NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY APPELLATE PANEL
FOR THE FIRST CIRCUIT
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BAP NO. MB 99-094
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IN RE: FRANK JOSEPH SCHIFANO,
Debtor.
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ALFRED RAZZABONI and HENRY RAZZABONI,
Plaintiffs/Appellants,
v.
FRANK JOSEPH SCHIFANO,
Defendant/Appellee.
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Appeal from the United States Bankruptcy Court
for the District of Massachusetts
(William C. Hillman, U.S. Bankruptcy Judge)
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Before
Votolato, Haines and Carlo, U.S. Bankruptcy Judges
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John F. Drew, Lawrence P. Murray and Lane, Altman & Owens, for Appellants.
Jordan L. Shapiro and Shapiro & Shapiro, for Appellee.
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March 21, 2000
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Per Curiam
On April 27, 1999, a panel of this court entered its order
remanding the case to the bankruptcy court for the limited
purpose of determining whether the controversy on appeal had been
consensually resolved. In the face of conflicting reports from
the parties about settlement, the panel stated:
[W]e hereby REMAND this case to the bankruptcy
court for a determination whether this matter has been
settled. We further instruct the bankruptcy court to
consider whether any party or their counsel has filed
false affidavits, misled this court, or engaged in
other conduct violative of the rules and to impose
sanctions as the circumstances warrant.
Thereafter the parties returned to bankruptcy court, engaged
in discovery and, ultimately, Schifano moved for summary
judgment, asserting that the undisputed material facts
established, as a matter of law, that settlement had been
effected. The lower court entertained the motion, considered the
response and, after hearing argument, the bankruptcy judge
entered summary judgment for Schifano. The Razzabonis have
appealed.
Discussion
1. Jurisdiction
The bankruptcy court's order granting summary judgment is a
final order. Its entry effectively terminated all outstanding
litigation between the parties in the bankruptcy forum. We have
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appellate jurisdiction pursuant to
28 U.S.C. § 158.
2. Standard of Review
Our review of summary judgment is de novo. See, e.g.,
Hodgens v. General Dynamics Corp.,
144 F.3d 151, 158 (1st Cir.
1998); Hinchey v. NYNEX Corp.,
144 F.3d 134, 140 (1st Cir. 1998);
Hidalgo v. Overseas Condado Ins. Agencies, Inc.,
120 F.3d 328,
332 (1st Cir. 1997); Den Norske Bank AS v. First Nat'l Bank of
Boston,
75 F.3d 49, 53 (1st Cir. 1996); Mottolo v. Fireman's Fund
Ins. Co.,
43 F.2d 723, 725 (1st Cir. 1995); Desmond v. Varrasso
(In re Varrasso),
37 F.3d 760, 763 (1st Cir. 1994); Santana Olmo
v. Quiñones Rivera (In re Quiñones Rivera),
184 B.R. 178, 184
(D.P.R. 1995).
3. Summary Judgment Standard
To affirm we must conclude that "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits ... show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment
as a matter of law." Fed. R. Civ. P. 56 (c). See also Celotex
Corp. v. Catrett,
477 U.S. 317, 323 (1986); Barbour v. Dynamics
Research Corp.,
63 F.3d 32, 36-37 (1st Cir. 1995); Mottolo, 43
F.3d at 725.
A material fact is one that, in light of the governing law,
has the potential to affect the outcome of the case. See
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)("Only
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disputes over facts that might affect the outcome of the suit
under the governing law will properly preclude the entry of
summary judgment."); accord Mottolo, 43 F.3d at 725; United
States v. One Parcel of Real Property, 960 F.2d 200, 204 (1st
Cir. 1992).
If a reasonable fact-finder could reach a lawful decision in
favor of the Razzabonis, then the dispute over the material fact
is "genuine." See Anderson,
477 U.S. at 248; Mottolo, 43 F.3d at
725; One Parcel of Real Property, 960 F.2d at 204. We view the
facts in a light most favorable to the Razzabonis, the nonmoving
parties, drawing all reasonable inferences in their favor. See
Barbour,
63 F.3d at 36; Levy v. FDIC,
7 F.3d 1054, 1056 (1st Cir.
1993); see also In re Varrasso,
37 F.3d at 763 ("This means, of
course, that summary judgment is inappropriate if inferences are
necessary for the judgment and those inferences are not mandated
by the record."); In re Quiñones Rivera, 184 B.R. at 188
(reversing summary judgment because the court "succumbed to the
temptation of indulging in impermissible credibility
determinations and otherwise refrained from drawing reasonable
inferences in favor of the [nonmovants]").
4. The Summary Judgment Dispute
The contested issue on summary judgment was whether Attorney
Michael Smith, one of several counsel employed on behalf of the
Razzabonis, effectively settled their dispute with Schifano in
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accordance with the authority the Razzabonis had given him.
Our circuit has stated:
A party to a settlement agreement may seek to
enforce the agreement’s terms when the other party
reneges. If, at the time of the claimed breach, the
court case already has been dismissed, the aggrieved
party may bring an independent action for breach of
contract. See Kokkonen v. Guardian Life Ins. Co.,
511
U.S. 375, 381-82,
114 S.Ct. 1673,
128 L.Ed.2d 391
(1994). If, however, the settlement collapses before
the original suit is dismissed, the party who seeks to
keep the settlement intact may file a motion for
enforcement. See United States v. Hardage,
982 F.2d
1491, 1496 (10th Cir. 1993)(“A trial court has the
power to summarily enforce a settlement agreement
entered into by the litigants while the litigation is
pending before it.”)(citations omitted): Mathewson
Corp. V. Allied Marine Indus., Inc.,
827 F.2d 850, 852-
53 (1st Cir. 1987)(similar). In a federal court, such
a motion – at least when the underlying cause of action
is federal in nature – is determined in accordance with
federal law. See Michaud v. Michaud,
932 F.2d 77, 80
n.3 (1st Cir. 1991); Fennell v. TLB Kent Co.,
865 F.2d
498, 501 (2d Cir. 1989); Mid-South Towing Co. v. Har-
Win, Inc.,
733 F.2d 386, 389 (5th Cir. 1984); Gamewell
Mfg., Inc. v. HVAC Supply, Inc.,
715 F.2d 112, 115-16
(4th Cir. 1983).
Malave v. Carney Hosp.,
170 F.3d 217, 220 (1st Cir. 1999).
The Malave panel also noted that, “[a]s a general rule, a
trial court may not summarily enforce a purported settlement
agreement if there is a genuinely disputed question of material
fact regarding the existence of terms of that agreement.”
Id.
On remand, the issues before the bankruptcy court were
analogous to those presented by a motion to enforce a settlement
agreement. The underlying cause of action with which we are
concerned arose under § 727 of the Bankruptcy Code, and is
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indisputably “federal in nature.”
The summary judgment record included deposition testimony
from the attorneys involved, Schifano’s deposition, and the
Razzabonis’ affidavits. The Razzabonis, in apparent
contradiction of a letter sent to Attorney Smith by another
attorney working on their behalf, denied that Smith had authority
to finally settle the litigation, at least without their approval
of the final settlement terms - an approval they never gave.
Attorney Smith’s testimony is not at variance with their
asservations.
Certainly, there was substantial evidence supporting the
judge’s conclusion that the matter had been effectively settled,
as well. But on the question of Attorney Smith’s actual
authority to consummate the settlement,1 material facts were in
genuine dispute.2 Schifano’s counsel conceded as much at oral
1
The Malave court held, under analogous circumstances,
that the party championing settlement must demonstrate that its
opponent’s agent acted with actual authority. “[T]he doctirne of
apparent authority may not be invoked in these purlieus.” Id. at
221.
2
The settlement would have terminated the Razzabonis’
objection to discharge suit in Schifano’s bankruptcy case, as
well as Schifano’s state law claims against the Razzabonis. The
picture is complicated by the fact that the Razzabonis’ insurer
sent, and Schifano’s counsel promptly cashed, a check in
settlement of Schifano’s state law claims, and by the fact that
the parties’ state law litigation was dismissed on the basis of
settlement. However, we note that the two aspects of the
parties’ controversy are legally independent of one another (that
is, the discharge objection can not be styled as a mandatory
counterclaim to Schifano’s state law claims) and that Schifano
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argument when he argued that the decision below was not based on
a “clearly erroneous” view of the facts and urged us not to
second guess the trial court’s decision to accept one
interpretation of the evidence over another. Accordingly, we
must reverse the lower court’s award of summary judgment and
remand the matter for evidentiary proceedings.
We add the following before closing. The record before this
panel and its predecessor plainly shows that the
Razzaboni/Schifano conflict has been long (too long) and
acrimonious (too acrimonious). The lower court’s view of the
evidence before it, though not unreasonable, progressed to
judgment prematurely. Given genuine disputes of material fact,
it was required to go farther before assessing credibility,
weighing the evidence, and entering judgment. We reverse and
remand because the law’s properly punctilious penchant for
procedural fairness requires it. We trust, however, that the
parties will see the forest for the trees and not take today’s
decision as encouragement to fight longer, harder, and more
heatedly than necessity and good conscience require.3
alone provided releases in return for payment (a payment issued
by the Razzabonis’ insurer without Smith’s or the Razzabonis’
knowledge).
3
Our action today opens the door to consider that
portion of the remand order that remains thus far unexamined.
That is, whether any party should answer, through sanctions, for
its conduct regarding representations of settlement.
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Conclusion
For the reasons set forth above, the bankruptcy court’s
entry of summary judgment is REVERSED and the case is REMANDED
for further proceedings under our April 27, 1999, order of
remand.
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