Holmes, Rochester v. Potter, John E. ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-2138
R OCHESTER H OLMES,
Plaintiff-Appellant,
v.
JOHN E. P OTTER, Postmaster General,
United States Postal Service,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 05 C 447—Andrew P. Rodovich, Magistrate Judge.
A RGUED JANUARY 18, 2008—D ECIDED D ECEMBER 31, 2008
Before B AUER, W ILLIAMS, and SYKES, Circuit Judges.
W ILLIAMS, Circuit Judge. Rochester Holmes maintains
that his former employer, the United States Postal Service,
breached a settlement agreement signed after the media-
tion of a complaint he brought under the Rehabilitation
Act. In particular, he contends that the USPS breached the
agreement by requiring him to repay a voluntary with-
drawal he had taken from his retirement account, by
2 No. 07-2138
improperly calculating his retirement amount using his
time in the military, and by adjusting his annual leave
payment based on an existing negative leave balance.
Because the settlement agreement is unambiguous, inte-
grated, and contains no provisions detailing how benefits
were to be calculated, the USPS did not breach the agree-
ment. Therefore, we affirm the grant of summary judg-
ment in the USPS’s favor.
I. BACKGROUND
Rochester Holmes began working for the United States
Postal Service in 1970. In 1992, he filed a complaint in
federal court in Minnesota alleging that the USPS violated
Title VII during his employment there. Around that time,
he had a break in service from his employment with the
USPS and voluntarily withdrew about $60,000 from his
retirement account. The case was settled in October 1994.
Shortly thereafter, Holmes began working at the Gary,
Indiana postal facility. On June 25, 2003, he filed a discrimi-
nation complaint with the EEOC alleging that he had a
disability (Chronic Adjustment Order with Depressed
Mood and Mixed Anxiety and a Phase Life problem) that
the USPS failed to accommodate in violation of the Reha-
bilitation Act. An EEOC administrative law judge referred
the case to mediation.
The mediation took place on May 26, 2004. Holmes
was present at the mediation along with his attorney. A
USPS management employee and a USPS attorney also
attended, though the parties were in separate rooms
No. 07-2138 3
during the mediation and communicated only through a
mediator. The mediation proved successful, and the
parties executed and signed a written settlement agree-
ment that day. The agreement provided that retroactive to
January 1, 2003 and continuing through October 6, 2004,
Holmes would be placed on twenty hours per week
administrative leave status and twenty hours per week
leave without pay status. It also specified the salary he
would receive during that period and provided that he
was to retire or be deemed to have resigned effective
October 6, 2004. The agreement also contains a clause that
states: “[T]his settlement agreement contains all of the
terms and conditions agreed to by the parties in settle-
ment of this matter.”
After the mediation, the federal government’s Office of
Personnel Management (“OPM”) calculated that Holmes
was owed $824.05 for unused annual leave. Also, a little
over seven months after the mediation, the OPM wrote
Holmes that because he had previously withdrawn retire-
ment funds in the amount of $59,984, he could pay back
that amount and receive retirement payments of $3233 per
month, or not repay the amount and receive retirement
benefits of $1096 per month.
Maintaining that USPS breached the terms of the settle-
ment agreement, Holmes filed for enforcement of the
agreement with the EEOC. The EEOC ruled that USPS had
not violated the agreement, and Holmes filed suit in
federal district court. He now appeals from the entry of
summary judgment against him.
4 No. 07-2138
II. ANALYSIS
Under the now-familiar standard, summary judgment
is proper only if “there is no genuine issue of material
fact and the moving party is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c). We review the district
court’s grant of summary judgment de novo, Petts v.
Rockledge Furniture LLC, 534 F.3d 715, 720 (7th Cir. 2008),
and note that “[t]he interpretation of an established written
contract is generally a question of law for the court,” In re
United Airlines, Inc., 453 F.3d 463, 468 (7th Cir. 2006).
A. Threshold issues
We begin with a quick word about our jurisdiction. A
federal district court may not enforce a settlement agree-
ment unless an independent basis of federal jurisdiction
exists. Lucille v. City of Chicago, 31 F.3d 546, 548 (7th Cir.
1994). We have ruled before that a private plaintiff may
bring an action under Title VII to enforce a pre-determina-
tion settlement agreement. Ruedlinger v. Jarrett, 106
F.3d 212, 215 (7th Cir. 1997). Claims under the Rehabil-
itation Act are enforceable through Title VII of the Civil
Rights Act of 1964, 29 U.S.C. § 794a(a)(1), so the rationale
in Ruedlinger applies here as well.
Another threshold issue is whether state or federal law
applies to the interpretation of the settlement agreement.
Holmes maintains that the settlement agreement is a
federal contract subject to federal common law, while
the USPS contends that state law should apply. The
USPS is correct. A “settlement of a federal claim is
No. 07-2138 5
enforced ‘just like any other contract’ under the state law
of contract.” Dillard v. Starcon Int’l, 483 F.3d 502, 508 (7th
Cir. 2007); see also Pohl v. United Airlines, Inc., 213 F.3d 336,
338 (7th Cir. 2000) (“Issues regarding the formation,
construction, and enforceability of a settlement agree-
ment are governed by local contract law.”). Our decision
in Funeral Financial Systems v. United States, 234 F.3d 1015
(7th Cir. 2000), does not counsel otherwise. We applied
federal common law in that case because we were inter-
preting provisions in a federal government contract, in
particular, the plaintiff’s contract with the government to
provide insurance to military personnel, and the suit was
brought under federal statute. Id. at 1017-18; cf. Empire
Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 691
(2006) (noting that uniform federal law need not be
applied in all cases involving federal government con-
tracts). We note, too, that the result in this case is the
same under both federal and Indiana state law.
B. Holmes’s specific arguments
Under Indiana state law, the court’s goal in interpreting
a contract is to “give effect to the parties’ intent as reason-
ably manifested by the language of the agreement.” Reuille
v. Brandenberger Constr., Inc., 888 N.E.2d 770, 771 (Ind.
2008). Indiana follows the rule that “extrinsic evidence
is not admissible to add to, vary or explain the terms of a
written instrument if the terms of the instrument are
susceptible of a clear and unambiguous construction.”
Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 532 (Ind.
2006) (citation omitted). Therefore, unless the terms of a
6 No. 07-2138
contract are ambiguous, they will be given their plain
and ordinary meaning. Reuille, 888 N.E.2d at 771.
1. Annuity calculation
Holmes first argues that an issue of fact exists as to
whether the USPS breached the settlement agreement
when it reduced his retirement annuity by $59,984 after
the agreement’s execution. He states that during the
mediation, the mediator performed calculations of the
amount Holmes could expect to receive that did not
account for this reduction and that he signed the settle-
ment agreement based on these calculations.
Holmes had a break in service with the USPS during the
early 1990’s, and he received $59,984 from his retirement
account during that time. When the government discov-
ered this earlier voluntary withdrawal about seven
months after the mediation, it informed Holmes that if he
did not redeposit $59,984, his monthly annuity payment
would be $1096 instead of the $3233 he says he anticipated
after the mediation. (Holmes said nothing during the
mediation about his earlier withdrawal.)
The reduction in annuity was not a breach of the settle-
ment agreement because the agreement does not concern
Holmes’s retirement benefits. The agreement does pro-
vide that “on October 6, 2004, [Holmes] shall either be
deemed to have retired or voluntarily resigned from his
employment.” The agreement therefore required the USPS
to consider October 6, 2004 as Holmes’s last date of em-
ployment, and it did so. But there is no discussion of the
No. 07-2138 7
amount of money Holmes would be paid during retire-
ment, and the agreement did not spell out how his retire-
ment pay would be computed if he chose to retire.
The settlement agreement required that Holmes be
placed on paid administrative leave for twenty hours per
week and approved leave without pay for the other twenty
hours per week for a certain period. That was done. The
agreement provided that Holmes would receive a specified
salary during that time. That was done. The agreement
required that Holmes retire or be deemed resigned as of
October 6, 2004. That was done. The agreement also
required that the USPS pay Holmes’s attorney’s fees. That
too was done. The settlement agreement simply contains
no provisions specifying the amount Holmes would
receive each month upon retirement or the method for
calculating that amount.
In addition, the mediator’s statements to Holmes
during the mediation session do not create a triable issue.
Holmes maintains that evidence about what the mediator
said to him during the mediation should be considered to
ascertain the parties’ intent. But we find nothing ambigu-
ous about the word “retire” or any other word in the
settlement agreement, and “extrinsic evidence is not
admissible in an attempt to create an ambiguity.” DeBoer v.
DeBoer, 669 N.E.2d 415, 421 (Ind. Ct. App. 1996), disapproved
of on other grounds by Merritt v. Merritt, 693 N.E.2d 1320,
1324 n.4 (Ind. Ct. App. 1998).
Finally, that Holmes settled the discrimination suit
he brought in Minnesota does not mean that the USPS
should now refund the $59,984 he voluntarily withdrew
8 No. 07-2138
from his retirement account during his break in service
from the USPS in Minnesota. The Minnesota settlement
agreement makes no mention at all of the money he
withdrew from his retirement funds, nor does the settle-
ment agreement in this case.
2. Other provisions
Holmes also argues that a genuine issue of material fact
exists as to whether the USPS properly calculated his
retirement benefits in light of his time in the military.
Immediately prior to beginning his employment at the
USPS, Holmes served in the United States Air Force from
April 7, 1969 through November 25, 1970. Holmes asserts
that the mediator stated during the course of the media-
tion that the USPS was willing to add sufficient years of
service to equal thirty years of service with the USPS
exclusive of Holmes’s military time.
The settlement agreement, however, makes no mention
of any such understanding or of Holmes’s military service.
Instead, it contains an integration clause stating that the
agreement “contains all of the terms and conditions
agreed to by the parties in settlement of this matter.”
Under Indiana law, the parol evidence rule generally
prohibits the introduction of extrinsic evidence for the
purposes of varying the terms of a contract when parties
have reduced an agreement to writing and included an
integration clause. Illiana Surgery & Med. Ctr., LLC v. STG
Funding, Inc., 824 N.E.2d 388, 400 (Ind. Ct. App. 2005).
Holmes does not argue that any exception to this general
rule, such as fraud in the inducement, applies, so we will
No. 07-2138 9
only consider the terms of the settlement agreement itself.
The agreement does not discuss Holmes’s military service,
and USPS did not breach the settlement agreement when
it computed the amount of Holmes’s retirement or the
dates used in this calculation.
Holmes also argues that the USPS breached the settle-
ment agreement by improperly calculating the amount of
annual leave owed to him. The agreement provides that
Holmes’s employment status from January 1, 2003 through
October 6, 2004 “shall be 20 hours per week paid adminis-
trative leave and 20 hours per week approved leave
without pay.” It further specified October 6, 2004 as
Holmes’s last day of service with the USPS.
Consistent with the settlement agreement, Holmes
accrued annual leave through October 6, 2004, and he
does not dispute that he was properly credited with
accruing 192 hours of annual leave from January 1, 2003
through October 6, 2004. Instead, Holmes’s quarrel is
with an adjustment made later, after the government
reviewed Holmes’s annual leave balance. Upon review, the
government concluded that Holmes had a negative
balance of 168 hours of annual leave at the end of 2002,
and its annual leave computation reflected an adjustment
for that balance. But even if the annual leave adjustment
was incorrect, it would not constitute a breach of the
settlement agreement because none of its provisions
mentions annual leave. Similarly, if Holmes did not
receive the annual leave check as he suggests, his remedy
is not in a suit for breach of the settlement agreement.
Finally, Holmes maintains that the USPS breached the
settlement agreement when it deducted the cost of health
10 No. 07-2138
insurance premiums it had advanced to him. Again,
however, the settlement agreement makes no mention of
this detail, and any such deduction did not breach the
agreement.
III. CONCLUSION
The judgment of the district court is AFFIRMED.
12-31-08