Court Opinion

ID: 3175271
Source: CourtListenerOpinion
Date Created: 2016-02-05 21:01:48.697316+00
Date Added: 2024-06-11T14:49:45.884532
License: Public Domain

NOT PRECEDENTIAL

                 UNITED STATES COURT OF APPEALS
                      FOR THE THIRD CIRCUIT
                           _____________

                               No. 14-4411
                              _____________

          PAUL BRYAN; BONNIE BRYAN, Husband and Wife,
            individually and as Parents and Natural Guardians
               on behalf of their minor child, KB, and KB;
                           KENNETH BRYAN

                                     v.

          ERIE COUNTY OFFICE OF CHILDREN AND YOUTH;
         PAUL CANCILLA, individually and as an employee of Erie
        County Office of Children and Youth; CARMEN E. MERRIT,
individually and as an employee of Erie County Office of Children and Youth;
 RENIE SKALKO, individually and as an employee of Erie County Office of
  Children and Youth; CINDY BAXTER, individually and as an employee of
   Erie County Office of Children and Youth; CINDY LEWIS, individually
       and as an employee of Erie County Office of Children and Youth;
   BRIGITTE SULLIVAN, individually and as an employee of Erie County
   Office of Children and Youth; JOHN PETULLA, individually and as an
   employee of Erie County Office of Children and Youth DPW Bureau of
                     County Children and Youth Programs

                                         Kenneth Bryan,
                                                Appellant
                              _____________

                Appeal from the United States District Court
                  for the Western District of Pennsylvania
                            (No. 1-03-cv-00259)
                District Judge: Honorable J. Frederick Motz

              Submitted Pursuant to Third Circuit LAR 34.1(a)
                             January 22, 2016
                              ____________

       Before: FISHER, CHAGARES, and BARRY, Circuit Judges.
                                  (Filed: February 5, 2016)
                                       ____________

                                         OPINION*
                                       ____________

CHAGARES, Circuit Judge.

       This appeal concerns an attempt by the plaintiff to avoid what turned out to be an

ill-advised “high-low” settlement agreement (the “Agreement”). Kenneth Bryan brought

suit against Erie County Office of Children and Youth and several of its employees under

42 U.S.C. § 1983 for violation of his constitutional due process rights. During trial,

Bryan and the defendants entered into the Agreement, which capped Bryan’s recovery at

$2,700,000 but guaranteed him a minimum of $900,000, and entitled Bryan to the

amount of any jury verdict within that range. The jury returned a verdict for $8,654,769,

well over the Agreement’s ceiling.

       Bryan now appeals the District Court’s enforcement of the Agreement, on the

ground that the defendants allegedly publicly disclosed its terms several weeks after the

verdict and thus materially breached. Because the Agreement did not require

confidentiality after the verdict, we will affirm.

                                              I.

       We write solely for the parties’ benefit and recite only the facts essential to our

disposition. Bryan brought suit against Erie County Office of Children and Youth and

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.

                                              2
several of its employees after they were involved in placing in his foster parents’ home a

foster brother who sexually abused Bryan. Only claims against Erie County employees

Cindy Baxter and Renie Skalko proceeded to trial; the claims against Erie County Office

of Children and Youth and other employees were resolved on summary judgment.

During trial, Bryan and all the original defendants entered into the “high-low” settlement

Agreement that capped Bryan’s recovery at $2,700,000 but guaranteed him a minimum

of $900,000, regardless of the jury’s verdict, and entitled Bryan to the amount of any

verdict within that range. The Agreement provided that it would be confidential “‘subject

to the duties, if any, of the [Erie County Office of Children and Youth] and/or its

employees under the Pennsylvania Right to Know Act,’” but also that the parties would

“‘put this Agreement on the record with the court to memorialize the same following

entry of the verdict or court order disposing of the case.’” Defs. Br. 15 (quoting

Agreement ¶¶ 16, 18). The Agreement also declared that

       [i]t is the intention of the parties to settle this matter once and for all within
       the parameters of this Agreement and accordingly, no litigation shall extend
       beyond the jury verdict, molding the verdict to the extent necessary based
       upon the terms of this Agreement, and any other matters necessary to bring
       the trial phase to a conclusion.

Defs. Br. 14-15 (quoting Agreement ¶ 7). The parties agreed not to file any Federal Rule

50 motions or to appeal.

       The jury returned a verdict of $8,654,769 on June 1, 2012. The parties and the

judge then had the following discussion in chambers:

       THE COURT: All right, we’re on the record.

                                               3
DEFENSE COUNSEL: I’d like to make an oral motion to mold the verdict
consistent with our agreement to $2.7 million, consistent with the terms set
forth therein.

THE COURT: I think the best way to handle it is to file a motion, style it
motion to mold — which incorporates all the material terms of your
agreement that you both signed. Just file a written motion to mold and I’ll
go ahead and sign it.

DEFENSE COUNSEL: Without the agreement attached to it?

THE COURT: It seems to me — was the agreement actually typed out?

DEFENSE COUNSEL: Yes.

THE COURT: I would include it.

DEFENSE COUNSEL: Fine, I’ll file it under seal.

THE COURT: You can’t file it under seal.

BRYAN COUNSEL: I’m bound by the contract. You have it on record. If
you file a motion to mold it’s going to be public anyway. I’m willing to do
whatever you want to do. You can decide later.

THE COURT: Put it this way, without an explanation on record why I am
molding the verdict, I’m not just going to go ahead and reduce the verdict
by that much. You should do one of two things. I don’t care what you do.
But either set forth within your motion the material terms of your high/low
agreement, which I think it probably the easier way to do it, if there is not
any dispute —

BRYAN COUNSEL: It’s not disputed. I’m bound by contract. It’s a
whole separate contractual matter, you don’t even need to do a motion to
mold. I’ve already entered into the contract, whatever you want to do.

THE COURT: He is obviously going to honor the terms. What is the high
of the agreement?

DEFENSE COUNSEL: $2.7 million.

THE COURT: Just file a motion that makes it clear why you are molding,
filing a motion to mold the verdict.

BRYAN COUNSEL: You can if you want to, but that’s going to make it
public.
                                     4
       THE COURT: Otherwise — let me put it this way. It’s got to be clear why
       the verdict is being reduced.

       DEFENSE COUNSEL: Why don’t we do this. We have an agreement for
       a high/low that we previously signed, we’re going to issue checks for $2.7
       million to you. If you accept that, once we’ve issued the checks, we will
       file a stipulation of dismissal.

       BRYAN COUNSEL: That’s fine.

       THE COURT: All right, we’re done.

Appendix (“App.”) 631-33. That same day, June 1, the District Court entered judgment

on the $8,654,769 verdict.

       On June 20, the defendants sent Bryan $2,700,000, the amount owed under the

Agreement. Bryan informed the defendants that he was “able to accept the checks as

only partial payment on the judgment” because, as Bryan alleged, the defendants had

breached the Agreement’s confidentiality provision by disclosing its terms to its public

auditors. App. 140. Bryan refused to file a stipulation of dismissal.

       Baxter and Skalko then filed a motion, which did not include the Agreement’s

terms, asking the District Court to mark the judgment satisfied pursuant to Federal Rule

60. Baxter and Skalko also moved for leave to file under seal a motion pursuant to

Federal Rule 59, which Baxter and Skalko styled as a “Motion to Alter or Amend

Judgment Under Rule 59(e), or in the Alternative, Motion for New Trial Under Rule

59(a)(1)(A).” App. 127-39.

       In a conference regarding these motions, the District Court denied the motion to

file under seal and “direct[ed] that everything [be] filed of record . . . [b]ecause this is a

public entity . . . [a]nd the agreement they entered into and how they may be required or

                                               5
not be required to pay . . . is a matter in the interest of the public.” App. 643. The

District Court continued, “[t]his high/low agreement . . . notwithstanding the

confidentiality between the two of you, in all likelihood is a matter of public record . . . in

one form or fashion.” App. 646. “[S]ince a dispute has grown up around the terms and

conditions of [the] agreement . . . that dispute is properly put on the record,” concluded

the District Court. App. 646-47. Baxter and Skalko responded by publicly filing their

Rule 59 motion and attaching the Agreement.

       On July 3, Bryan filed a motion to pursue discovery on the asserted breach of the

Agreement’s confidentiality provision. The District Court ultimately held that it lacked

jurisdiction to resolve the dispute over the enforceability of the Agreement.

       Baxter and Skalko appealed. We held that the District Court did have jurisdiction

to decide Skalko and Baxter’s Rule 60 motion for relief from the judgment, and reversed

and remanded. Bryan v. Erie County Office of Children & Youth, 752 F.3d 316 (3d Cir.

2014). And we left for the District Court to decide whether Baxter and Skalko breached

the Agreement. Id. at 323.

       On remand, the District Court granted Baxter and Skalko’s Rule 60 motion to

satisfy the judgment, finding the Agreement enforceable. The District Court reasoned

that the Agreement’s provision for placing the Agreement “on the record with the court”

after the verdict “clear[ly] and unambiguous[ly]” allowed for public disclosure. App. 3.

That conclusion was in line with “sound public policy.” App. 3. Accordingly, Baxter

and Skalko did not breach by attaching the Agreement to their publicly filed Rule 59

motion. The District Court also determined that Bryan’s refusal to accept the $2,700,000

                                               6
payment as satisfying the judgment materially breached the Agreement and Baxter and

Skalko were then free to file their post-trial motions and appeal.

       Bryan timely appealed.

                                             II.

       The District Court had jurisdiction under 28 U.S.C. § 1331. We have appellate

jurisdiction under 28 U.S.C. § 1291. “The construction of an unambiguous contract is a

matter of law for the court and therefore is subject to plenary review.” U & W Indus.

Supply, Inc. v. Martin Marietta Alumina, Inc., 34 F.3d 180, 185 (3d Cir. 1994).

                                            III.

       “The fundamental rule in interpreting the meaning of a contract is to ascertain and

give effect to the intent of the contracting parties.” Murphy v. Duquesne Univ. Of The

Holy Ghost, 777 A.2d 418, 429 (Pa. 2001). The intent of the parties is found by

considering the whole instrument “taken together.” Id. Only where a contract is

ambiguous may extrinsic evidence be examined to determine intent. Id. And “[a]

contract contains an ambiguity if it is reasonably susceptible of different constructions.”

Id. at 430 (quotation marks omitted).

       At issue in this appeal is the operation of the Agreement’s two provisions reading:

(1) “‘[t]his Agreement shall be CONFIDENTIAL subject to the duties, if any, of the [Erie

County Office of Children and Youth] and/or its employees under the Pennsylvania Right

to Know Act’” and (2) “‘[t]he parties herein will put this Agreement on the record with

the court to memorialize the same following entry of the verdict.’” Defs. Br. 15 (quoting

Agreement ¶¶ 16, 18).

                                             7
       We first examine the confidentiality provision by itself. The Commonwealth of

Pennsylvania has made a “policy determination . . . that favors disclosure of public

records over the general policy of encouraging settlement.” Tribune-Review Pub. Co. v.

Westmoreland Cty. Hous. Auth., 833 A.2d 112, 120-21 (Pa. 2003). Specifically,

Pennsylvania’s Right-to-Know Law provides that “a public record . . . shall be accessible

for inspection and duplication” upon a written request. 65 P.S. §§ 67.701, 67.702.

Settlement agreements that involve public entities such as the Erie County Office of

Children and Youth are considered public records. Tribune-Review, 833 A.2d at 121.

Thus, absolute confidentiality provisions in such agreements are unenforceable. Id.

       The parties here acknowledged this public policy in their Agreement and

accordingly included what can only be considered a “partial” confidentiality provision.

The Agreement’s partial confidentiality term explicitly provides that it is subject to the

duties of Erie County Office of Children and Youth and its employees “under the

Pennsylvania Right to Know Act.” In other words, if a written request is made under the

statute for this Agreement, the Agreement must be publicly disclosed. The

confidentiality provision is therefore far from absolute. Likely due to this limited ability

to prevent public disclosure, the parties added a provision prohibiting publication of the

Agreement to the jury.

       It is in this context that we consider the intersection of this partial confidentiality

clause and the parties’ promise to “put this Agreement on the record with the court” after

the verdict. The District Court correctly construed the partial confidentiality provision as

operating only until the jury’s verdict for three reasons.

                                               8
       First, the natural meaning of the requirement that the Agreement be placed “on the

record” is that the Agreement would become part of the public record of the judicial

proceeding. Of course, the word “public” does not appear in that provision — but nor

does any reference to filing the Agreement under seal (the only mechanism by which the

Agreement could be both on the record and nonpublic). However, the parties could have

no control over whether the District Court would allow the Agreement to be filed under

seal. It would make little sense for the parties to create an obligation that they would not

have the power to uphold. Indeed, the District Court ultimately did rule that all filings in

the case would be public given the involvement of the Erie County Office of Children

and Youth. Based on that reality, the only construction to which this language is

“reasonably susceptible,” Murphy, 777 A.2d at 430, is that “on the record” means

publicly available.

       Second, the Agreement’s general term regarding confidentiality is qualified by its

more specific terms regarding that subject. See In re Alloy Mfg. Co. Emp. Trust, 192

A.2d 394, 396 (Pa. 1963). This canon of construction dictates that the partial

confidentiality term, which was never intended nor able to provide absolute secrecy,

operated only until the Agreement was to become publicly available after the jury’s

verdict.

       Third, the parties made clear their “‘intention’” in entering into the Agreement to

“‘settle this matter once and for all’” so that “‘no litigation . . . [would] extend beyond the

jury verdict . . . .’” Defs.’ Br. 14-15 (quoting Agreement ¶ 7). To prolong the

confidentiality obligation beyond the verdict would only increase the possibility of

                                              9
litigation in this case, and not bring the desired finality. See Capek v. Devito, 767 A.2d

1047, 1050 (Pa. 2001) (holding that courts must “give effect to all of the provisions” of a

contract). The District Court’s construction of the Agreement therefore reflected “the

most reasonable, probable, and natural conduct of the parties, bearing in mind the objects

manifestly to be accomplished.” Unit Vending Corp. v. Lacas, 190 A.2d 298, 300 (Pa.

1963).

         Given this contract construction, the asserted public disclosure by the defendants

— weeks after the verdict — was not a breach. In contrast, Bryan did materially breach,

as the District Court found, by refusing to stipulate to dismissal of the case after the

$2,700,000 payment by the defendants. That material breach, in turn, discharged the

defendants of any additional obligations under the Agreement.

                                             IV.

         For the foregoing reasons, we will affirm the judgment of the District Court.

                                              10