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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

)

METROPOLITAN LIFE INSURANCE )

COMPANY, )

)

Plaintiff, ) 

) No. 12 cv 4839

v. )

) Judge Sharon Johnson Coleman

JENNIFER SMITH, BEVERLY SMITH )

PULLIAM, AUDREY SMITH LEWIS, DIANE )

SMITH ATIVIE, and DAVID ALI SMITH, )

)

Defendants. ) 

Memorandum Opinion and Order

On January 16, 2013, Magistrate Judge Arlander Keys filed his report and 

recommendation concerning plaintiff Metropolitan Life Insurance Company’s (“MetLife”) 

motion to enforce the settlement agreement in this case. Judge Keys recommends granting 

MetLife’s motion to enforce the settlement agreement. 

Pursuant to Federal Rule of Civil Procedure 72(b)(3) “the district judge must determine 

de novo any part of the magistrate judge’s disposition that has been properly objected to. The 

district court may accept, reject, or modify the recommended disposition; receive further 

evidence; or return the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3). 

This Court has reviewed MetLife’s motion to enforce the settlement agreement, the relevant 

briefs, Judge Keys’ report, defendants Jennifer Smith and Beverly Smith Pulliam’s objections 

thereto, MetLife’s memorandum opposing defendants’ objections, and the transcript of the 

settlement agreement entered in the court record, this Court adopts Judge Keys’ report and 

recommendation.

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Judge Keys’ report and recommendation includes an extensive factual background of the 

events at issue and the settlement proceedings over which Judge Keys presided. Therefore, this 

Court adopts as its own the factual events in Judge Keys’ report and recommendation.

Background

At the time of her death on September 2, 2010, Anna Smith, was covered by a Group Life 

Insurance Plan policy administered by MetLife in the amount of $14,000. MetLife filed this 

interpleader action seeking declaratory judgment as to whom the policy proceeds should be paid 

because there are serious questions as to the proper beneficiaries and a disagreement among 

Anna Smith’s five adult children. The dispute here highlights a division among the siblings, 

pitting two sisters (defendants Jennifer Smith and Beverly Smith Pulliam) against sisters Audrey 

Smith Lewis, Diane Smith Ativie and brother David Ali Smith over the disbursement of the 

proceeds of their mother’s insurance policy. 

Judge Keys held two settlement conferences. The first attended only by Jennifer Smith 

and Beverly Smith Pulliam and the second by all defendants. Counsel for MetLife appeared at 

both settlement conferences. On September 10, 2012, at the conclusion of the second settlement 

conference, all parties agreed on the record that MetLife would waive the legal fees which it had 

incurred and that it would deduct the $427.38 in court fees, leaving a total of $13,572.67 for 

distribution. It was also agreed that, Jennifer Smith and Beverly Smith Pulliam would be 

reimbursed from that amount for $4,951.50 for their mother’s burial expenses that they paid. The 

remaining $8,620.67 would be divided equally among the five siblings ($1,724.13 each).

Although not required to do so under ERISA law, MetLife agreed to pay interest on the 

entire $14,000. At the time of the settlement conference, however, MetLife could not provide the 

exact rate of interest, but estimated it to be between 1.5% and 2.5%. In return, all parties agreed 

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that all claims against MetLife arising out of this lawsuit would be extinguished and that the case 

would be dismissed with prejudice. Judge Keys verified the agreement on the record at the end 

of the settlement conference on September 10, 2012. (Dkt. #40, Transcript of Proceedings –

Settlement Statement before Magistrate Judge Keys). Counsel for MetLife drafted a settlement 

agreement and sent it to each of the defendants for their signatures. Only Jennifer Smith and 

Beverly Smith Pulliam have not signed the agreement.

On December 17, 2012, MetLife filed a Motion to Enforce the Settlement Agreement to 

which it attached letters from Jennifer Smith and Beverly Smith Pulliam requesting the precise 

interest rate and the dates of calculation (Group Exhibit A) and a letter dated November 28, 

2012, from MetLife to all the siblings stating that MetLife would “voluntarily pay 0.5% interest 

on the principal sum of $13,572.17 ($14,000 minus $472.83 in court costs), calculated from the 

45th day after death (October 17, 2010) through the date the parties confirmed the settlement of 

this matter in Court” [September 10, 2012]. (Dkt. #27-2, Ex. B). Here, there is a slight variance 

in the record with respect to the calculation of interest. While the November 28, 2012, letter 

states that interest will be calculated on the principal sum of $13,572.17 ($14,000 minus $472.83 

in court costs), the Agreed Order for Dismissal with Prejudice prepared by MetLife, attached as 

Exhibit C to MetLife’s Motion to Enforce the Settlement states that MetLife is authorized to 

disburse $14,000 plus interest, less MetLife’s costs of $472.83. (Dkt. #27-2, Ex. C). The draft 

Agreed Order for Dismissal with Prejudice is consistent with the transcript from the settlement 

conference, when, in response to a direct inquiry from Judge Keys, counsel for MetLife stated 

that interest would be calculated on the whole $14,000. (Dkt. #40, at p. 4:7-11).

On December 21, 2012, Judge Keys held a hearing on the motion to enforce the 

settlement, at which both Jennifer Smith and Beverly Smith Pulliam asserted that the Release 

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drafted by MetLife did not reflect the agreement because the interest rate was different and 

therefore they would not sign the agreement. (Dkt. #41). It appears that Jennifer Smith and 

Beverly Smith Pulliam believe the interest rate should be 9% based on state law.

Discussion

As noted above, this Court reviews objections to a magistrate judge’s determination de

novo. This “de novo determination” does not require a new hearing, but simply means that we 

must give “fresh consideration to those issues to which specific objections have been 

made.” Rajaratnam v. Moyer, 47 F.3d 922, 925 n.8 (7th Cir. 1995)(citation omitted). Jennifer 

Smith and Beverly Smith Pulliam object to Judge Key’s report and recommendation to enforce 

the settlement agreement on the basis that Illinois law should govern the application of interest 

rather than the provisions of ERISA under which the case was brought; that the agreed interest 

rate was between 1.5% and 2.5% and was to be applied to the whole $14,000 before deductions.

A settlement agreement is a contract and therefore state contract law applies for 

determining enforceability. Pohl v. United Airlines, Inc., 213 F.3d 336, 338 (7th Cir. 2000). An 

oral agreement to settle a lawsuit is enforceable under both federal and Illinois law. Taylor v. 

Gordon Flesch Co., Inc., 793 F.2d 858, 862 (7th Cir. 1986). “Under Illinois law an oral 

settlement agreement is enforceable if ‘there is offer, acceptance, and a meeting of the minds as 

to the terms.’” TRT Transp., Inc. v. Aksoy, 506 Fed. Appx. 511, 513 (7th Cir. 2013) (quoting 

Lewis v. Sch. Dist. #70, 648 F.3d 484, 486 (7th Cir. 2011), and citing Kim v. Alvey, Inc., 322 Ill. 

App. 3d 657, 749 N.E.2d 368, 378, 255 Ill. Dec. 267 (Ill. App. Ct. 2001)). “Ambiguity will 

prevent the enforcement of a contract only where the ambiguity affects the material terms of the 

contract.” Pritchett v. Asbestos Claims Mgmt. Corp., 332 Ill. App. 3d 890, 897 (Ill. App. Ct. 

2002).

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Here, the record supports all the elements of a valid oral contract. In fact, there is no 

dispute as to any material terms. On September 10, 2012, Judge Keys memorialized the 

settlement agreement on the record following two settlement conferences. It is clear from the 

transcript that all parties understood that the MetLife policy was for $14,000 and the agreement 

was only for determining distribution. The parties agreed that MetLife would waive its attorneys’ 

fees of $2,604.43 and deduct from the total only its court costs of $427.38. After which, Jennifer 

Smith and Beverly Smith Pulliam would be awarded $4,951.50 to cover the expenses they 

incurred for their mother’s burial. The remaining $8,620.67 was to be divided equally among the 

five siblings ($1,724.13). In exchange for a release of all claims against MetLife arising out of 

this lawsuit and dismissal with prejudice, MetLife agreed to pay interest on the entire $14,000 

despite interest not being required under ERISA law. Equally clear from the transcript of the 

settlement statement was that the precise amount of interest was yet to be determined by 

MetLife, but which MetLife estimated would be between 1.5% and 2.5% interest. Judge Keys 

queried each party at the close of the settlement statement on the record whether this was the 

agreement and each party, including Jennifer Smith and Beverly Smith Pulliam stated that it was 

the agreement.

This Court finds that the precise rate of interest was not a material term. Nothing in the 

record suggests that the agreement was contingent upon the rate of interest. The material terms 

are now and were then that MetLife would deduct its court costs; that Jennifer Smith and Beverly 

Smith Pulliam would receive the burial expenses; that the remainder would be divided equally; 

that interest at MetLife’s current rate would be paid on the total $14,000 and then divided 

equally among the five siblings; and the parties would release all claims and dismiss the case 

with prejudice.

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MetLife’s counsel negotiated the settlement in good faith, including waiving his own fees 

and his client voluntarily paying interest despite not being required to do so. It is clear from the 

record that the range of interest rates that counsel for MetLife stated on the record were only an 

estimate. The parties agreed on the record that the precise interest rate was to be determined by 

MetLife once counsel had an opportunity to confer with his client as to the current rate. A 

contract “‘is sufficiently definite and certain to be enforceable if the court is enabled from the 

terms and provisions thereof *** to ascertain what the parties have agreed to do.’” Academy 

Chicago Publishers, 144 Ill. 2d 24, 29, 578 N.E.2d 981, 983 (Ill. 1991) (quoting Morey v. 

Hoffman, 12 Ill. 2d 125, 131, 145 N.E.2d 644, 647-48 (Ill. 1957)). The fact that the precise rate 

of interest was left open and turned out to be lower than was anticipated does not invalidate an 

otherwise enforceable agreement. A party to a settlement cannot avoid the agreement merely 

because he subsequently believes the settlement is insufficient. Glass v. Rock Island Refining 

Corp., 788 F.2d 450 (7th Cir. 1986).

This Court accepts Judge Keys’ report and recommendation and finds that the parties 

entered into a valid oral agreement to settle. The $14,000 MetLife insurance policy is to be 

disbursed according to the agreement as follows: 

- the interest rate of 0.5% is to be calculated on the whole $14,000 and the interest is to be 

divided equally among the five siblings;

- the interest shall be calculated from 45 days after the insured Anna Smith’s death until the date 

of the settlement on September 10, 2012;

- MetLife is awarded the court costs in the amount of $427.38;

- Jennifer Smith and Beverly Smith Pulliam are awarded $4,951.50;

- the remaining $8,620.67 is to be divided equally among the five siblings;

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- all claims against MetLife arising out of this lawsuit are released and the case is dismissed with 

prejudice.

IT IS SO ORDERED.

Date: September 13, 2013 Entered: _________________________

 United States District Judge

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