Opinion ID: 2979927
Heading Depth: 2
Heading Rank: 3

Heading: Enforceability of Settlement Agreement

Text: Assuming that the parties reached an oral settlement agreement, the Smiths alternatively argue that the agreement should be modified or set aside on a number of other grounds. 1. Undue Pressure From District Judge The Smiths contend that the agreement is unenforceable because they were subject to undue pressure during the settlement mediation process from the district judge. In support, the Smiths point to two statements allegedly establishing judicial coercion. First, they allege that the district judge told them “that they stood a better chance to get an award of money in a settlement agreement rather than in a jury trial because of the nature of the jury pool.” Appellants’ 1st Br. at 42. Second, they 12 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. claim that the district judge told them “that he [could] not get any more money from the Defendants.” Appellants’ 1st Br. at 42–43. We agree with the Smiths that, “[a]lthough judges should encourage and aid early settlement, . . . they should not attempt to coerce that settlement.” In re NLO, Inc., 5 F.3d 154, 157 (6th Cir. 1993); accord Code of Conduct for United States Judges Cannon 3A(4) (Commentary) (“A judge may encourage and seek to facilitate settlement but should not act in a manner that coerces any party into surrendering the right to have the controversy resolved by the courts.”). As the Seventh Circuit has explained, coercion generally “occurs when a judge threatens to penalize a party that refuses to settle.” Gevas v. Ghosh, 566 F.3d 717, 719 (7th Cir. 2009). The alleged statements in the present case evidence no judicial threat, express or implied, that the Smiths should settle the case or suffer court-imposed repercussions. Nor has our independent review of the record uncovered any conduct resembling coercion. Accordingly, the settlement agreement is not unenforceable on this ground.6 2. Economic Duress Second, the Smiths argue that the settlement agreement is unenforceable because of economic duress. They contend that as a result of defendants’ fraudulent actions, they were put in an economic situation in which they had no choice but agree to the terms of the agreement. As Appellees correctly point out, the Smiths have forfeited any right to have this argument considered 6 At oral argument, counsel for the Smiths argued that the district judge’s coercive statements and actions constituted fraud upon the court. Because this argument was neither raised in the court below nor in the Smiths’ appellate briefs, we decline to consider it in the first instance. See, e.g., Precaj v. Holder, 376 F. App’x 553, 563 (6th Cir. 2010). 13 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. on appeal by not raising it in their opening brief. See, e.g., Golden v. Comm’r, 548 F.3d 487, 493 (6th Cir. 2008) (concluding that argument not raised in opening brief was forfeited). Even assuming that the argument is preserved, it would nevertheless be insufficient to invalidate the agreement. Under Ohio law, “[a] person who claims to have been a victim of economic duress must show that he or she was subjected to a wrongful or unlawful act or threat, and that it deprived the victim of his unfettered will.” Blodgett v. Blodgett, 551 N.E.2d 1249, 1251 (Ohio 1990) (internal quotation marks and alterations omitted). As one Ohio court noted, “courts have rejected the proposition that when one executes a settlement or satisfaction merely because one cannot afford to wait for the outcome of the dispute, the settlement or satisfaction may be subsequently avoided.” Wilkinson v. Cincinnati Ins. Co., No. CA99-10-181, 2000 WL 270044, at  (Ohio Ct. App. Mar. 13, 2000). In the present case, the Smiths cite no evidence that the defendants forced them into settling the dispute rather than continuing to pursue the legal action. As a result, the district court correctly rejected the Smiths’ economic duress argument. 3. Defendants’ Failure to Circulate Drafted Agreement Within Thirty Days The Smiths argue that the settlement agreement is unenforceable because the defendants did not circulate the settlement draft within thirty days, as requested by the district court at the May 1 hearing. We disagree. The oral settlement agreement became binding at the time the parties reached the agreement during the May 1 hearing. There is no indication in the record that the effectiveness of the settlement agreement was contingent on the circulation of a writing within thirty days. The thirty-day period was a request from the district court so that the drafts would be “ready to go” upon termination of the bankruptcy case and before a telephone status conference scheduled for June 5. 14 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. The expectation that the memorialized agreement would be executed within thirty days was dashed by the Smiths’ intervening motion to modify or set aside the agreement. Thus, the defendants’ failure to circulate the proposed draft within thirty days does not excuse the Smiths from the agreement. 4. Statute of Frauds The Smiths argue that the oral settlement agreement is unenforceable because it violates Ohio’s statute of frauds, Ohio Rev. Code § 1335.05, which generally requires transactions involving real estate to be reduced to writing. We decline to consider this issue because the Smiths did not raise it in their opening brief in this Court. See Golden, 548 F.3d at 493. We note, however, that the Smiths’ argument would likely fail because Ohio law generally treats settlement agreements that are read into the record as outside the statute of frauds. See, e.g., Thomas v. Thomas, 449 N.E.2d 478, 484 (Ohio Ct. App. 1982). 5. Conclusion The district court transcript of the May 1 settlement conference establishes that the parties reached a binding oral settlement agreement. The Smiths had the benefit of counsel both during and outside of the settlement discussions. “Where the parties enter into a settlement agreement in the presence of the court, such an agreement constitutes a binding contract. Neither a change of heart nor poor legal advice is a ground to set aside a settlement agreement.” Walther v. Walther, 657 N.E.2d 332, 335 (Ohio Ct. App. 1995) (citation omitted). The district court’s decision on the existence and enforceability of the oral settlement agreement is affirmed. 15 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. II. SMITHS’ MOTION FOR A CHANGE OF VENUE OR RECUSAL The Smiths also challenge the district court’s denial of their motion for a change of venue or recusal. They argue that the district court should have granted their motion for a change of venue pursuant to 28 U.S.C. § 1404(a) on the ground that the jury pool in the Southern District of Ohio is racially prejudiced. They also contend that the trial judge erred by not recusing himself pursuant to 28 U.S.C. § 455, based primarily on his personal involvement as a mediator during the settlement discussions. Defendants argue that the district judge correctly denied both motions. Defendants also contest this Court’s jurisdiction to consider these issues because the Smiths’ notice of appeal does not specifically designate the district court’s denials of the recusal and transfer motions. A. Appellate Jurisdiction This Court has jurisdiction over appeals from “final decisions of the district courts.” 28 U.S.C. § 1291. A district court decision generally is “final” for purposes of Section 1291 if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233 (1945); accord In re Saffady, 524 F.3d 799, 802 (6th Cir. 2008). The parties do not appear to dispute that the district court’s Opinion and Order, along with the accompanying Order setting forth the terms of the binding settlement agreement, collectively constitute a final decision of the district court appealable under 28 U.S.C. § 1291. The Opinion and Order conclusively resolved the litigation by compelling adherence to the terms of the settlement agreement set forth in the incorporated Order. The parties dispute, however, whether the Smiths’ notice of appeal referencing only these two contemporaneously entered orders is sufficient to confer jurisdiction on this Court to consider 16 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. the district court’s earlier denial of the Smiths’ motion for recusal or change of venue.7 Defendants rely primarily on Federal Rule of Appellate Procedure 3(c)(1)(B), which requires a notice of appeal to “designate the judgment, order, or part thereof being appealed.” “It has long been the rule ‘that an appeal of a final judgment draws into question all prior non-final rulings and orders.’” Caudill v. Hollan, 431 F.3d 900, 904 (6th Cir. 2005) (quoting McLaurin v. Fischer, 768 F.2d 98, 101 (6th Cir. 1985)). As this Court succinctly explained in Caudill, “our rule is that we will entertain arguments on all objections and asserted errors prior to the final disposition of a case if a party indicates in its notice of appeal that it appeals either the final judgment or the final order in the case.” 431 F.3d at 906 (emphasis added) (concluding that a notice of appeal designating a final order was sufficient to give the Court jurisdiction to consider non-final ruling leading up to final order); accord Gipson v. Vought Aircraft Indus., Inc., 387 F. App’x 548, 553 (6th Cir. 2010) (unpublished) (same). In the present case, the district court entered an Opinion and Order on July 15 that conclusively resolved the litigation by compelling adherence to the terms of the settlement agreement set forth in the accompanying Order. Although the Smiths’ notice of appeal does not explicitly identify the district court’s earlier non-final entry denying the motion for a change of venue or recusal, the notice of appeal specifically designates the simultaneously entered orders intended to function as the final decision of the district court. Such a notice of appeal is sufficient to bring up 7 The Smiths’ notice of appeal designated, in relevant part, “the Opinion and Order (Sealed Doc. 199), entered July 15, 2008” and the “accompanying Order (Sealed Doc. 200), entered contemporaneously with its Opinion and Order.” JA38. 17 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. all non-final rulings upon which the court’s final decision is predicated. See Caudill, 431 F.3d at 906. As a result, this Court has jurisdiction to consider the propriety of the district court’s decision denying the Smiths’ motion for change of venue or recusal. B. Standard of Review This Court reviews the denial of a motion for a change of venue for abuse of discretion. Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574, 588 (6th Cir. 2007). A district judge’s denial of a motion to recuse also is reviewed for abuse of discretion. Johnson v. Mitchell, 585 F.3d 923, 945 (6th Cir. 2009). C. Motion for Change of Venue The Smiths argue that the district court should have granted their motion for a change of venue pursuant to 28 U.S.C. § 1404(a) because they “do not believe that as African American[s] they can get justice in the Southern District of Ohio.” Appellants’ 1st Br. at 36. Instead, “[t]he Smiths want[] to be in a district of Ohio where the racial mix [i]s fairer,” Appellants’ 3d Br. at 30, in hopes of having a more sympathetic jury, Appellants’ 1st Br. at 36. They specifically suggest the Northern District of Ohio because that district “is more liberal in interpreting minority cases.” Id. Counsel for the defendants conceded at oral argument that the Smiths’ status as plaintiffs did not preclude them from seeking a change of venue pursuant to 28 U.S.C. § 1404(a). As this Court explained in Philip Carey Manufacturing Co. v. Taylor, 286 F.2d 782 (6th Cir. 1961), “[t]he right to a transfer under [28 U.S.C. § 1404(a)] is available to a plaintiff as well as a defendant. A plaintiff is not bound by his choice of forums, if he later discovers that there are good reasons for transfer.” Id. at 784; accord 15 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice 18 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. & Procedure § 3844 (3d ed. 1989) (recognizing the “very substantial authority,” including this Court’s decision in Taylor, “for the proposition that [a] motion . . . may be made by the plaintiff”). Although the Smiths were not precluded from seeking a change in venue, the district court did not abuse its discretion in denying the Smiths’ request. At the time the Smiths filed the request for a change of venue based on the alleged bias of the jury pool, the parties were disputing the existence and enforceability of the settlement agreement before the district judge. Consequently, at that time, there was no allegedly biased jury to avoid. Moreover, an unsubstantiated claim of jury bias, such as the one alleged here, is insufficient to compel a district court to transfer a case. The district court did not abuse its discretion in denying the Smiths’ motion for a change of venue.