Court Opinion

ID: 204126
Source: CourtListenerOpinion
Date Created: 2011-02-07 06:30:25+00
Date Added: 2024-06-11T17:27:42.649972
License: Public Domain

Not for Publication in West's Federal Reporter

          United States Court of Appeals
                      For the First Circuit

Nos. 09-1259, 09-1420, 09-1430

                   H. MARK WHITE, individually
             and as next friend for his son H.T.W.,

                        Plaintiff, Appellee,

                                    v.

        THE FESSENDEN SCHOOL, PETER DRAKE, DANIEL KIELY,
                        and WENDY PEARRE,

                      Defendants, Appellants,

                                   and

              TUCKER, HEIFETZ & SALTZMAN, LLP, and
           WILMER CUTLER PICKERING HALE AND DORR LLP,

                              Appellants.

        ON APPEALS FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. Joseph L. Tauro, U.S. District Judge]

                                 Before

                       Lynch, Chief Judge,
              Torruella and Howard, Circuit Judges.

     George P Butler III with whom Phillip J. De Rosier, Leslie
A.F. Calhoun, Robert Y. Murray, and Ramsey & Murray were on brief
for plaintiffs-appellees H. Mark White and H.T.W.
     Robert S. Frank Jr. with whom William P. Rose and Tucker,
Heifetz & Staltzman, LLP were on brief for defendants-appellants
The Fessenden School and Peter Drake, Daniel Kiely, and Wendy
Pearre and appellant Tucker, Heifetz & Saltzman, LLP.
     Mark C. Fleming with whom Jerome P. Facher, Michael R.
Heyison, and Wilmer Cutler Pickering Hale and Dorr LLP were on
brief for appellant Wilmer Cutler Pickering Hale and Dorr LLP.

                      December 28, 2009
          Per Curiam.    The issue before us is whether the parties

in this case reached an enforceable settlement agreement.       The

underlying case concerns claims brought by a student, now a sixth

grader, and his father against the student's former school.   It is

not necessary to describe those claims to decide this appeal.

          On September 22, 2008, the day trial was to start (over

a year after the case was filed), the experienced trial judge asked

the parties if they wanted to make a last effort to settle the

case.   They said yes.    Counsel for the plaintiffs reported the

parties had begun negotiations shortly before and they believed

they had achieved an agreement in principle on a noneconomic term

but were far apart on any economic terms.       In response to the

court's question as to whether the only issue remaining unresolved

was the amount of a monetary settlement, counsel for the school

said,

          Well, we have a lot of issues to work out on
          that noneconomic issue . . . so if we got
          there, we're certainly going to request
          assistance, perhaps assistance from The Court;
          but in principle we had a deal on that as of
          the week before the pretrial.

          The parties then spent some time trying to negotiate the

economic terms.   The court, wisely, did not participate in those

negotiations. Ultimately, the parties reported they had reached an

agreement on the economic terms that was "subject to finalization

of the noneconomic issues" and there was work they "still ha[d] to

do" on one of those issues.   The court replied that "we will report

                                 -3-
the case closed, as having been settled, and give you two months to

move to reopen it if for some reason or other, you're unable to

finish the paperwork."

             Perhaps in a sense of optimism, the parties told the

court that it could enter a settlement order but asked the court to

retain jurisdiction over enforcement.      The court asked, "Well in

what way?     How am I going to enforce it?"      Plaintiffs' counsel

replied that there could be a dispute over "it."     He suggested one

reason for the retention of jurisdiction was that the parties could

need the assistance of the court to work out the noneconomic terms.

There was no written agreement at this or any later point.1

             The court then entered a settlement order dated September

22, 2008.2     However, the optimism of the parties that they had

reached agreement on the noneconomic terms was misplaced.      One of

the noneconomic terms concerned what the parties referred to as a

     1
          Because of the sensitive nature of the information, the
parties asked the court to extend a sealing order and it did so.
For that reason as well, we do not go into details.
     2
             The settlement order said,

                  The   court   having  been   advised   on
             September 22, 2008 by counsel for the parties
             that the above action has been settled:
                  IT IS ORDERED that this action is hereby
             dismissed without prejudice to reconsideration
             and possible re-opening if within 60 days of
             this order a motion is filed which represents
             that the terms of the settlement agreement
             have not been performed and there is good
             cause for the non-performing party or parties
             to have failed to perform.

                                  -4-
"reenrollment contract," by which the parties meant very different

things.

               On November 12, 2008, the plaintiffs filed a "motion to

enforce the September 22, 2008 settlement or, in the alternative,

to reopen the case and proceed to trial."                The defendants filed an

opposition to the plaintiffs' motion, which took the position that

a settlement agreement had been reached in September but the

plaintiffs were departing from that agreed "reenrollment contract"

in    two   material   respects.        They    also    joined    the   plaintiffs'

alternative request that the court reopen the case for trial.                    It

was    clear    from   the   parties'    filings       that    they   fundamentally

disagreed      about   the   substantive       content    of    any   "reenrollment

contract," which standard form of competing contracts was involved,

what consequences flowed from it, and how the contract could be

used.

               The court convened a nonevidentiary hearing on January 5,

2009, and asked what matters were in dispute, including the dispute

about the reenrollment contract.           Saying this was the last help it

could give the parties, the court then offered its own version of

what the reenrollment contract was and told plaintiffs' counsel to

submit to the court a draft order embodying that version.                       The

parties spent the hearing jockeying for position to get the court

to endorse and enforce each party's version of the reenrollment

contract.       No one explicitly discussed the alternate relief of

                                        -5-
sending the case back for trial because there was no agreed

settlement. With no settlement to enforce, however, the only thing

the court could do was order the case to trial.               Indeed, the court

said that if there were further proceedings, they would be before

a different judge.

           Plaintiffs'      counsel,    as     the    court    had    requested,

submitted a draft order.         In our view it went well beyond the

court's offered resolution of the disputed term "reenrollment

contract;" it also sanctioned counsel for the school, ordering

counsel   to   pay   the   attorneys'   fees    and   costs     the   plaintiffs

incurred bringing the motion to enforce. The defendants protested,

but the court, on January 22, 2009, entered the plaintiffs' five-

page proposed order as an "Order of Settlement and Judgement."                As

to the sanctions, the court held no hearing, and it made no

separate findings why sanctions were appropriate or that defense

counsel had acted in bad faith or in violation of any order.                The

court also did not respond to the arguments of the law firm that

was the school's general counsel, but not the school's litigation

counsel, that the firm had no notice it might be sanctioned and

that there was no basis to sanction it.         Final judgment was entered

on April 6, 2009, on the basis of the January 22 order.               The school

and the sanctioned counsel have appealed from that judgment, which

embodies the January 22 order.

                                    -6-
           We have carefully reviewed the record in this case and

conclude that the parties never had an enforceable settlement

agreement because they never agreed on the content, consequences,

or use of the so-called reenrollment contract.        There is no doubt

that these disputes over the "reenrollment contract" were about a

material term of the contract; indeed, the disagreement may have

gone to the most material issues in the underlying litigation.         To

the extent the trial court thought there was no ambiguity in the

parties' previous use of the term "reenrollment contract" and so

there was no material disagreement, that was plain error, whether

viewed as an issue of law or of fact.     See, e.g., Fid. & Guar. Ins.

Co. v. Star Equip. Corp., 541 F.3d 1, 5 (1st Cir. 2008) (district

courts may not summarily enforce settlement agreements when a

genuine   dispute   over   the   agreement's   material   terms   exists);

Malave v. Carney Hosp., 170 F.3d 217, 220 (1st Cir. 1999) (same);

Warner v. Rossignol, 513 F.2d 678, 683 (1st Cir. 1975) (same); see

also Magallanes v. SBC, 472 F.3d 923, 924 (7th Cir. 2006) ("A valid

and enforceable settlement agreement requires a meeting of the

minds on all material terms.").       Both the September 22 statements

and the later filings established that there was only an ongoing

dispute and no agreement.

           It is so clear there was no settlement the court could

enforce that there is no point in remanding this case for an

evidentiary hearing. See F.A.C., Inc. v. Cooperativa de Seguros de

                                    -7-
Vida de P.R. (F.A.C. I), 449 F.3d 185, 194 (1st Cir. 2006)

(considering whether the parties "had testimony worth presenting"

about a settlement's terms when deciding not to remand for an

evidentiary hearing); see also Quint v. A.E. Staley Mfg. Co., 246

F.3d 11, 15 (1st Cir. 2001) ("There are certainly instances in

which no oral contract is formed where material terms are not yet

agreed upon, and no agreement is reached until there is a written

agreement embodying those material terms.") (citing Salem Laundry

Co. v. New England Teamsters and Trucking Indus. Pension Fund, 829

F.2d 278, 280-81 (1st Cir. 1987)).

              It is true that sometimes courts may construe the terms

of a settlement, particularly when the judge has personal knowledge

of the negotiations.         E.g., F.A.C. I, 449 F.3d at 192, 194.        Here

the   judge    did     not   have   personal   knowledge   of   the   parties'

negotiations, so that could not have been the basis for the court's

decision.      See, e.g., Malave, 170 F.3d at 220-21 (holding that a

district court could not summarily enforce a settlement when it was

obvious from the pleadings that a dispute existed and when the

court had no personal knowledge of the settlement negotiations).

              It is permissible but often unwise for counsel to inform

the court a case is settled when they have no more than an oral

settlement agreement.         F.A.C. I, 449 F.3d at 187; see also, e.g.,

Quint,   246    F.3d    at   15.    That   situation   frequently     leads   to

proceedings to "clarify" what the "agreement" was.                  See, e.g.,

                                       -8-
F.A.C., Inc. v. Cooperativa de Seguros de Vida de P.R. (F.A.C. II),

563 F.3d 1, 3-6 (1st Cir. 2009) (describing the long history of

disputes over the meaning of an oral settlement that forced the

district court and this court to interpret its terms and that

culminated in sanctions that this court vacated).

           The district court was attempting to be helpful and had

been patient and shown restraint throughout a contentious case.

But in the absence of a trial and a liability finding, it was

beyond the power of the district court to impose its own resolution

of material disputed issues that the parties did not agree to, and

it could not do so under the rubric of a settlement order.                      As

there was no enforceable settlement, there was no possible basis

for   sanctions    orders   against   the   defendants     or   any   of   their

counsel. We need not address the other objections to the sanctions

order.   See Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991)

("[A] court may assess attorney's fees when a party has 'acted in

bad faith, vexatiously, wantonly, or for oppressive reasons.'"

(quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421 U.S.

240, 258-59 (1975))).

           We     reverse   and   vacate.    We   remand   this   case     to    a

different judge for trial.        Perhaps the considerable legal talent

which counsel has brought to this appeal can still resolve this

matter short of trial.

           No costs are awarded.

                                      -9-