Opinion ID: 3010828
Heading Depth: 1
Heading Rank: 2

Heading: the tentative agreement

Text: Before we proceed with our analysis of the constitutional issue, we will address the plaintiffs' contention that the district court erred in not permanently enjoining the City from using SODAT's direct observation method of drug testing. We find no such error. On April 15, 1994, the parties filed a Stipulation and Order temporarily enjoining the City from further use of the direct observation method during the pendency of this case. On June 16, the parties participated with the district court in a teleconference, during which the City expressed its willingness to refrain permanently from using the direct observation method. At the end of the teleconference, 7 SODAT's counsel stated that she would draft a stipulation and order to that effect and send it around to the other parties for their signature. Despite this tentative agreement, the plaintiffs and the City of Wilmington were unable to arrive at an accord on the terms of the stipulation. The City therefore refused to sign it. The plaintiffs then filed a motion with the district court for an order permanently enjoining the City and SODAT from further use of the direct observation method of urine collection. The district court denied this motion without opinion on March 31, 1995. The plaintiffs argue that this denial was error, as the City defendants had reneged on their agreement in bad faith. The defendants reply that the oral agreement was only tentative. As a general rule, we encourage attempts to settle disagreements outside the litigative context. A settlement agreement is a contract and is interpreted according to local law. See Pennwalt Corp. v. Plough, Inc., 676 F.2d 77, 79 (3d Cir. 1982). A district court may enter injunctive relief on a party's behalf to enforce a settlement agreement when it determines that one of the parties has failed to perform its obligations. See Read v. Baker, 438 F.Supp. 732, 735 (D. Del. 1977), citing Petty v. General Accident Fire & Life Assurance Co., 365 F.2d 419, 421 (3d Cir. 1966). The power to grant or deny an injunction, however, is firmly within the discretion of the district court. See Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir. 1993). According to the City, the district court did not abuse its discretion by denying the injunction because the parties had produced no more than a tentative agreement, unenforceable by law. We agree. Under Delaware law, the criteria for deciding whether a contract exists is the intention of the parties, evidenced by their objective conduct and manifestations. See Industrial America, Inc. v. Fulton Indus., Inc., 285 A.2d 412, 415 (Del. 1971). The parties' subjective intent is irrelevant. Id. Rather, the court's inquiry is whether a reasonable man would, based upon the `objective manifestation of assent' and all of the surrounding circumstances, conclude that the parties intended to be bound by contract. Leeds v. First Allied 8 Connecticut Corp., 521 A.2d 1095, 1101 (Del.Ch. 1986). As Chancellor Allen has noted, This is not a simple or mechanical test to apply. Negotiations typically proceed over time with agreements on some points being reached along the way towards a completed negotiation. It is when all of the terms that the parties themselves regard as important have been negotiated that a contract is formed. Leeds, 521 A.2d at 1101 (emphasis added). The Chancellor further stated, Until it is reasonable to conclude . . . that all of the points that the parties themselves regard as essential have been expressly or . . . implicitly resolved, the parties have not finished their negotiations and have not formed a contract. Id., at 1102. These basic principles of contract law lead us to conclude that the district court committed no abuse of discretion in denying injunctive relief. Although the parties agreed in principle at the pre-trial teleconference to a stipulation permanently halting the direct observation procedure, they did not discuss the details of the agreement. Thus, we cannot say that all the essential terms were resolved before or during the teleconference. The teleconference represented but one step of a complex negotiation between three parties (the firefighters, the City, and SODAT). The record indicates that the City made a good faith effort to work with the plaintiffs to draft a stipulation acceptable to everyone. Unfortunately, the parties never reached that stage. This failure, however, does not represent a breach of contract. Accordingly, we will affirm the district court's denial of the permanent injunction.