Opinion ID: 2977464
Heading Depth: 1
Heading Rank: 3

Heading: Settlement and Reopening

Text: The district court awarded Marck summary judgment and further awarded over a million dollars in damages to Marck. Whether or not the legal reasoning underlying these rulings was correct, however, the district court’s earlier handling of the motion to reopen requires vacating these rulings. The parties agreed, in October 2005, that they had reached a settlement, and they placed various terms of that settlement on the record. See Re/Max Int’l, Inc. v. Realty One, Inc., 271 F.3d 633, 646 (6th Cir. 2001) (“When parties have agreed on the essential terms of a settlement, and all that remains is to memorialize the agreement in writing, the parties are bound by the terms of the oral agreement.”). In November Marck moved to enforce this settlement. In December both sides signed a stipulated injunction that purported to settle the case. In January, rather inexplicably, and without giving Peng time to respond to Marck’s motion, the district court ordered the case reopened but left the stipulated injunction intact. Because we do not ascertain a proper legal basis on which the district court could rest its actions, we vacate and remand. The situation facing the district court in January 2006 can be thought of in different ways. The broad settlement agreement contained various terms, of which the two most important (for present purposes) were that the parties and Ms. Peng would sign a mutual release and that the parties would sign a stipulated injunction. If these two terms were separate parts of the settlement, then the fact that no one signed a separate release would imply that one of the parties had breached the -8- Nos. 07-4180, 07-4251 Marck v. Peng settlement agreement and thus call into question whether the stipulated injunction should continue in force. On the other hand, the stipulated injunction by its terms appears to obviate the need for a separate release. From this, one can infer that the settlement succeeded in that the stipulated injunction resolved all claims between the parties, and the only thing left for the court to do was to enforce the injunction. Marck proposes a novel third interpretation of the record—that the stipulated permanent injunction was not part of the settlement at all, but rather represents a preliminary injunction that the district court would have entered had Peng refused to sign it, and that the stipulated injunction must therefore be given force independent of the settlement. This theory does not warrant much analysis, because Marck has not presented record evidence supporting this interpretation of events, and we will not rely on Marck’s speculations as to what the district court might have done had Marck requested a different form of relief. Marck’s theory of the case, under which it reaps all the benefits of the stipulated injunction but pays no price for it, cannot be correct. Rather, either (1) the parties fully complied with the settlement agreement by virtue of the stipulated permanent injunction, in which case the court should have enforced the settlement as entirely encompassed by the stipulated injunction, or (2) one of the parties breached the settlement agreement, in which case the court should have either enforced the settlement agreement (i.e., by requiring the relevant party to sign the release), or, if the settlement proved to be unenforceable, vacated the stipulated permanent injunction (as part of a now-unenforceable settlement). Below, Peng appeared to believe that the entry of the injunction had completed the settlement -9- Nos. 07-4180, 07-4251 Marck v. Peng agreement—he argued to that effect in his first filing on the issue after Marck moved to reopen the case.1 Indeed, the stipulated injunction appears on its face to have resolved the entire case. The stipulated permanent injunction is a form of consent judgment, and the “interpretation of a consent decree or judgment is a question of contractual interpretation.” Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 372 (6th Cir. 1998) (citation omitted). A consent judgment is treated as a contract formed and interpreted under the law of the state in which it was formed. Id. (citation omitted). The most straightforward reading of the stipulated injunction is that it forecloses further litigation. The injunction states that Marck “filed a verified complaint for permanent injunction and other relief,” and further states that “[t]o effect settlement of the matters alleged in the Verified Complaint without a trial on the merits or any further judicial proceedings, Defendants agree and 1 Adding to the confusion, the precise reason Marck sought the separate release is far from comprehensible. According to Marck, Ms. Peng’s refusal to sign that separate mutual release caused the entire settlement to fail. But Marck does not explain why this term was so important, other than noting that the district court would likely not otherwise have in personam jurisdiction over Ms. Peng. But if Marck cannot otherwise obtain in personam jurisdiction over Ms. Peng, it appears unlikely that she has harmed Marck in such a way that it has any claims against her to surrender, nor has Marck explained what claims it fears that she may have against it. Why her signature should be required on a separate mutual release of claims is thus a mystery, and makes it difficult to see why an entire settlement should fail merely because of its lack. After all, by the terms of the stipulated injunction, she must abide by the injunction so long as she continues as a corporate officer of any of the Peng companies. To the extent that Marck could be harmed by her actions, therefore, the injunction contemplated binding her as well as every other officer of the Peng companies. - 10 - Nos. 07-4180, 07-4251 Marck v. Peng consent to the entry of this Stipulated Final Order for Permanent Injunction.” The injunction does not refer to a separate release of claims as necessary to bar further litigation. The injunction thus may be fairly read as foreclosing the “reopening” of the case as to all matters addressed in the complaint. “The court’s task in interpreting a consent decree is to ascertain the intent of the parties at the time of settlement.” National Ecological Foundation v. Alexander, 496 F.3d 466, 477-78 (6th Cir. 2007) (quotation omitted). However, “the instrument must be construed as it is written,” id. at 478 (quoting United States v. Armour & Co., 402 U.S. 673, 682 (1971)), and “the scope of a consent decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it,” Armour, 402 U.S. at 682. The language of the stipulated injunction, by clearly stating that it settles matters alleged in Marck’s complaint, would thus appear to foreclose further litigation on any issue raised in the complaint. Marck argues that the district court and parties clearly contemplated the execution of a separate release before they signed the injunction. But regardless of the subjective intent of the parties at one point in the proceedings, the language of the injunction controls the interpretation of their contract. See Armour, 402 U.S. at 682. The stipulated injunction neither refers to a separate release nor implies that it constitutes only a portion of a broader settlement agreement. And because Marck prepared the language in question, it is proper to apply the most natural reading of that language against Marck. Under Ohio law, “where there is doubt or ambiguity in the language of a contract it will be construed strictly against the party who prepared it.” McKay Mach. Co. v. Rodman, 228 N.E.2d 304, 307 (Ohio 1967). - 11 - Nos. 07-4180, 07-4251 Marck v. Peng Nevertheless, the intent of the parties has some bearing on the analysis. Those portions of the proceedings that are on the record demonstrate that both Marck and the district court contemplated a separate release shortly before the signing of the injunction. While this understanding may have changed during one of the many off-the-record portions of the proceedings, it appears that Marck and the district court both may have signed a document that did not reflect their true intentions, though Peng’s intent in signing the document is less clear. Moreover, a district court should hesitate to decline to enforce a working settlement agreement. In a recent case in which one party had shown that the other had violated some provisions of a settlement agreement, we reversed the district court’s vacating of the settlement agreement. Ford Motor Co. v. Mustangs Unlimited, Inc., 487 F.3d 465, 470 (6th Cir. 2007). We held that the district court had not found facts sufficient to justify setting aside the settlement, and that such a setting aside normally would require “extraordinary or exceptional circumstances sufficient to warrant Rule 60(b)(6) relief.” Id. A district court should normally seek to enforce a settlement. It is thus not clear why the district court did not merely enforce the stipulated injunction as encompassing the entirety of the essential terms of the settlement agreement. However, while we generally review de novo questions of law regarding the interpretation of consent judgments, we give some deference to a district court’s interpretation of a consent decree where that court was involved in creating the decree. See Sault Ste. Marie, 146 F.3d at 371; see also Brown v. Neeb, 644 F.2d 551, 558 n.12 (6th Cir. 1981). We therefore leave to the district court in the first instance the - 12 - Nos. 07-4180, 07-4251 Marck v. Peng determination whether (1) to enforce the settlement as fully encompassed in the stipulated permanent injunction, or (2) if the additional release is required notwithstanding the stipulated permanent injunction, to require the relevant parties to sign the release. If the release is not obtainable, and the settlement agreement is therefore unenforceable, the case may be reopened pursuant to Rule 60(b), although in doing so the district court must first “expressly determine whether—and, if so, how—[Marck’s] evidence establishes extraordinary or exceptional circumstances sufficient to warrant Rule 60(b)(6) relief.” Ford Motor Co., 487 F.3d at 470. Moreover, the district court cannot conclude that the settlement agreement is unenforceable without vacating the stipulated permanent injunction, because that injunction was entered pursuant to the settlement agreement. We vacate the reopening of the case and all judgments dependent on that reopening. On remand, the district court must, after making appropriate findings of fact and conclusions of law, decide whether the settlement agreement is encompassed in the stipulated permanent injunction or if one of the parties has breached a material term of the settlement agreement. If the court concludes that the stipulated permanent injunction settled the case, the court should proceed to enforce that injunction, but deny all relief based on the underlying claims. On the other hand, if the court finds that the stipulated permanent injunction did not resolve the requirement of an additional release, the court should either require compliance with the settlement agreement (the preferred course) or vacate the injunction. - 13 - Nos. 07-4180, 07-4251 Marck v. Peng