Opinion ID: 792706
Heading Depth: 2
Heading Rank: 3

Heading: Application of Legal Principles to the Present Case

Text: 24 We find ample evidence to conclude that OSA assented to the Settlement Agreement and intended to be bound by it without first affixing its signature. 25 First, OSA's motive in negotiating the Settlement Agreement was to avoid a trial. Magistrate Judge Smith said in his recommended ruling that to get out from being under the gun of imminent trial, OSA had to settle the case on May 19, 2003 because otherwise the trial would not have been postponed. Instead, trial would likely have begun the next day had OSA informed him that the Settlement Agreement was contingent on further review by OSA principals in Switzerland. Going to trial would not have served OSA's purpose in seeking a settlement. 26 The next Klein factor, the language of the contract, offers some support for OSA's contention that a signing was anticipated. For example, paragraph 6 of the agreement provides that [t]he parties will execute and file the stipulation of dismissal with prejudice . . . immediately upon execution of this Settlement Agreement, (emphasis added); and paragraph 10 provides that [t]his Settlement Agreement cannot be waived, altered, modified, changed, amended, rescinded or terminated except by an instrument signed in writing by an officer of each of the parties hereto, (emphasis added). The former provision may be taken to imply that the Settlement Agreement anticipated a moment of execution, presumably a signing, upon the occurrence of which the lawsuit would be dismissed. With respect to the latter provision, if all future modifications to the agreement require a signature in order to be valid, it is reasonable to infer that the agreement itself might be conditioned on the same formality. While these provisions suggest that a signing was envisioned, they do not establish that the obligations imposed by the contract were contingent upon the signing. 27 Finally, the circumstances under which the Settlement Agreement was executed do not support OSA's assertion that its signature was required. For example, counsel for the parties represented to both judges that the complete agreement had been reduced to writing and the case was settled. Further, the magistrate judge heard testimony from Omega Engineering's counsel — and had direct knowledge based on prior representations from OSA's counsel — that the parties understood the signature of an OSA officer in Switzerland was simply a ministerial act. OSA contends that the history of negotiation between the parties shows that it consistently sought to limit or preclude Omega Engineering's use of the word Omega and the &#937; mark on timers, and thus OSA principals would have needed to sign any agreement that allowed Omega Engineering to use those marks. We do not think the circumstances warrant such an inference. If anything, the circumstances support the conclusion reached by the magistrate judge that OSA's contentions are actually a thinly veiled attempt by OSA's principals to rewrite an agreement to which their authorized representative assented because, upon further review, they are dissatisfied with its terms and believe their representative made a mistake. This conclusion is bolstered by the fact that OSA itself, through counsel, proposed much of the operative language in paragraph 2 that it now contends is unacceptably ambiguous. It is an elementary principle of contract law that a party's subsequent change of heart will not unmake a bargain already made. See Sartor v. Town of Manchester, 312 F.Supp.2d 238, 244 (D.Conn.2004); Restatement (Second) of Contracts § 171 (cmt.a) (1981). 28 In light of the factors considered by the Connecticut Supreme Court in Klein, the facts of this case reveal that nothing remain[ed] to be done to establish the contractual relation between OSA and Omega Engineering. Klein, 166 Conn. at 80, 347 A.2d at 61. We thus find no error, let alone clear error, in the district court's conclusion that OSA, through its authorized representative, assented to the terms of the Settlement Agreement and agreed to be bound without the signatures of OSA principals in Switzerland. Consequently, there was no impediment to the district court's summary enforcement of the Settlement Agreement. See Audubon Parking, 225 Conn. at 811, 626 A.2d at 733; Janus Films, 801 F.2d at 583. II OSA's Other Challenges on Appeal 29 We now turn to OSA's four other arguments, noted earlier, seeking reversal of enforcement of the Settlement Agreement: the alleged ambiguity of paragraph 2 of the Settlement Agreement, Gordon's authority, placing the burden of proof to show invalidity on OSA, and recusal of the magistrate judge. A. Alleged Ambiguity of Paragraph 2 30 OSA argues that paragraph 2 of the Settlement Agreement is ambiguous, and therefore OSA could not have consented to it. We doubt, however, that under Connecticut law one party's allegation that a contract is unclear is enough to render an otherwise valid contract unenforceable. [A]ccording to general principles of contract law, rescission based on a mistaken understanding of the terms of an agreement is available only where the mistake is mutual, or where one party's mistake has been caused by the other party's fraud. Gebbie v. Cadle Co., 49 Conn.App. 265, 276-77, 714 A.2d 678, 684 (1998) (citing Restatement (Second) of Contracts §§ 152, 153). In any event, we think paragraph 2 is unambiguous. 31 Under Connecticut law a contract is unambiguous when its language is clear and conveys a definite and precise intent. United Illuminating Co. v. Wisvest-Conn., LLC., 259 Conn. 665, 670, 791 A.2d 546, 550 (2002). Conversely, a contract is ambiguous when the language is susceptible to more than one reasonable interpretation. Id. at 671, 791 A.2d at 550. In determining whether the language in a contract is ambiguous, the words must be given `their natural and ordinary meaning,' and the fact that the parties interpret a provision differently does not mean the language is per se ambiguous. Id. at 670, 791 A.2d at 550. Moreover, there is a presumption against finding ambiguity where, as here, a contract is of a commercial nature between sophisticated parties. Id. 32 Our de novo review of the terms of the Settlement Agreement persuades us that the language in paragraph 2 is not ambiguous. Paragraph 2 clearly requires Omega Engineering to include a reference to Omega Engineering, Inc., Stamford, Conn. on timing devices, but only if it chooses to use[] the name Omega Engineering or any Omega trademark on the goods themselves (emphasis added). In other words, Omega Engineering may use its Omega trademarks (such as the word Omega or its stylized &#937;) on its timers as long as it also includes a reference to Omega Engineering, Inc., Stamford, Conn. Given the state law presumption against finding ambiguity in a commercial contract of this sort, we do not see how the language in paragraph 2 can reasonably be read the way OSA does: to forbid Omega Engineering from using the word Omega or an Omega trademark on timers and only allow the use of the phrase Omega Engineering, Inc., Stamford, Conn. B. Gordon's Authority to Settle 33 The magistrate judge ordered the appropriate persons with settlement authority to attend the settlement conference. Gordon informed the court that OSA had given him such authority and never communicated any limitation on that authority to Omega Engineering or either judge. Yet, in his testimony at the evidentiary hearing nine months later, Gordon stated that OSA made his authority contingent on his making certain that Omega Engineering would neither register nor use the trademarks Omega and their logo on timing devices of any sort. 34 Regardless of whether Gordon's authority to settle had been secretly limited by OSA, the Settlement Agreement to which he assented is still binding on his employer. Every agent is likely to have secret negotiating limits dictated by the principal, but other parties may safely assume that any agreement the agent agrees to is within his authority unless there is reason to believe he is exceeding it. See Int'l Telemeter Corp. v. Teleprompter Corp., 592 F.2d 49, 55 (2d Cir.1979). No limitation of authority was communicated to any of those involved in the settlement at the relevant time. C. Burden of Proof 35 Under Connecticut law the proponent of a contract must prove the existence of a valid agreement by a preponderance of the evidence. See, e.g., Chem-Tek, Inc. v. Gen. Motors Corp., 816 F.Supp. 123, 131 (D.Conn.1993); Coelho v. Posi-Seal Int'l, Inc., 208 Conn. 106, 112, 544 A.2d 170, 173 (1988) (same for implied contracts). The non-performing party must then show that performance under the contract is excused due to fraud, lack of actual consent, or mutual mistake. Conn. Nat'l Bank v. Cooper, 232 Conn. 405, 413-14, 656 A.2d 215, 218-19 (1995); see Callen v. Penn. R.R. Co., 332 U.S. 625, 630, 68 S.Ct. 296, 92 L.Ed. 242 (1948) (One who attacks a settlement must bear the burden of showing that the contract he has made is tainted with invalidity, either by fraud practiced upon him or by a mutual mistake under which both parties acted.). 36 OSA contends the district court and magistrate judge simply assumed the Settlement Agreement was binding and moved directly to placing the burden on appellant without having made any findings as to the existence of the contract. On the contrary, the magistrate judge's recommended ruling — which the district court adopted — clearly finds, on the basis of testimony and evidence presented to the magistrate judge, that a binding agreement existed between the parties. Only upon establishing this factual predicate did the magistrate judge shift the burden to OSA to prove fraud, lack of actual consent, or mutual mistake. Of course, no proof of fraud or mistake was proffered. D. OSA's Motion to Recuse the Magistrate Judge 37 Finally, OSA asserts that the magistrate judge's personal knowledge of the facts surrounding the settlement conference required him to recuse himself from considering Omega Engineering's subsequent motion to enforce the Settlement Agreement. OSA relies on 28 U.S.C. § 455(b)(1) (2000), which states that a judge or magistrate must recuse himself [w]here he has . . . personal knowledge of disputed evidentiary facts concerning the proceeding. 38 We review a judge's refusal to recuse himself for abuse of discretion, United States v. Yousef, 327 F.3d 56, 169 (2d Cir.2003), considering whether a reasonable person, knowing all the facts, [would] conclude that the trial judge's impartiality could reasonably be questioned. United States v. Lovaglia, 954 F.2d 811, 815 (2d Cir.1992); Apple v. Jewish Hosp. & Med. Ctr., 829 F.2d 326, 333 (2d Cir.1987) (same). Knowledge gained from the judge's discharge of his judicial function is not a ground for disqualification under 28 U.S.C. § 455(b)(1). Katsaros v. Cody, 744 F.2d 270, 283 (2d Cir.1984). 39 Here, the magistrate judge's knowledge of the Settlement Agreement arose solely from his judicial duty to oversee the settlement conference. He was not involved in the actual negotiations, but simply observed them and provided facilities to support the settlement. Since his knowledge was not extrajudicial, it was not an abuse of his discretion to decline to recuse himself. 40 Moreover, recusal motions must be brought `at the earliest possible moment after obtaining knowledge of facts demonstrating the basis for such a claim.' Gil Enters., Inc. v. Delvy, 79 F.3d 241, 247 (2d Cir.1996) ( quoting Apple, 829 F.2d at 333). We look to four factors in determining whether a motion for recusal is untimely: (1) whether the party seeking recusal has participated in trial or pre-trial proceedings; (2) whether granting the motion would waste judicial resources; (3) whether judgment preceded the motion; and (4) whether the party seeking recusal can show good cause for delay. Taylor v. Vermont Dep't of Ed., 313 F.3d 768, 794-95 (2d Cir.2002). 41 Judge Covello referred Omega Engineering's motion to enforce the Settlement Agreement to the magistrate judge on July 15, 2003, but OSA waited until the middle of the evidentiary hearing on February 18, 2004 — seven months later — to move for recusal. This delay was excessive. See, e.g., United States v. Durrani, 835 F.2d 410, 427 (2d Cir.1987) (finding a delay of four months untimely); Apple, 829 F.2d at 334 (finding a delay of two months untimely). OSA participated in all stages of the litigation and had all information necessary to move for recusal on July 15, 2003. It gave no indication of any good cause for its delay, and for Magistrate Judge Smith to have recused himself at that late date would have resulted in a considerable waste of judicial resources. OSA's recusal motion was therefore untimely. Its remaining arguments with respect to recusal are either waived because they were not raised when it moved for recusal or else are without merit.