Rogler v. Standard Insurance

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
FEB 28 2002
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
EDAR Y. ROGLER,
Plaintiff-Appellant,
v. No. 01-3157
(D.C. No. 00-CV-2104-GTV)
STANDARD INSURANCE (D. Kan.)
COMPANY,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before MURPHY , McKAY , and BALDOCK , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Plaintiff Edar Y. Rogler is appealing, inter alia , the order entered by the
district court granting defendant Standard Insurance Company’s (Standard)
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
motion to enforce settlement agreement and denying her motions for sanctions
against Standard and its counsel. We affirm.
I.
Standard issued a disability insurance policy to Ms. Rogler in 1993. At
the time, Ms. Rogler was working as an attorney in California. In October 1994,
Ms. Rogler submitted a claim for disability benefits to Standard, and Standard
accepted the claim and began paying benefits to her in February 1995. In July
1997, Standard closed Ms. Rogler’s claim and terminated benefits. According to
Standard’s termination letter, it terminated benefits because: (1) Ms. Rogler
failed to execute proper authorization forms for the release of medical records so
that Standard could continue to evaluate whether she was disabled; and (2) at the
request of Standard, Ms. Rogler underwent a neuropsychological evaluation in
December 1996, and the doctor who performed the evaluation concluded that she
was able to return to work as an attorney and that there was no reasonable basis to
support a disability claim.
Standard’s quality assurance unit subsequently reviewed the termination of
Ms. Rogler’s benefits, and it concluded that Standard made the correct decision in
closing her claim. In a letter to Ms. Rogler dated December 8, 1997, Standard
advised Ms. Rogler of the quality assurance review and informed her that: (1) the
medical information in her file indicated that she was capable of working as an
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attorney; and (2) her refusal to provide proper authorization forms had affected
Standard’s ability to properly administer her claim. Standard also informed
Ms. Rogler that there were material omissions in her policy application
concerning her past medical history, and Standard listed the prior medical
conditions which Ms. Rogler had allegedly failed to disclose in the letter.
In June 1999, Ms. Rogler filed suit against Standard in a Kansas state court,
and Standard removed the case to the United States District Court for the District
of Kansas. In her first amended complaint, Ms. Rogler claimed that Standard
wrongfully terminated her benefits and she asserted claims for breach of contract,
attorney’s fees, and interest. In its answer to the first amended complaint,
Standard denied it wrongfully terminated Ms. Rogler’s benefits, and it asserted
a number of affirmative defenses, including the defense that Ms. Rogler’s
“application for the Policy contain[ed] material misstatements that would provide
the basis to void the Policy and/or to deny plaintiff’s claim for benefits.”
See R., Doc. No. 23 at 3, ¶ 17.
Ms. Rogler subsequently filed a motion for leave to file a second amended
complaint. In her second amended complaint, Ms. Rogler added claims against
Standard for bad faith and punitive damages, alleging that Standard engaged in
a number of abusive and coercive practices in administering and terminating her
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benefits. The district court denied Ms. Rogler’s motion for leave on the grounds
that she unduly delayed in requesting the amendment. 1
The district court scheduled a settlement conference for September 1, 2000.
In the confidential settlement statement he submitted to the court, counsel for
Standard, Morris J. Nunn, stated that Ms. Rogler was not disabled from working
as an attorney. Mr. Nunn also stated that Ms. Rogler made misrepresentations in
her policy application concerning her pre-existing medical conditions. In support
of Standard’s settlement statement, Mr. Nunn submitted the letter from Standard
to Ms. Rogler dated December 8, 1997, which is referred to above.
Ms. Rogler and Standard agreed to a settlement at the settlement
conference. However, Ms. Rogler subsequently failed to execute the written
settlement agreement which Mr. Nunn forwarded to her, and Mr. Nunn filed a
motion to enforce the settlement agreement. A hearing on the motion was held
before the magistrate judge on September 29, 2000. At the hearing, Ms. Rogler
and Mr. Nunn prepared and executed a written settlement agreement. According
to the terms of the agreement, the parties agreed to settle all claims relating to
Ms. Rogler’s disability policy. The parties further agreed that the policy was
thereafter void, and Ms. Rogler released Standard from all claims relating to the
1
Specifically, Ms. Rogler did not file her motion for leave to file her second
amended complaint until one month after the deadline set by the district court for
amending pleadings.
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policy, including all claims for past or future disability benefits. Ms. Rogler also
agreed to sign a stipulation of dismissal with prejudice. 2
At the hearing on
September 29, Standard submitted separate settlement checks to Ms. Rogler and
her counsel, and both checks were subsequently negotiated. 3
Ms. Rogler subsequently refused to sign a stipulation of dismissal. After
being informed of this fact, the district court ordered Ms. Rogler to appear at
a hearing on November 20, 2000 to show cause as to why Standard’s
previously-filed motion to enforce the settlement agreement should not be
granted. At the hearing, Ms. Rogler informed the court that she was not objecting
to the settlement agreement the parties executed. Nonetheless, she requested
additional time to respond to Standard’s motion to enforce the agreement, and the
court granted her request.
Ms. Rogler subsequently filed numerous pleadings and declarations in the
district court, and her filings clearly indicated that she was in fact seeking to void
2
The settlement agreement also contains a confidentiality provision, and
Ms. Rogler claims that Standard and Mr. Nunn have violated the confidentiality
provision by disclosing certain terms of the agreement in the proceedings before
the district court and this court. We note, however, that the confidentiality
provision only bars Ms. Rogler from disclosing the terms of the settlement
agreement and Standard is not subject to such a restriction.
3
Prior to the hearing on September 29, Ms. Rogler had instructed her
attorney to withdraw from the case, and the magistrate judge entered an order
on September 29 permitting her counsel to withdraw. Thereafter, Ms. Rogler
represented herself before the district court and she has continued to proceed
pro se on appeal.
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the settlement agreement. In particular, she filed a brief in opposition to
Standard’s motion to enforce the settlement agreement and motions for sanctions
against Standard and Mr. Nunn pursuant to the inherent power of the court and
Fed. R. Civ. P. 11. On April 13, 2001, the district court held an evidentiary
hearing on these motions. At the conclusion of the hearing, the court granted
Standard’s motion to enforce the settlement agreement and denied Ms. Rogler’s
motions for sanctions, and the court entered an order confirming these and other
rulings on April 20, 2001. Ms. Rogler is now appealing all of the rulings in the
district court’s April 20 order that were adverse to her. She is also appealing the
district court’s order denying her motion for leave to file her second amended
complaint.
II.
A. Motion to Enforce Settlement Agreement
“A trial court has the power to summarily enforce a settlement agreement
entered into by the litigants while the litigation is pending before it.” United
States v. Hardage , 982 F.2d 1491, 1496 (10th Cir. 1993). We review the district
court’s order enforcing the settlement agreement for an abuse of discretion.
See id. at 1495.
Issues involving the enforceability of a settlement agreement are resolved
by applying state law. See United States v. McCall , 235 F.3d 1211, 1215
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(10th Cir. 2000). Under Kansas law, “in the absence of bad faith or fraud, when
parties enter into an agreement settling and adjusting a dispute, neither party is
permitted to repudiate it.” Krantz v. Univ. of Kan. , 21 P.3d 561, 567 (Kan. 2001).
Similarly, a “mere mistake of fact on the part of one of the parties to a release, in
the absence of fraud, duress, undue influence, or mental incapacity, is not
sufficient ground for the avoidance of a release.” Fieser v. Stinnett , 509 P.2d
1156, 1160-61 (Kan. 1973).
The district court did not specifically address whether the settlement
agreement could be set aside on any specific grounds. Instead, it granted
Standard’s motion to enforce the agreement because it found that the agreement
was fair and reasonable; that Ms. Rogler understood the terms of the agreement
at the time she entered into it; and that she accepted the benefits of the agreement
by negotiating her settlement check. We agree with the district court’s analysis,
and we hold that Ms. Rogler has failed to establish sufficient grounds for setting
aside the settlement agreement.
The misconduct alleged by Ms. Rogler must be broken into pre- and
post-litigation conduct. With respect to pre-litigation, Ms. Rogler alleges that
Standard acted fraudulently and in bad faith in terminating her disability benefits
because it made misrepresentations regarding the acceptance and contestibility of
her claim and falsely claimed she made misrepresentations in her policy
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application. Ms. Rogler also alleges that an agent of Standard threatened to
release her medical records to the public if she pursued litigation against
Standard, and, further, that an agent of Standard burglarized her office and
removed certain documents from her copy of Standard’s claim file. With respect
to post-litigation, Ms. Rogler alleges that Mr. Nunn asserted a false affirmative
defense that she made misrepresentations in her policy application as part of
a preconceived plan to intimidate and coerce her into settling by making her prior
medical records admissible if her case went to trial. According to Ms. Rogler,
Mr. Nunn then made an implicit threat to release her medical records into the
public records of the district court if she did not settle by disclosing her prior
medical history in the confidential settlement statement.
We are not persuaded by Ms. Rogler’s arguments. First, the alleged
pre-litigation conduct is what formed the basis of Ms. Rogler’s substantive claims
against Standard, and she cannot rely on these very same claims to attack the
settlement agreement. Second, with respect to the alleged post-litigation conduct,
the district court correctly found that the denials and affirmative defenses in
Standard’s answer were warranted based on the evidence in Standard’s claim file,
and we see nothing in Standard’s answer that calls into question the validity
of the settlement agreement. Further, there is no evidence that Standard or
Mr. Nunn ever threatened to publically release Ms. Rogler’s medical records after
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she filed litigation, and we will not infer such a threat based solely on the
contents of the confidential settlement statement. Accordingly, the district court
did not abuse its discretion in enforcing the settlement agreement. 4
B. Inherent Power Sanctions
The district court denied Ms. Rogler’s request for sanctions pursuant to its
inherent power because it found that she did not meet her burden of proving that
Standard acted in bad faith. We review the district court’s decision not to impose
sanctions pursuant to its inherent power for an abuse of discretion. See Chambers
v. NASCO, Inc., 501 U.S. 32, 55 (1991).
It is well established that a federal district court has the inherent power to
“assess attorney’s fees when a party has acted in bad faith, vexatiously, wantonly,
or for oppressive reasons.” Id. at 45-46 (quotations omitted). However, this
power only extends to “bad faith conduct in litigation .” Morganroth &
Morganroth v. DeLorean , 213 F.3d 1301, 1317 (10th Cir. 2000) (emphasis in
original). 5
As set forth above, the record does not support Ms. Rogler’s claim
4
Ms. Rogler also alleges that the settlement agreement violated the public
policy of Kansas and California because it required her to surrender all of her
rights under the policy. Ms. Rogler has put forth no legal authority in support of
this argument, and we reject it because the provision in the settlement agreement
voiding Ms. Rogler’s disability policy is a reasonable provision given the lump
sum nature of the settlement.
5
This result could be different in a diversity case such as this one if
there is an underlying substantive state-law policy allowing sanctions based on
(continued...)
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that Standard and Mr. Nunn acted in bad faith or otherwise improperly during the
course of the litigation before the district court. We therefore hold that the
district court did not abuse its discretion in denying her motion for inherent
power sanctions.
C. Rule 11 Sanctions
The district court denied Ms. Rogler’s Rule 11 motion because it found that
Mr. Nunn performed a reasonable investigation before filing an answer on behalf
of Standard and that the defenses and factual denials he included in the answer
were supported by the evidence. The court also found that Standard did not
violate Rule 11. We review the district court’s decision not to impose sanctions
under Rule 11 for an abuse of discretion. See Hughes v. City of Fort Collins ,
926 F.2d 986, 988 (10th Cir. 1991) (quotation omitted).
Rule 11 only applies to the presentation of “pleading[s], written motion[s],
or other paper[s]” to the court. Fed. R. Civ. P. 11(b). Ms. Rogler’s Rule 11
motion must therefore be limited to her claims that Standard and Mr. Nunn:
5
(...continued)
pre-litigation conduct. See Morganroth , 213 F.3d at 1317-18. However, we
have not found any Kansas case law indicating that Kansas recognizes such
a substantive policy, and we predict that the Kansas Supreme Court would
follow the weight of federal authority and hold that a court’s inherent power to
award attorney’s fees for bad faith conduct is limited to conduct occurring
during litigation. Cf. Richards v. Bryan , 879 P.2d 638, 649 (Kan. Ct. App. 1994)
(noting that “it is well settled that trial courts have inherent power to impose
sanctions for litigation misconduct”) (emphasis added).
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(1) wrongfully denied liability and asserted a false affirmative defense in
Standard’s answer; and (2) submitted documents referring to her prior medical
history as part of Standard’s confidential settlement statement for the improper
purpose of coercing her into settling.
Neither Standard’s answer nor its confidential settlement statement provide
a basis for imposing Rule 11 sanctions. Most importantly, it is undisputed that
there was medical evidence in Standard’s claim file indicating that Ms. Rogler
was capable of working as an attorney and that she failed to disclose certain prior
medical conditions in her policy application. As a result, the district court did not
abuse its discretion in denying Ms. Rogler’s motion for Rule 11 sanctions.
D. Other Rulings of the District Court
We hold that the district court did not abuse its discretion in denying
Ms. Rogler’s motion for leave to file her second amended complaint. Because the
settlement agreement prohibits Standard from disclosing any medical records or
reports concerning Ms. Rogler, we also hold that the district court properly denied
Ms. Rogler’s motion for a protective order. All of the other issues raised on
appeal by Ms. Rogler are moot.
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The orders of the United States District Court for the District of Kansas
are AFFIRMED. 6
Entered for the Court
Bobby R. Baldock
Circuit Judge
6
With respect to the motions pending on appeal, we deny Ms. Rogler’s
motion to strike Standard’s response brief and Standard’s related motion for an
award of costs and attorney’s fees. We grant Ms. Rogler’s motion to submit
Standard’s confidential settlement statement and quality assurance review under
seal, and the record on appeal is supplemented with the sealed documents.
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