Opinion ID: 769259
Heading Depth: 3
Heading Rank: 2

Heading: The district court erred when it ordered TSI to sign the settlement agreement

Text: 33 In this appeal, TSI contends that the district court's order should be set aside because the terms of the agreement are in dispute and because there was no meeting of the minds on the principal issue . . . . Thermoscan, on the other hand, asserts that TSI committed to a settlement agreement on the record in open Court and later insisted on an additional term . . . . For the reasons set forth below, we are of the opinion that the district court clearly erred in siding with Thermoscan on this factual question. 34 This circuit has long recognized the broad, inherent authority and equitable power of a district court to enforce an agreement in settlement of litigation pending before it . . . . Bostick Foundry Co. v. Lindberg, 797 F.2d 280, 282-83 (6th Cir. 1986). Moreover, [a] federal court possesses this power 'even if that agreement has not been reduced to writing.' Brock v. Scheuner Corp., 841 F.2d 151, 154 (6th Cir. 1988) (quoting Bowater N. Am. Corp. v. Murray Mach., Inc., 773 F.2d 71, 77 (6th Cir. 1985)). In Kukla v. National Distillers Products Co., 483 F.2d 619 (6th Cir. 1973), however, this court cautioned as follows: 35 The power of a trial court to enter a judgment enforcing a settlement agreement has its basis in the policy favoring the settlement of disputes and the avoidance of costly and time-consuming litigation. . . . While summary enforcement of a settlement agreement may very well promote the above policy in cases where there exists no substantial dispute as to the entry into, or the terms of, the agreement, summary proceedings may result in inequities when . . . such a dispute does exist. 36 Id. at 621 (citations omitted). Thus, [b]efore enforcing settlement, the district court must conclude that agreement has been reached on all material terms. Brock, 841 F.2d at 154. 37 Here, the district court summarily concluded that [t]he parties . . . entered into a stipulation and agreement in open Court . . . . We believe this finding of fact was clearly erroneous. Notably absent from its order is any discussion of whether the parties agreed as to Thermoscan's secondary identifier obligations. If the district court had engaged in such an analysis, it would have recognized that the source of the disagreement was the districtcourt's own language. The parties' collective conduct following the February 26, 1999 hearing confirms that there was ambiguity in the district court's recitation of the disputed term. 38 As previously noted, the district court set forth the understanding of the parties as follows: [A]ll marketing in the future of the Thermoscan thermometer shall include the name 'Braun' prominently displayed either in the advertising or on the package. And I'm not saying that it has to be equal size, bigger or smaller, but just visible . . . . (Emphasis added.) Both sides indicated in open court that they agreed with the district court's outline of the settlement terms, but their subsequent dispute makes clear that each heard only what it wanted to hear. TSI honed in on the words prominently displayed and naturally expected them to be in the written agreement. Thermoscan, on the other hand, fixated on the words just visible and equally expected them to be the controlling standard. 39 These reasonable differences in interpretation manifested themselves in heated debate during the drafting process, a situation that highlights the disagreement between the parties and the obvious materiality of the disputed term. See United States v. Orr Constr. Co., 560 F.2d 765, 770 (7th Cir. 1977) ([T]he record shows that the parties consistently clashed over the meaning of [a clause in their tentative agreement] during the course of their negotiations following the exchange of proposals, indicating that they never had reached a true agreement.). 40 The basic problem is that, at least as it relates to size, the terms prominently displayed and just visible are inherently incompatible. Yet the district court used both terms in successive sentences. Although either party could have, and perhaps should have, pointed out this inconsistency to the district court, there is no basis to blame one side any more than the other for failing to do so. See Flower City Painting Contractors, Inc. v. Gumina Constr. Co., 591 F.2d 162, 165 (2d Cir. 1979) ([W]e cannot say that either party acted so unreasonably as to justify construing the ambiguity in the contract against it.). 41 We recognize that a trade name can be prominently displayed by means other than size, such as by font, placement, color, or relief. But Thermoscan objected to any language that included the term prominently displayed, despite its explicit mention by the district court as a key provision of the proposed settlement. The end result was simply no objective manifestation of a meeting of the minds on this material term of the settlement. See United Paperworkers Int'l Union v. Champion Int'l Corp., 908 F.2d 1252, 1258 (5th Cir. 1990) (In determining whether there was a meeting of the minds, the parties' objective, rather than subjective, intent governs.); see also Local Motion, Inc. v. Niescher, 105 F.3d 1278, 1280 (9th Cir. 1997) (The presence of an ambiguous material term may indicate that no meeting of the minds occurred when the document was signed.). Because the root source of the ambiguity was the district court's own inconsistent language, we believe that it was an abuse of discretion for the court to impose Thermoscan's version of the settlement upon TSI. 42 C. The question of whether the district court erred when it dismissed TSI's suit with prejudice is rendered moot 43 Because we are remanding this case for further proceedings, the issue of whether the district court erred when it dismissed TSI's claims with prejudice is rendered moot.