Hakim, Michael v. Payco-General ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-1831
Michael Hakim,
Plaintiff-Appellant,
v.
Payco-General American
Credits, Inc. and OSI, Inc.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 1904---Ruben Castillo, Judge.
Argued November 7, 2001--Decided November 29, 2001
Before Flaum, Chief Judge, and Posner and
Kanne, Circuit Judges.
Flaum, Chief Judge. The district court
granted defendants’ motion to enforce a
binding settlement agreement between
Hakim and Payco-General/OSI. Hakim
appeals. For the reasons set forth below,
we affirm.
I. Background
Until his March 1, 1999 resignation,
Michael Hakim was a debt collector at the
Schaumburg, Illinois facility of
Outsourcing Collection Services, Inc.
(formerly Payco-General American Credits,
Inc.) ("Payco"), a subsidiary
ofOutsourcing Solutions, Inc. ("OSI").
Soon after he left Payco, Hakim filed a
charge with the Cook County Commission on
Human Rights ("CHR"), claiming
discrimination on the basis of perceived
sexual orientation. In July 1999, Hakim
joined an existing Title VII lawsuit,
claiming retaliation, assault and
battery, and discrimination. Hakim and
OSI began settlement discussions in
December 1999, when Hakim requested a
$95,000 settlement. OSI, believing
Hakim’s claims to have little merit,
refused to settle under those terms. On
March 30, 2000, after a settlement
conference, Hakim again offered to
settle, this time reducing his demand to
$12,500. Again OSI rejected the offer and
told Hakim’s attorney, Marshall Burt,
that it was not willing to pay Hakim
anything. Meanwhile, on March 26, Hakim
sent the district court an affidavit
prepared for Katrina Malone, an OSI
employee, alleging that she had been
coerced into giving false witness
statements during OSI’s investigation of
Hakim’s co-plaintiff’s allegations, and
false deposition testimony at trial. The
district court held an evidentiary
hearing on the issue on April 26, 2000.
Attorneys for both sides were present.
After the hearing, on May 4, 2000, Burt
telephoned OSI’s attorney, Beth Golub,
further pursuing settlement. Golub
suggested a settlement whereby Hakim
would voluntarily dismiss his federal
claims as well as his charge pending
before the CHR in exchange for OSI’s
agreement to forgo its right to seek
reimbursement of litigation costs. On May
18, the parties agreed to the terms of
the settlement. During the conversation
agreeing to the settlement, Burt
requested that OSI sign a stipulation for
the dismissal of Hakim’s claims in
federal court, stating that each party
would pay its own costs. Golub agreed,
and Burt mailed the prepared stipulation
as well as the dismissal to Golub later
that day.
On May 17, the day before the parties
agreed to the terms of the settlement and
unbeknownst to either party, the district
court determined that OSI knowingly and
intentionally coerced fraudulent
statements and testimony from Malone, and
entered default judgment against OSI in
favor of all four plaintiffs, including
Hakim. When the parties learned of this
judgment on May 19, Hakim, through Burt,
attempted to withdraw his offer to
settle. OSI replied that the parties had
already reached a binding settlement
agreement.
On May 30, OSI moved to vacate the
default judgment and enforce the
settlement agreement. The district court,
without holding an evidentiary hearing,
granted the motion.
II. Discussion
The law of this Circuit is clear that we
review a district court’s decision to
enforce a settlement agreement for abuse
of discretion. Carr v. Bloom, 89 F.3d
327, 331 (7th Cir. 1996) ("Given that the
power to implement a settlement agreement
between the parties inheres in the
district court’s role as supervisor of
the litigation, the exercise of that
power is particularly appropriate for
deferential review."); Wilson v. Wilson,
46 F.3d 660, 664 (7th Cir. 1995)
("[Enforcement of a settlement agreement]
is precisely the type of determination
that normally receives a deferential,
abuse of discretion review."). Hakim
inartfully argues that a de novo standard
applies when the reviewing court must
determine whether or not a material issue
of fact concerning the existence of a
settlement exists, requiring an
evidentiary hearing. Our case law holds
otherwise. "[I]n considering a district
court’s decision whether to enforce a
settlement agreement, including its
threshold determination of whether the
parties actually entered into a valid and
enforceable agreement, we will not
reverse unless the lower court abused its
discretion." Carr, 89 F.3d at 331(emphasis added). Therefore, we must ask
not whether we agree with the district
court’s ruling, but whether that ruling
was reasonable. Id. (citing Antevski v.
Volkswagenwerk Aktiengesellschaft, 4 F.3d
537, 539-40 (7th Cir. 1993)). We find
that it was.
The district court was presented with
ample evidence on the record to support
its finding, without holding a hearing,
that a binding settlement agreement
existed. "If . . . a court can have
reasonable confidence that it knows what
the contract means, it ought not put the
litigants (and the trier of fact) to the
bother, expense, and uncertainty of a
trial or other evidentiary hearing."
Overhauser v. United States, 45 F.3d
1085, 1087 (7th Cir. 1995). The district
court’s finding that the parties entered
into an executory contract was well
supported by the facts presented to it.
That the parties agreed that OSI would
not seek recovery of costs and Hakim
would voluntarily withdraw his case from
both federal court and the CHR is
supported by Burt’s directions to Golub
to sign the stipulation he mailed to her,
with no discussion of any condition
precedent, as well as by the fact that
Hakim had been actively pursuing a
settlement agreement. Three settlement
agreements had been negotiated between
OSI and the plaintiffs in the Title VII
case. The district court, after
considering the briefs, affidavits, and
record evidence, determined that,
although one did warrant an evidentiary
hearing, Hakim’s did not. This finding
was in no way unreasonable.
Moreover, we cannot accept Hakim’s
arguments that the settlement agreement
is void for lack of consideration./1
Forbearance of a right to a legal claim
constitutes valid consideration. E.g.,
Kapoor v. Robins 573 N.E.2d 292, 297
(Ill. Ct. App. 1991). Even if, in
hindsight, the legal claim was improbable
or nonexistent, "it would be enough if at
the time of settlement [the party]
believed in good faith it was vulnerable
to a claim by [the other party.]"
Intamin, Inc. v. Fingley Wright
Contractors, Inc., 605 F.Supp. 707, 711
(N.D. Ill. 1985). Hakim decided to settle
with OSI to obtain certainty that he
would not be liable for OSI’s court costs
and attorney fees. He decided that he
would rather have this certainty than the
chance to obtain a favorable judgment
from the district court. It turns out
that his chances of receiving such a
judgment were better than he had thought.
This does not make the agreement invalid,
however, and the district court was well
within its discretion to enforce it.
Lastly, Hakim cannot avoid the
settlement agreement by contending that
OSI acted fraudulently or in bad faith by
coercing false testimony of a witness.
Hakim did not show that he relied on
OSI’s false statements or bad faith
conduct in entering into the settlement
agreement. In fact, as the district court
explained, Hakim requested and witnessed
the evidentiary hearing on the issue of
OSI’s coercion of Malone. He pursued the
settlement notwithstanding his belief
that OSI acted in bad faith, and with
full knowledge that, if he did not
settle, the court had the authority
toenter a default judgment in his favor.
Again, the district court’s decision was
reasonable.
III. Conclusion
Because the district court, in its role
as supervisor of the litigation, may
summarily enforce a settlement agreement,
and because the court had abundant record
evidence to support its conclusion, we
find no abuse of discretion. We AFFIRM.
FOOTNOTE
/1 Although the parties argued the issue below, the
district court made no specific finding as to
consideration. The finding of consideration is
implicit, however, in the court’s enforcement of
the settlement agreement.