Court Opinion

ID: 4677003
Source: CourtListenerOpinion
Date Created: 2021-04-13 23:00:38.357487+00
Date Added: 2024-06-11T08:03:35.663176
License: Public Domain

FILED
                                                  United States Court of Appeals
                   UNITED STATES COURT OF APPEALS         Tenth Circuit

                          FOR THE TENTH CIRCUIT                      April 13, 2021
                          _________________________________
                                                                  Christopher M. Wolpert
                                                                      Clerk of Court
    CHOICE HOTELS
    INTERNATIONAL, INC.,

           Plaintiff - Appellee,

    v.                                                  No. 20-5003
                                             (D.C. No. 4:18-CV-00285-GKF-JFJ)
    PAPAMKRUPA HOSPITALITY,                             (N.D. Okla.)
    LLC, a/k/a Paramkrupa Hospitality,
    LLC, an Oklahoma limited liability
    company,

           Defendant - Appellant.
                         _________________________________

                           ORDER AND JUDGMENT *
                           _________________________________

Before TYMKOVICH, Chief Judge, HOLMES, and BACHARACH,
Circuit Judges.
                 _________________________________

         This appeal grew out of negotiations to settle a trademark dispute,

which arose from termination of a hotel franchise. The franchisor (Choice

Hotels International, Inc.) terminated the franchise on the ground that the

*
      Because oral argument would not materially help us to decide the
appeal, we have decided the appeal based on the record and the parties’
briefs. See Fed. R. App. P. 34(a)(2)(C); 10th Cir. R. 34.1(G).

      Our order and judgment does not constitute binding precedent except
under the doctrines of law of the case, res judicata, and collateral estoppel.
But the order and judgment may be cited for its persuasive value if
otherwise appropriate. See Fed. R. App. P. 32.1(a); 10th Cir. R. 32.1(A).
franchisee (Paramkrupa Hospitality, LLC) had failed to pay fees. After the

hotel franchise was terminated, the parties clashed on whether Paramkrupa

was infringing Choice Hotels’ trademarks.

     The parties ultimately agreed to settle for $60,000 with an agreed

judgment for $200,000 if Paramkrupa failed to pay. A disagreement arose,

however, and Paramkrupa refused to sign. This refusal spurred Choice

Hotels to move for enforcement of the settlement agreement. The district

court granted the motion and awarded $200,000 to Choice Hotels for

Paramkrupa’s failure to timely pay the agreed settlement amount

($60,000). Paramkrupa appeals.

     We affirm in part and reverse in part. We affirm the grant of Choice

Hotels’ motion to enforce the settlement, concluding that the parties

reached an enforceable agreement. But we conclude that the district court

erred in entering the judgment for $200,000. This part of the ruling strayed

beyond Choice Hotels’ motion.

I.   The parties ostensibly agree on the written terms.

     During the pendency of the suit, the parties negotiated and appeared

to reach an agreement on the terms. These terms included a requirement for

Paramkrupa to

          pay $60,000 and

          sign an agreed judgment for $200,000, to be filed only if
           Paramkrupa failed to timely pay the settlement amount
           ($60,000).
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Paramkrupa agreed, acknowledging the existence of a “deal.” Appellant’s

App’x vol. 2, at 214. The parties then set out to memorialize the settlement

terms.

      The attorneys exchanged drafts of the settlement agreement. In this

exchange, Paramkrupa proposed revisions and Choice Hotels stated that it

agreed. Choice Hotels then sent a final version of the settlement

agreement, asking Paramkrupa to sign. After receiving the settlement

agreement, Paramkrupa’s counsel asked Choice Hotels to confirm that it

was releasing any claims that could have been raised in the lawsuit,

including potential claims for breach of contract. Choice Hotels responded

“no,” and Paramkrupa refused to sign. Id. at 274.

II.   The district court can enforce the settlement agreement if the
      parties reached a meeting of the minds.

      The district court can summarily enforce a settlement agreement.

Shoels v. Klebold, 375 F.3d 1054, 1060 (10th Cir. 2004). When the court

exercises this power, we apply the abuse-of-discretion standard. Id.

      In determining whether the district court abused its discretion, we

consider whether the parties reached an enforceable settlement. A

settlement is enforceable only if it constitutes an enforceable contract, so

we consider the forum state’s laws on contract formation. United States v.

McCall, 235 F.3d 1211, 1215 (10th Cir. 2015). In the forum state

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(Oklahoma), we consider whether the parties reached a meeting of the

minds. Okla. Stat. tit. 15, § 66.

III.   Though Paramkrupa refused to sign, the parties reached a
       meeting of the minds.

       When the attorneys approved the settlement agreement, it contained a

release of all claims “which were or could have been brought in this

Lawsuit and which arise out of Defendant’s [Paramkrupa’s] alleged

unauthorized use of the CHOICE family of marks at or in connection with

the Subject Property [the hotel].” Appellant’s App’x vol. 2, at 292–93. The

threshold issue is whether this term left enough uncertainty between the

parties to prevent a meeting of the minds. Firstul Mtg. Co. v. Osko, 604

P.2d 150, 152–53 (Okla. Civ. App. 1979). In Oklahoma, the test is whether

the agreed term provided a basis for determining the existence of a breach

and selecting an appropriate remedy. Id. at 153.

       The district court concluded that a meeting of the minds existed,

interpreting the agreed release to unambiguously exclude a contract claim

by Choice Hotels for nonpayment of fees. Paramkrupa challenges the

district court’s approach, arguing that the court should have conducted an

evidentiary hearing before determining whether the parties had reached a

meeting of the minds. And if the court decided that the parties had reached

an agreement, Paramkrupa argues, the court should have declined to

interpret the release term. Interpretation, in Paramkrupa’s view, was

                                      4
something that should wait until Choice Hotels actually sued for breach of

contract.

      In our view, the district court properly addressed the meaning of the

release term. There was little need for evidence, for the parties agreed on

the release term. The only question is what the release term meant. Choice

Hotels argued that the release term did not affect a future breach-of-

contract claim for nonpayment of fees, and Paramkrupa argued the

opposite. The district court could not resolve that dispute without

interpreting the meaning of the release term.

      In resolving that dispute, the district court properly focused on the

release term itself. It joins two conditions with the conjunction “and,” so

both conditions were needed to release Paramkrupa. The parties agree that

one of the conditions is that the claim must be one that could have been (or

was) brought in this lawsuit.

      Paramkrupa points out that Choice Hotels could have included a

breach-of-contract claim in this suit, so this condition is satisfied. But the

release term contains a second condition: A claim is released only if it

“arise[s] out of Defendant’s alleged unauthorized use of the CHOICE

family of marks” at the hotel. A breach-of-contract claim for nonpayment

of fees would not “arise out of” Paramkrupa’s unauthorized use of Choice

Hotels’ family of marks. So the release term would not cover a breach-of-

                                       5
contract claim for nonpayment of fees. Choice Hotels’ interpretation of the

release term was thus correct.

IV.   The district court went too far by entering a judgment against
      Paramkrupa for $200,000.

      Agreeing with Choice Hotels’ interpretation of the settlement

agreement, the district court properly concluded that the agreement was

enforceable. But the court didn’t stop there.

      The settlement agreement required an agreed judgment for $200,000

in the event that Paramkrupa failed to pay the settlement amount

($60,000). Though Choice Hotels didn’t ask the district court to enter the

agreed judgment, the court thought that it was required under the

settlement agreement. So the district court not only granted Choice Hotels’

motion to enforce the settlement agreement but also issued a judgment for

$200,000 based on the judgment that Paramkrupa had agreed to sign.

      The parties agree that we should apply de novo review on this aspect

of the ruling. In conducting de novo review, we must examine the

provision for the agreed judgment. Paramkrupa did promise to sign the

agreed judgment, but Choice Hotels agreed that Paramkrupa would have

ten days to cure a default. Until the ten days passed without any payment,

Choice Hotels was not to file the judgment.

      By entering the judgment, the district court not only bypassed the

opportunity to cure but also deprived Paramkrupa of notice. Paramkrupa

                                      6
should have had an opportunity to supply input prior to entry of the

judgment. Cf. Oldham v. O.K. Farms, Inc., 871 F.3d 1147, 1150–51

(10th Cir. 2017) (explaining that a sua sponte summary judgment ruling

should be reversed if the losing party was procedurally prejudiced by the

lack of notice).

V.    Conclusion

      We affirm the order granting the motion to enforce the settlement

agreement. But we vacate the judgment and remand for further proceedings

consistent with this decision. 1

                                   Entered for the Court

                                   Robert E. Bacharach
                                   Circuit Judge

1
      Counsel for Paramkrupa has moved for leave to withdraw, and we
grant this motion.
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