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Perry v. Alexander

United States District Court, D. Maine

January 19, 2018

ALAN J. PERRY, et al., Plaintiffs
v.
JULIET ALEXANDER, et al., Defendants PETER TINKHAM, et al., Plaintiffs
v.
LAURA PERRY, et al., Defendants

          DECISION AND ORDER ON MOTIONS FOR SANCTIONS

          JOHN C. NIVISON, U.S. MAGISTRATE JUDGE

         This matter is before the Court on the motion for sanctions (ECF No. 202) filed by Defendants Juliet Alexander and Peter Tinkham (hereafter “Defendants”), and the motion for sanctions (ECF No. 203) filed by Plaintiffs Alan Perry, Nina Perry, and Laura Perry (hereafter “Plaintiffs”). Both motions were filed after Defendants' counsel reported to the court that the parties had reached a settlement in the case.[1]

         Through their motion, Defendants contend “Plaintiffs breached the terms of what they thought was a settlement” and should be sanctioned and compelled to settle on certain terms. (Defendants' Motion at 14.) Through their motion, Plaintiffs assert that the parties agreed to settle on the terms contained in a settlement agreement signed by Plaintiffs. Plaintiffs, however, do not ask the Court to enforce the settlement agreement. Instead, Plaintiffs request that as a sanction for Defendants' breach of the settlement agreement, Defendants' repeated disregard for court orders and Defendants' disrespect of the judicial process, the Court enter a default against Defendants on Plaintiffs' claims and dismiss Defendant Tinkham's counterclaim.

         Background

         On July 10, 2017, the Court empaneled a jury for trial, which was to begin on July 31, 2017. On July 26, 2017, Defendants' counsel informed the Court that the parties had reached a settlement of the matter. In accordance with the reported settlement, the Court entered the following order on the docket:

NOTICE of Settlement by Defendants and PROCEDURAL ORDER RE: SETTLEMENT: Counsel having advised the Court on 7/26/17 that the settlement has been effected by mutual agreement of the parties herein, it is hereby ORDERED that counsel shall complete the settlement of this matter within thirty (30) days of this date and cause to be filed a stipulation of dismissal of this matter with prejudice and without costs, failing which, the case will be dismissed pursuant to Local Rule 41.1(a) (Stipulation of dismissal due by 8/25/17).

         As a result of the report of the settlement, the Court discharged the jury. After the date the trial was to commence, the parties informed the Court that some issues regarding the settlement had arisen. The Court convened a telephonic conference for August 3, 2017, to discuss the status of the matter. During the conference, the parties reported they were attempting to resolve some settlement-related issues. Defendants' counsel also advised the Court that they might have to seek to withdraw as counsel.

         Following the conference, the Court ordered the parties to notify the Court by August 9 whether they had resolved the settlement issues. The Court also ordered: “Unless the parties resolve the settlement issues and file a stipulation of dismissal, on August 15, 2017, at 3 p.m. at the Edward T. Gignoux U.S. Courthouse in Portland, Maine, the Court will conduct a hearing on any motion to withdraw that is filed and will address the future course of the case.” (Procedural Order, ECF No. 187.) When Defendant Alexander informed the Court that she had a medical appointment scheduled for August 15, the Court rescheduled the hearing for August 16, 2017. (Supplemental Procedural Order, ECF No. 192.) Defendants' counsel subsequently filed a motion to withdraw (ECF No. 190), which the Court granted on August 16 after hearing from counsel and Defendants. (ECF No. 197.) At the hearing, Plaintiffs informed the Court that they intended to file a motion for sanctions based on Defendants' breach of the settlement agreement.

         Defendants filed a motion for sanctions on August 21, 2017. (ECF No. 202.) In their motion, they requested an evidentiary hearing to introduce evidence to establish that Plaintiffs breached the terms of any possible settlement. (Id. at 14.) They wrote:

This evidence will overwhelmingly support the Defendants' contention that not only that [sic] there was no settlement, the Plaintiffs breached the terms of what they thought was a settlement and should themselves be sanctioned and compelled to settle on the terms of the redacted settlement/release document, the unredacted version of which they knowingly and willingly signed.

(Id.)

         On August 30, 2017, Plaintiffs filed a motion for sanctions. (ECF No. 203.) In the motion, Plaintiffs recited the facts they believe establish that the parties reached a valid, binding agreement to settle the case. Plaintiffs, however, did not seek enforcement of the settlement agreement. They asserted that “enforcement of the settlement is no longer in Plaintiffs [sic] best interest and is therefore not being sought by Plaintiffs' counsel.” (Motion at 17.) Instead, citing what they describe as Defendants' “pattern of misconduct” (Motion at 18) and Defendants' “contumacious conduct” (id.), Plaintiffs have asked the Court to enter a default against Defendants on Plaintiffs' claims and dismiss Defendant Tinkham's counterclaim.

         Whether the Parties Achieved a Settlement Agreement

         Because the parties' motions for sanctions focus on whether the parties reached a binding agreement to settle the case, [2] a preliminary issue is whether the parties in fact reached an agreement to settle the case.

         In the context of a request to enforce a settlement agreement, the First Circuit has determined that when a dispute exists as to whether the parties achieved a settlement or as to the terms of a settlement, an evidentiary hearing is necessary. Fidelity and Guar. Ins. Co. v. Star Equipment Corp., 541 F.3d 1, 5 (1st Cir. 2008). See also Michaud v. Michaud, 932 F.2d 77, 81 (1st Cir. 1991) (evidentiary hearing generally required where client denies giving attorney authority to settle). Because an issue central to the assessment of the parties' motions for sanctions was whether the parties reached a binding agreement to settle the litigation, the Court scheduled an evidentiary hearing on the motions for sanctions for October 27, 2017. (Procedural Order, ECF No. 207.)

         In the order scheduling the hearing, the Court noted that the evidentiary hearing would “include the issue of whether the parties reached a binding settlement agreement” and that “the parties should be prepared to address all issues raised by the motions for sanctions, including whether, if the Court were to determine that the parties reached a binding settlement, the Court should enforce the settlement agreement.” (Id.) Prior to the hearing, the Court convened a telephonic conference to discuss several hearing-related issues.[3] Following the conference, the Court issued an order to govern the pre-hearing process and the hearing. (Procedural Order, ECF No. 211.)

         In a motion filed on October 24, Defendants asserted that they had “no intention” of appearing at the October 27 hearing “without counsel.” (Motion ¶ 16, ECF No, 218.) In an order dated October 26, the Court wrote:

Defendants have asserted that they do not intend to appear for the October 27 hearing. The Court intends to proceed with the hearing as scheduled. Defendants are cautioned that their failure to appear for the hearing could preclude not only their opportunity to be heard further on the motions for sanctions, but also could preclude their opportunity to prosecute the claims they have asserted in this action and to contest the claims made by Plaintiffs in this action.

(Order at 4 - 5, ECF No. 219.)[4]

         The Court conducted the hearing as scheduled.[5] Defendants, however, did not attend the hearing. Instead, after the conclusion of the hearing, the Court learned that prior to the hearing, Defendant Alexander appeared at the courthouse and filed a series of documents that Defendants asked the Court to consider as evidence and argument. At the hearing, Plaintiffs presented a number of e-mail communications, a draft Universal Settlement Agreement and Release of All Claims, and the transcript of the August 16, 2017, hearing in this matter. (ECF No. 222.) Plaintiffs also called Michael Weinberg, Esq., and John Kiernan, Esq., to testify at the hearing.[6] (ECF No. 223.)

         “Settlement agreements are analyzed as contracts, and the existence of a binding settlement is a question of fact.” Muther v. Broad Cove Shore Ass'n, 2009 ME 37, ¶ 6, 968 A.2d 539. “A contract exists if the parties mutually assent to be bound by all its material terms, the assent is either expressly or impliedly manifested in the contract, and the contract is sufficiently definite to enable the court to ascertain its exact meaning and fix exactly the legal liabilities of each party.” Campbell v. First Am. Title Ins. Co., 644 F.Supp. 126, 136 (D. Me. July 2, 2009) (quoting Sullivan v. Porter, 2004 ME 134, ¶ 13, 861 A.2d 625, 631 (Me. 2004)). An agreement to agree on terms in the future does not amount to a binding settlement agreement, and whether the parties mutually assented to settlement or merely engaged in negotiation presents a question of intention. In re Estate of Snow, 2014 ME 105, ¶ 12, 99 A.3d 278, 282. “The absence of a formalized contract does not affect the binding nature of a potential contract if the parties intended to close the contract prior to a formal writing.” McClare v. Rocha, 2014 ME 4, ¶ 20, 86 A.3d 22, 29. Under such circumstances, the written agreement is simply “a post hoc memorialization of an already existing oral agreement.” Me. Surgical Supply Co. v. Intermedics Orthopedics, Inc., ...


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