Indiana Lumbermens v. Information Systems ( 1996 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
INDIANA LUMBERMENS MUTUAL
INSURANCE COMPANY, a corporation
of the state of Indiana,
Plaintiff-Appellee,
v.
INFORMATION SYSTEMS,
INCORPORATED; NETWORKS No. 94-2633
CORPORATION; ROMA P. MALKANI;
PREM MALKANI,
Defendants-Appellants,
and
DAVID C. CONDRON; JACK J. MORRIS,
Defendants.
INDIANA LUMBERMENS MUTUAL
INSURANCE COMPANY, a corporation
of the state of Indiana,
Plaintiff-Appellant,
v.
INFORMATION SYSTEMS,
INCORPORATED; NETWORKS No. 95-2084
CORPORATION; ROMA P. MALKANI;
PREM MALKANI,
Defendants-Appellees,
and
DAVID C. CONDRON; JACK J. MORRIS,
Defendants.
Appeals from the United States District Court
for the District of Maryland, at Greenbelt.
Deborah K. Chasanow, District Judge.
(CA-93-707-DKC)
Argued: January 29, 1996
Decided: May 1, 1996
Before RUSSELL, WILLIAMS, and MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Bobby Dean Melvin, Bethesda, Maryland, for Appellants.
Bernard L. Balkin, SANDLER, BALKIN, HELLMAN & WEIN-
STEIN, Kansas City, Missouri, for Appellee. ON BRIEF: Peter J.
McNamara, OBER, KALER, GRIMES & SHRIVER, P.C., Balti-
more, Maryland, for Appellants. Michael J. Blake, SANDLER,
BALKIN, HELLMAN & WEINSTEIN, Kansas City, Missouri;
Gerard P. Sunderland, WHITEFORD, TAYLOR & PRESTON, Balti-
more, Maryland, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Information Systems & Networks Corporation (ISN) appeals from
the district court's order, dated July 20, 1994, finding that ISN and
2
Indiana Lumbermens Mutual Insurance Company (Indiana) entered
into an oral settlement agreement. Indiana separately appeals from the
district court's refusal to enforce its order of July 20, 1994, as a judg-
ment. We affirm in both appeals.
I.
On March 9, 1993, Indiana filed suit against ISN, Roma Malkani
(president and sole shareholder of ISN), and her husband, Prem
Malkani.1 The suit concerned surety bonds which Indiana had pro-
vided for two ISN contracts, one to provide an Automated Access
Control System at Kansas City International Airport (KCIA) and
another to install a security system for the Port of Oakland. Indiana
filed the suit because ISN was engaged in separate lawsuits with
KCIA and Oakland, and both KCIA and Oakland had made demands
upon Indiana as surety. Indiana's complaint against ISN requested,
among other things, that ISN provide Indiana with additional collat-
eral in excess of $4.2 million. ISN counterclaimed, alleging, among
other things, that Indiana had charged for unnecessary and unreason-
able legal and consulting fees.
On April 28, 1994, while the case was pending, Indiana served a
Motion to Enforce Settlement, alleging that the parties had entered
into an oral settlement agreement at a meeting on February 25, 1994.
In attendance at this meeting for Indiana were David Riese, its vice
president; William Piper, an expert witness for Indiana; and Michael
Blake, attorney of record for Indiana. Present for ISN were Vera
Chawla, its executive vice president; Herbert Rubinstein, its vice
president; Ronald Austin, a consultant for ISN; and Joseph Billings,
in-house counsel for ISN. Neither Roma nor Prem Malkani were at
the meeting. ISN and the Malkanis denied that any settlement agree-
ment was reached at the meeting, so the district court held an eviden-
tiary hearing on July 15, 18 and 20, 1994.
At the hearing ISN claimed that it called the meeting solely to pres-
ent the merits of its case in the KCIA lawsuit and to seek Indiana's
cooperation in that lawsuit. Riese (of Indiana), on the other hand, tes-
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1 Two other named defendants are not parties to these appeals.
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tified that Billings (of ISN) indicated at the outset that the meeting
was "for settlement purposes."
Riese also testified that general settlement discussions took place
at the February 25, 1994, meeting. During these discussions he took
notes and recorded those areas in which he thought the parties were
agreeing. Later in the meeting he composed a list of terms that he
entitled "final agreement." He read each item out loud to secure ISN's
agreement. After Riese read the first term, Billings (ISN) told Chawla
(ISN), "We are settling, we are talking about settling everything."
Riese said that after he finished reading the items in his proposed
agreement, Billings (ISN) and Piper (Indiana) read back the same
items from their respective notes. Riese testified that the following
exchange took place next:
I said to Mrs. Chawla, I said now are you willing to commit
to this settlement -- to this framework for settlement? And
she says, I am. I says, you're willing to commit? And she
says, I am. And I said, we've got a deal.
The parties shook hands and the meeting ended. On the following
Monday Riese found urgent phone messages from Chawla at both his
office and home.
ISN witnesses testified that most of the meeting was devoted to
ISN's presentation of its strategy in the KCIA litigation. They denied
that a settlement agreement had been reached. Rubinstein and Austin,
for example, testified that Chawla had only committed to negotiate
further with Indiana.
ISN introduced evidence that the parties customarily reduced
agreements to writing before considering them binding. But several
Indiana witnesses testified that, in this case, the oral agreement was
simply to be "memorialized" in the form of an order and submitted
to the court.
After the hearing the district judge found that the parties had orally
agreed to settle the case. She found that Riese's notes contained the
terms of the settlement, which she set forth in her order of July 20,
1994, as follows:
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1. This case, including all claims and counterclaims BE,
and the same hereby IS, DISMISSED upon the following
terms agreed to by the parties;
2. ISN will immediately pay to Indiana its unreimbursed
fees and expenses incurred as of February 25, 1994, with
respect to the two bonds issued by Indiana on behalf of ISN
in the current litigation, as itemized between $161,000.00
and $200,000.00;
3. ISN will pay future expenses of VMI and counsel
(Michael Blake) as presented in itemized bills. Mr. Blake
will provide description of work and approximate costs
before proceeding;
4. ISN will attempt to mediate its dispute with Kansas
City, and Indiana will encourage Kansas City to mediate
with ISN;
5. ISN will continue to maintain in a separate account the
amount of One Million Seven Hundred Thousand and no
cents ($1,700,000), or some lesser amount of at least One
Million Dollars and no cents ($1,000,000) as may be agreed
to by Michael Blake and Joseph Billings, in unencumbered
liquid corporate assets as per this court's Order of Septem-
ber 28, 1993, to satisfy any of ISN's obligations to Indiana;
and
6. Indiana will fully cooperate with ISN in preparation for
the Kansas City litigation, and ISN will fully cooperate in
the preparation of that case.
Both parties filed post-hearing motions. Indiana asked the court to
clarify its July 20 order to specify that it retained continuing jurisdic-
tion, and ISN filed a motion asking the court to reconsider its July 20
order. By order, dated November 3, 1994, the district court denied
both motions. ISN appeals the July 20 and the November 3 orders.
On December 12, 1994, Indiana filed a motion to enforce the judg-
ment of the court. Indiana claimed that ISN had refused to comply
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with a provision of the settlement agreement and asked the district
court to issue a writ of execution pursuant to Fed. R. Civ. P. 69 and
70 to force compliance. By order dated April 19, 1995, the district
court denied Indiana's motion. On May 10, 1995, the court denied
Indiana's motion for reconsideration. Indiana appeals the April 19 and
May 10 orders. We consolidated the two appeals.
II.
We turn first to ISN's appeal from the district court's determination
that the parties reached a settlement agreement. The district court's
decision rests on factual findings which will be upheld unless clearly
erroneous. Moore v. Beaufort County, 936 F.2d 159, 162 (4th Cir.
1991).
ISN first argues that the parties merely agreed to a"framework of
settlement" (which is unenforceable) rather than a final agreement.
We disagree. The district judge found that Riese (Indiana) offered to
settle the case when he said he was willing to commit to the terms dis-
cussed. Likewise, the court found that Chawla (ISN) accepted when
she said she was "willing to commit." The district judge found that
Chawla understood that she was committing to a final settlement.
There were no words restricting the import of her willingness to
"commit." Moreover, earlier in the meeting ISN representatives had
discussed who had authority to commit and what stage the settlement
discussions had reached. Billings (ISN) stated at the outset of the
meeting that the discussions were for settlement purposes. Riese testi-
fied that later in the meeting Billings reiterated that the parties were
still negotiating. However, after further discussions, Billings informed
Chawla that the parties were "talking about settling everything." This
progression indicated to the district judge that Chawla understood she
was agreeing to a final settlement.
The district judge thoroughly explained why she credited Indiana's
witnesses over ISN's. For instance, she considered it significant that
at the hearing Billings (ISN) neither produced his notes from the
meeting nor testified as to their contents. Yet all Indiana representa-
tives who were at the meeting testified at the hearing. She also noted
that Chawla had placed urgent calls on Monday or Tuesday following
the meeting. The district judge felt that had there simply been an
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agreement to negotiate further, there would have been no urgency to
the calls. Finally, she found that ISN had a strong motive to settle the
case: ISN wanted to enlist Indiana's assistance in the KCIA litigation
and avoid battling on two fronts. We think the evidence on which the
district court relied and the inferences drawn from it amply support
the finding that the parties reached a final agreement.
ISN next argues that the parties did not intend to bind themselves
until a written agreement was drafted and signed. ISN says that the
parties customarily settled complex cases in writing, not orally. We
reject this argument. Riese, Piper and Blake all testified that the par-
ties intended merely to "memorialize" the agreement to which they
already considered themselves bound. Moreover, Riese testified that
he often settled matters with other parties by oral agreement. We
think the district court's finding that the parties considered themselves
bound by the oral agreement is not clearly erroneous.
Third, ISN says the purported agreement is invalid because the
Malkanis did not agree to the settlement. ISN insists that the district
court made no finding that Chawla had authority to bind the Mal-
kanis. We disagree. The district court "conclude[d] as a matter of fact
that Ms. Chawla [had] the authority to deal with this litigation." We
read this as a finding that Chawla had authority to settle on behalf of
all defendants. That finding, given Chawla's role and position, is not
clearly erroneous.
Finally, ISN argues that no agreement was reached because the
purported terms were too indefinite, vague and incomplete. For
instance, the agreement required ISN to pay Indiana between
$161,000 and $200,000 for expenses and to maintain an account con-
taining between $1 million and $1.7 million, the precise amount to be
negotiated. And it required Indiana to "fully cooperate" with ISN in
the KCIA litigation.
Under Maryland law,2 a contract is not valid unless "the parties
express themselves in such terms that it can be ascertained to a rea-
sonable degree of certainty what the agreement meant. If the agree-
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2 The parties agree that Maryland law governs.
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ment is so vague and indefinite that it is not possible to collect from
it the full intention of the parties, it is void." Marmott v. Maryland
Lumber Co., 807 F.2d 1180, 1183 (4th Cir. 1986) (quoting Strickler
Engineering Corp. v. Seminar, Inc., 122 A.2d 563, 568 (Md. 1956)),
cert. denied, 482 U.S. 929 (1987). In this case, we think the terms are
sufficiently definite. First, with regard to the expenses, the figure of
$161,000 was based upon the January 21, 1994, computation which
Indiana had submitted to ISN prior to the February 25 meeting. The
parties understood that Indiana had incurred additional expenses
between January 21 and February 25 which would be paid under the
settlement but had not yet been itemized. The parties agreed that the
expenses would be capped at $200,000. Second, the requirement that
ISN maintain $1.7 million in a separate account was a continuation
of an agreement described in a stipulation the parties had filed with
the court on September 28, 1993. The terms of the deposit were
detailed in the stipulation. Finally, the district court found that "fully
cooperate" meant providing ISN access to Indiana's legal and consult-
ing expertise. In addition, we think "fully cooperate" is no more
ambiguous than other terms, such as "best efforts," commonly found
in commercial contracts. In short, we conclude that the terms of the
agreement are sufficiently definite.
III.
We now turn to Indiana's appeal. Indiana first argues that the trial
court's order of July 20, 1994 is a judgment, and therefore the court
erred by refusing to enforce it pursuant to Fed. R. Civ. P. 69 or 70.
Indiana relies on cases which hold that courts have the inherent
authority to summarily enforce settlement agreements and enter judg-
ments based upon the agreements. See, e.g., Petty v. Timken Corp.,
849 F.2d 130, 133 (4th Cir. 1988). We reject Indiana's argument.
Rules 69 and 70 have no application here. Rule 69 prescribes proce-
dures for enforcing "judgment[s] for the payment of money," and
Rule 70 addresses judgments directing a party to perform specific
acts. The district court's July 20 order neither entered a money judg-
ment against ISN, nor ordered it to perform specific acts. The order
simply dismissed the lawsuit based on the settlement. The district
court was not obligated to enter the judgment Indiana seeks based
upon the agreement merely because it had the authority to do so.
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Indiana next argues that the district court erred in ruling that it had
not retained jurisdiction of the case to enforce the settlement. This
argument is meritless. A court may, in its discretion, retain jurisdic-
tion over a settlement agreement by making the parties' obligation to
comply with the settlement agreement a part of the dismissal order.
See Kokkonen v. Guardian Life Ins. Co. of America, 114 S. Ct. 1673,
1677 (1994). A district court may evidence an intent to retain jurisdic-
tion by including in the dismissal order a separate provision, such as
a provision expressly retaining jurisdiction over the settlement agree-
ment, or by incorporating the terms of the settlement agreement in the
order. See id. Here, in her denial of Indiana's motion for reconsidera-
tion, the district judge stated that she did not intend to retain jurisdic-
tion and did not incorporate the settlement terms in the order. In light
of the judge's clear statement of intent, we see no reason to reverse
her conclusion that she lacked jurisdiction to enforce the settlement.
Thus, as the district judge stated, Indiana's remedy is to file suit for
breach of contract or to move to reinstate the original suit pursuant
to Fed. R. Civ. P. 60(b)(6). See Fairfax Countywide Citizens Ass'n v.
Fairfax County, 571 F.2d 1299, 1302-03 (4th Cir.), cert. denied, 439
U.S. 1047 (1978).
IV.
The district court's decision in each appeal is affirmed.
AFFIRMED
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