sanctionsa

against defendants pursuant to 28 U.S.C. § 1297 on the basis that defendants' conduct has

unnecessarily and vexatiously multiplied the proceedings in this case. Defendants Theriault

Enterprises Inc. and Leo Theriault ("defendants") filed a notice of non-opposition, and further

indicated that they intend for this matter to be submitted without oral argument by defendants. The

court has read the papers submitted by the parties and considered the arguments of counsel. For the

reasons set forth below, the court GRANTS plaintiffs' motion to enforce the settlement agreement

between the parties for settlement of this action in the amount of $65,000. 

Case 5:05-cv-04183-RMW Document 32 Filed 03/06/07 Page 1 of 6
United States District Court

For the Northern District of California

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ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT—No. C-05-04183 RMW

SPT 2

I. BACKGROUND

Defendants are owners of a Wienerschnitzel restaurant in Salinas, California. Decl. of Adam

Wang Supp. Pls.' Mot. Enforce ("Wang Decl.") ¶ 2. In October 2005 plaintiffs sued defendants,

alleging that defendants, as their former employer, failed to pay overtime wages as required by the

Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq., and California labor laws. Id. ¶ 3. On

September 15, 2006 the parties participated in mediation, which was unsuccessful. Plaintiffs

indicate that they were amenable to a settlement amount of $65,000 as early as the mediation

session. See id. ¶ 4. Thereafter, negotiations between the parties continued. On December 5, 2006

counsel for defendants telephoned counsel for plaintiffs, stating that (1) the contemplated sale of the

Wienerschnitzel restaurant had failed and (2) defendants agree to settle the case for $65,000 with

20% of the total settlement paid twenty days following execution of the settlement agreement and

the remaining amount paid by a loan defendants would secure. Id. ¶ 6. 

On December 11, 2006 plaintiffs' counsel confirmed, by e-mail, the terms orally discussed. 

The e-mail stated that defendants agreed to pay a total of $65,000 in settlement of the action with the

first payment of 20% to be paid in twenty days. Id. ¶ 7; Ex. 1. The e-mail further clarified (1) the

remaining $45,000 should be paid within a reasonable time to be agreed to by plaintiffs, and (2) both

defendants shall sign the agreement and be liable under the agreement. Id. Counsel for defendants

replied on December 12, 2006 stating: "Got the message. Will draft the settlement agreement as

agreed. However, the first payment was to be $20,000. I believe that is all the [sic] he can get his

hands on until he gets approval for a loan for the remainder of the agreed sum." Id. ¶ 8; Ex. 2. 

On December 21, 2006 counsel for defendants suggested that plaintiffs' counsel could draft

the settlement agreement if he chose. Id. at Ex. 3. That same day counsel for plaintiffs forwarded a

draft settlement agreement for defendants' review. Id. The draft agreement indicated (1) the

defendants shall pay $65,000 to settle the entire case, (2) $20,000 shall be paid twenty days from

execution of the agreement, and (3) the remaining $45,000 shall be paid thirty days thereafter. Id. at

Ex. 4. Later that day, counsel for defendants responded via e-mail indicating some changes to the

draft agreement: 

Theriault needs at least 30 days to pay the $20,000. Also, since he is seeking some

refinancing in order to pay the amount of the agreement, I have provided for the

Case 5:05-cv-04183-RMW Document 32 Filed 03/06/07 Page 2 of 6
United States District Court

For the Northern District of California

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 Plaintiffs did not cite any California case law and rely on a Washington district court case in

support of their substantive argument that a binding agreement exists. 

ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT—No. C-05-04183 RMW

SPT 3

second payment to be received within 45 days after the first payment. That should

allow him sufficient time to get a loan. It will be difficult because of the bankruptcy

and poor credit rating. Let me know if this agreement works. If so, I will forward a

copy to Mr. Theriault for his signature.

Id. ¶ 10; Exs. 5-6. 

Counsel for plaintiffs responded that the agreement "looks ok, except the allocation of the

first payment of $20,000 among the plaintiffs. Let me check with them, and get back to you." Id. at

Ex. 7. On December 26, 2006 plaintiffs executed the settlement agreement as revised by counsel for

defendants. Id. ¶ 12; Ex. 8. On December 28, 2006 counsel for plaintiffs e-mailed the executed

settlement agreement to counsel for defendants for defendants' signature. Id. ¶ 13; Ex. 9. Counsel

also indicates that he called counsel for defendants who confirmed that her clients would execute the

settlement agreement and return it that same day. Id. ¶ 14.

On January 2, 2007 counsel for defendants e-mailed plaintiffs' counsel and indicated that her

clients have not signed the agreement because they had not been able to obtain a loan as

contemplated. Defendants sought to revise the payment terms of the second payment under the

settlement agreement to allow them to make monthly payments over approximately two years. Id. at

Ex. 10. Counsel for defendants confirmed that defendants would be able to make the $20,000

payment within thirty days. Id. 

Plaintiffs now move to enforce the terms of the settlement agreement as memorialized in the

written agreement signed by plaintiffs even though defendants never executed that agreement. As

noted above, defendants filed a notice of non-opposition.

II. ANALYSIS

A district court has inherent power to enforce an agreement in settlement of litigation

pending before it. See In re Suchy, 786 F.2d 900, 903-04 (9th Cir. 1985).

A. Existence of Settlement Agreement

As indicated by the terms of the agreement, California substantive law governs the

interpretation of the settlement agreement.1

 Settlement agreements are merely one type of contract

and should be governed by the laws governing contracts in general." Nicholson v. Barab, 233 Cal.

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ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT—No. C-05-04183 RMW

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App. 3d 1671, 1683 (1991). In California, "[a]n oral agreement of settlement . . . need not be in

writing" if it does not fall within the statute of frauds. People ex rel. Dept. Pub. Wks. v. Douglas, 15

Cal. App. 3d 814, 820 (1971). Further, "settlements are highly favored because they diminish the

expense and persistency of litigation." Hastings v. Matlock, 171 Cal. App. 3d 826, 837 (1985)

(internal quotation marks and citations omitted).

In California, an oral agreement may give rise to a binding oral contract:

Where parties reach an oral agreement with the expectation that a written agreement

will follow, two possibilities exist: Negotiations can result in a binding oral contract

when all of the terms are definitely understood, even though the parties intend to later

execute a formal writing. Alternatively, where the parties understood that the

proposed agreement is not complete until reduced to formal writing and signed, no

binding contract results until this is done. 

Khajavi v. Feather River Anesthesia Medical Group, 84 Cal. App. 4th 32, 62 (2000); see also

Banner Entertainment, Inc. v. Superior Court, 62 Cal. App. 4th 348, 358 (1998) ("[I]f the respective

parties orally agreed upon all of the terms and conditions of a proposed written agreement with the

mutual intention that the oral agreement should thereupon become binding, the mere fact that a

formal written agreement to the same effect has not yet been signed does not alter the binding

validity of the oral agreement."). As set forth in Kreling v. Walsh, 77 Cal. App. 2d 821, 834-35

(1947), the test of whether there is an enforceable oral agreement is:

did the minds of the parties meet; that a proposal for a contract was made by one

party and accepted by another; that the parties definitely understood and agreed upon

the terms of the contract; and, finally, that as a part of the mutual understanding it

was agreed that a written contract embodying the terms agreed upon should be

prepared and executed by the respective parties. 

"Under such circumstances, neither party is at liberty to refuse to perform." Id. 

Here, there is no evidence that the proposed written settlement agreement would only be

binding when signed by the parties; thus, the fact that defendants have not signed the written 

settlement agreement does not bar enforcement of the orally agreed-upon terms contained in the

contract. See Banner Entertainment, 62 Cal. App. 4th at 358. Rather, the communications between

the parties indicate that defendants and plaintiffs agreed that the entire case would be settled in

exchange for defendants paying plaintiffs $65,000. Therefore, the court finds there to be an

agreement to settle this action for $65,000. 

However, plaintiffs do not address what the timing of payments would be if the court were to

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ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT—No. C-05-04183 RMW

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enforce the settlement agreement. It appears the parties had agreed that the timing of payments

would be based on the date the written agreement is executed by the parties. Here, there is no

executed written agreement. According to the writing between the parties which, although not

executed by defendants may be evidence of the final orally agreed upon terms, defendants are to pay

$20,000 within thirty days of the execution of the agreement and $45,000 forty-five days thereafter. 

See Khajavi, 84 Cal. App. 4th at 62 ("The terms of a subsequent writing may evidence the terms of

the oral agreement but cannot enlarge them."). Plaintiffs executed the written agreement and

forwarded it to defendants on December 28, 2006. Plaintiffs indicate that pursuant to a telephone

conversation between counsel for the parties, defendants were to sign and return the executed

agreement the same day. Thus, it can be inferred that the parties intended that the first payment be

made thirty days from December 28, 2006. Plaintiffs do not articulate such an argument here and

merely request the court to "enter a judgment in favor of plaintiffs in the amount of $65,000." Pls.'

Mot. Enforce at 5:6. In any event, the $65,000 should have been paid by now and defendants have

filed a non-opposition to the motion to enforce. 

B. Sanctions 

Plaintiffs also move for monetary sanctions against defendants "under 28 U.S.C. § 1297." 

However, no such code section exists. To the extent plaintiffs seek to impose sanctions against

defendants' counsel personally pursuant to 28 U.S.C. § 1927, plaintiffs provide no showing that

defense counsel acted unreasonably or vexatiously. In fact, plaintiffs provide no argument

whatsoever in support of their request for sanctions. The court therefore denies plaintiffs' request for

sanctions. 

III. ORDER

For the foregoing reasons, the court GRANTS plaintiffs' motion to enforce the settlement

agreement between the parties for settlement of this action in the amount of $65,000. Judgment will

be entered in favor of plaintiffs and against defendants in the amount of $65,000.

DATED: 3/5/07

RONALD M. WHYTE

United States District Judge

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For the Northern District of California

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ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT—No. C-05-04183 RMW

SPT 6

Notice of this document has been electronically sent to:

Counsel for Plaintiffs:

Adam Wang waqw@sbcglobal.net 

Counsel for Defendants:

Robin Kubicek robinkubicek@sbcglobal.net 

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 3/6/07 SPT

Chambers of Judge Whyte

Case 5:05-cv-04183-RMW Document 32 Filed 03/06/07 Page 6 of 6