Get, LLC v. City of Blackwell

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS January 13, 2011
FOR THE TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
GET, LLC, d/b/a Get Real Cable,
Plaintiff-Appellant,
v. No. 10-6068
(D.C. No. 5:08-CV-00623-R)
CITY OF BLACKWELL, (W.D. Okla.)
Defendant-Appellee.
ORDER AND JUDGMENT *
Before LUCERO, EBEL, and O’BRIEN, Circuit Judges.
Plaintiff GET, LLC (GET), a cable operator, commenced this action
asserting various federal and state law claims when negotiations over the renewal
of its cable franchise with the defendant City of Blackwell broke down. But this
appeal by GET is not about the merits of these claims. Rather, this appeal
concerns the parties’ efforts to settle the case. Specifically, GET challenges the
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
district court’s determination that the parties had reached a binding settlement of
the action, encompassing both a settlement agreement and an associated franchise
agreement, and asks us to reverse the district court’s resultant order enforcing the
agreements and dismissing the case.
“A trial court has the power to summarily enforce a settlement agreement
entered into by the litigants while the litigation is pending before it.” Shoels v.
Klebold, 375 F.3d 1054, 1060 (10th Cir. 2004) (internal quotation marks omitted).
Where, as here, the formation of a purported settlement agreement is at issue, we
look to state contract law to resolve the matter. Id. In Oklahoma, the existence
of a contract, and in particular “whether the minds of the parties ever met in
complete agreement,” is a question of fact. Gomes v. Hameed, 184 P.3d 479, 485
(Okla. 2008); see also Manchester Pipeline Corp. v. Peoples Natural Gas Co.,
862 F.2d 1439, 1445 (10th Cir. 1988). Thus, although our overarching standard
of review is for abuse of discretion, see Shoels, 375 F.3d at 1060, we review the
critical finding at issue in this appeal, that the parties reached a binding
settlement of the case, for clear error, see, e.g., id. at 1056; United States v.
McCall, 235 F.3d 1211, 1215 (10th Cir. 2000). See generally United States v.
Hasan, 609 F.3d 1121, 1127 (10th Cir. 2010) (noting abuse-of-discretion review
incorporates clear-error standard for fact findings). As explained below, we hold
that the district court’s finding was not clearly erroneous and hence affirm its
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enforcement order. 1 We also agree with the district court that GET waived any
argument under the statute of frauds.
I. SETTLEMENT EFFORTS AND ASSOCIATED PROCEEDINGS
At the center of this appeal are the parties’ negotiations over a new
franchise agreement that would obviate further litigation of their dispute. The
district court found that in the course of these negotiations the parties reached
agreement on all material terms, which is the sine qua non of a binding contract,
Watkins v. Grady County Soil & Water Conservation Dist., 438 P.2d 491, 494
(Okla. 1968) (“It is elementary that there must be a meeting of the minds of the
1
As the cases cited above reflect, the disputed existence of a contract, like
other fact questions, is generally reserved for the jury. Gomes, 184 P.3d at 485;
Manchester Pipeline Corp., 862 F.2d at 1445. In Oklahoma, this appears to be
true even if the contract involves a settlement of the litigation before the court.
See In re De-Annexation of Certain Real Property from the City of Seminole,
204 P.3d 87, 89 (Okla. 2009). This latter aspect of Oklahoma law does not
control here. Even in diversity cases, where state substantive law controls,
“[f]ederal law generally governs the allocation of tasks between the court and the
jury.” MidAm. Fed. Sav. & Loan Ass’n v. Shearson/American Express, Inc.,
962 F.2d 1470, 1475 (10th Cir. 1992); see, e.g., Shropshire v. Laidlaw Transit,
Inc., 550 F.3d 570, 573 (6th Cir. 2008); Johnson v. Hugo’s Skateway, 974 F.2d
1408, 1416 (4th Cir. 1992). And adherence to federally assigned roles for judge
and jury is obviously even more compelling in non-diversity cases. In re Lewis,
845 F.2d 624, 628 (6th Cir. 1988). Our cases consistently illustrate that the
federal district court resolves disputed issues relating to the existence and
enforcement of agreements settling pending litigation, even when factual findings
are required. See, e.g., Shoels, 375 F.3d at 1056 (affirming order finding and
enforcing settlement agreement on strength of district court’s factual findings);
United States v. Hardage, 982 F.2d 1491, 1496-97 (10th Cir. 1993) (remanding
for district court to hold evidentiary hearing to resolve factual dispute over
existence of valid settlement agreement).
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parties on all material parts of the agreement in order to settle a valid contract.”);
Roads West, Inc. v. Austin, 91 P.3d 81, 85 (Okla. Civ. App. 2003) (same); see
also Holleyman v. Holleyman, 78 P.3d 921, 935 n.37 (Okla. 2003) (stating
contract is not invalid simply because it does not specify all details regarding the
subject matter, so long as parties’ intent can be ascertained with reasonable
degree of certainty). Specifically, the district court found that the parties had
reached a binding settlement based on the terms in a draft franchise agreement
dated June 16, 2009, approved by the City Council on June 17, 2009, revised as to
form by draft dated July 1, 2009, and further corrected by the court to reflect
certain matters previously agreed upon but inaccurately captured by the language
of the draft. GET contends that the parties never reached an agreement and that
the district court, in effect, “impermissibly composed a settlement agreement for
the parties by supplying terms on which there had been no final agreement,” In re
De-Annexation of Certain Real Property from City of Seminole, 204 P.3d 87, 93
(Okla. 2009). Before we address the specific arguments advanced by GET, it will
be necessary to recount the parties’ communications to each other and to the court
during the course of settlement negotiations. Additional points regarding relevant
testimony and documentary evidence will be included later where necessary in
our analysis of the issues presented for our review.
During the spring of 2009, counsel for the City, primarily Robert Jernigan
at the time, and counsel for GET, Kaiser Wahab, engaged in informal settlement
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negotiations, working from an initial draft franchise agreement prepared by
Jernigan. In the time leading up to a settlement conference set for June 9, 2009,
counsel identified several key terms for resolution, including the franchise fee to
be paid by GET on its revenue (both the fee percentage and the types of revenue
to which the percentage would be applied), the term of the franchise, the “pole
fee” to be paid by GET (a charge for use of poles to which cable lines are
attached), GET’s imposition of a monthly five-dollar “litigation fee” charge on
subscribers, eminent domain concerns, and the scope of the settlement (whether it
would encompass GET’s interest in another legal proceeding pending before the
Oklahoma Supreme Court).
Magistrate Judge Argo presided over the settlement conference. Counsel
actively participated in the conference, but the parties were also present to confer
with counsel. The City Manager, Mayor, and one council member attended for
the City, which was legally represented by Jernigan, David Lee, Mary Karns, and
Johnson Woods, while Gregg Deffner, managing member of GET, and Jessica
Pepper attended for GET, which was legally represented by Wahab and Jim
Buxton. As established by later testimony of the participants, and memorialized
to some extent in handwritten notes made by Karns on Jernigan’s initial draft
agreement, an oral understanding addressing the key unresolved terms was
reached. Basically, the franchise fee would be 3.5% of gross revenue (down from
the City’s initial demand of 5%), which at GET’s insistence was not to include
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revenue from internet operations as distinguished from cable services; the term of
the franchise would be ten years (up from the City’s initial limit of five years);
the pole fee would be $3.50 per pole (though this would have to be set out in a
separate pole attachment agreement with the Blackwell Utility Authority); a
provision expressly preserving the City’s right to lawful exercise of its police
powers (eminent domain) was to be eliminated; GET would immediately stop
charging subscribers the $5 litigation fee; and GET would dismiss the instant
action in its entirety, though it would not be required to abandon other ongoing
litigation. Counsel informed Magistrate Judge Argo that they had a tentative
agreement to settle, that they would work out the remaining details and prepare a
written draft for approval by the City Council within a few days, and that they
would inform the magistrate judge of the result.
On June 15, 2009, Karns took a copy of a revised draft worked up by
Jernigan and Wahab to the City Council. On her way there, she received word
from Wahab that GET manager Deffner wanted to reduce the amount and duration
of the security fund required by the City. Because these were material changes to
what had been agreed upon in the existing draft, Karns told him that the City
would not likely approve them. Two days later, on June 17, the City Council
approved the agreement, without the changes to the security fund provision,
subject to it being finalized and enforced by court order, at which point the
Council would give the agreement effect as a city ordinance.
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Work to complete a polished document was continued the next day. Karns
sent an email to Wahab enclosing a copy of the draft approved by the City
Council, noting that it still needed formalistic corrections such as punctuation and
capitalization, but expressing a wish to wrap up the matter quickly. She also had
a question about some language used in an indemnification provision that Wahab
had written. When Wahab explained that he and Jernigan had agreed on the
language, Karns responded that she had no intention of interfering with prior
negotiations. On June 19, 2009, Wahab stated that aside from the indemnification
section and a question about termination of the franchise (which he explained at
the hearing had to do with correcting the term of the pole attachment agreement to
match the ten-year term agreed upon for the franchise itself), “I think we are good
to go.” Aplt. Addendum at 228. Three days later, on the following Monday
morning, Wahab followed up with an email stating: “Please let me know what
you need from me and how we’re doing on the agreements (last I checked we
were pretty much done).” Id. at 230. The next day, June 23, he sent an email to
Lee, Jernigan, and Karns stating: “I believe we are near completion on the
subject franchise agreements, but I am awaiting final docs from the City so that
I can go over them with my client and secure his OK for settlement.” Id. at 49.
In the meantime, nothing had been communicated to Magistrate Judge Argo
since the settlement conference two weeks earlier. On June 23, sometime after
Wahab sent the email noted above, the magistrate judge sent an email to Lee and
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to Wahab and Buxton asking: “Could you please update me on the status of the
tentative settlement?” Id. at 50. Lee conferred with Wahab about the email and
then telephoned the magistrate judge to tell him that the parties were prepared for
entry of an administrative closure order halting further proceedings in the case.
Magistrate Judge Argo later testified that, although he did not remember the exact
wording used, the parties certainly communicated to him that the case had settled,
and he entered a brief order to that effect. The district court promptly followed
up with an Administrative Closing Order, which stated:
On the representations from counsel for both sides that the
parties have reached a settlement and compromise, it is ordered that
the Clerk administratively terminate this action in his records without
prejudice to the rights of the parties to reopen the proceeding for
good cause shown, for the entry of any stipulation or order, or for
any other purpose required to obtain a final determination of the
litigation.
If the parties have not reopened the case within 30 days of this
date for the purpose of dismissal pursuant to the settlement
compromise, Plaintiff’s action shall be deemed to be dismissed.
Admin. Closing Order dated June 24, 2009 (emphasis added). Neither party made
any objection to these orders.
The next day, Wahab sent the following email to Jernigan and Karns:
Please let me know when I can get a final to send over to my client
for review. I explained to him that there is little to no room for
changes. However, I cannot guarantee that he will not ask for minor
changes that might be mutually acceptable and the faster I have that
final the fast[er] we can close things out. Many thanks.
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Aplt. Addendum at 51. A week later, on July 1, Karns sent an email to both
Jernigan and Wahab attaching a draft and apologizing for her delay. She noted
several changes she had made per their directions, including removal of the
eminent domain provision and addition of a force majeure definition Wahab had
prepared, though she conceded that she still “probably missed something.” Id. at
231. The email concluded with the following comments about finalization of the
franchise agreement and conclusion of settlement: “I am sure, Kaiser [Wahab],
that you cannot get this worked out with Greg [Deffner] in time for us to do this
Monday [July 6], and we need to all review the settlement agreement anyway, but
we can either do this the 20th, or I will have my guys call a special meeting.” Id.
On July 13, 2009, counsel’s optimism about finalizing the franchise
agreement evaporated when Wahab sent Karns a re-revised draft with many major
and minor changes. See id. at 132 (email), 91-129 (re-revised draft agreement).
Some of these were in line with agreed-upon terms that the existing draft simply
failed to reflect, such as removal of the reference to internet services in the
definition of gross revenues, see id. at 94, and removal of language–left over from
an early draft that had set the franchise fee at the then legal maximum of 5%–that
would have enabled the City to raise the franchise fee above the agreed upon
3.5% in the event the legal maximum were increased, see id. at 97. But many
changes reflected new demands. Wahab asked for Karns’s “gut” assessment of
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whether the City was likely to accept any, most, or all of the changes. She
promptly responded with an email that stated in pertinent part:
Kaiser, my “gut” reaction is that some of these proposals are going to
send my client through the roof. There are a handful that may be
OK, but the ones that appear to be most important to your client are
not going to fly. They [City officials] are going to want to change
some things they are not happy to have agreed to, and we will be
back at square one.
I have circulated this to Bob [Jernigan] for his comments and we will
respond to you tomorrow probably. . . .
David [Lee] is going to send you a draft settlement agreement, so we
at least know where we are on that.
....
[M]y “gut” tells me what I have believed all along: the parties will
not be able to reach an agreement, despite the best efforts of
attorneys and some of the participants.
I will work with Bob and see if there is anything we believe we can
agree to or recommend, but other than the grammatical type errors, I
do not see anything changing from our side.
Id. at 131.
Two days later, on July 15, Lee sent Wahab a letter enclosing a five-page
draft settlement agreement. See id. at 133-38. The letter also commented on the
recent impasse with respect to the franchise agreement, stating in no uncertain
terms Lee’s view that GET was taking the matter in a direction contrary to the
parties’ prior agreement to settle that he had communicated to Magistrate Judge
Argo:
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Enclosed is a draft of Settlement Agreement and Full and Final
Mutual Release of Claims. Obviously before the City will sign and
enter into this Agreement, Mr. Deffner and GET must agree to the
Cable Franchise Agreement negotiated between you, Mr. Jernigan,
and Ms. Karns. As the Administrative Closing Order is due to expire
on July 24, 2009, please finalize the Franchise Agreement so that we
can enter into this Settlement Agreement.
As you know, we had previously advised Magistrate Judge
Argo that the case had settled. If it comes to this, I will have no
hesitation in filing a motion to enforce settlement agreement and file
a motion for sanctions against Mr. Deffner if he attempts to breach
our agreement that the case had settled.
Id. at 133.
While the draft settlement agreement generally followed the understanding
reached at the June 9 settlement conference, it diverged from that accord in two
specific ways, as Wahab explained in uncontroverted testimony at the evidentiary
hearing. First, in addition to releasing all claims in the instant action, the draft
agreement required GET and Deffner to drop all pending litigation with the City,
however unrelated, including an unresolved legal action involving an initiative
petition. See Aplt. Addendum at 135; Aplt. App. at 835-36. But after Wahab
objected to this language, Lee promptly removed it. See Aplt. App. at 836, 840;
Aplt. Addendum at 140, 141. Second, the draft prohibited Deffner from
“seek[ing] another cable television franchise on his own behalf, or on behalf of
any corporation or other entity in which he has any monetary or legal interest.”
Aplt. Addendum at 134. This prohibition had never been a part of the parties’
agreement. See Aplt. App. at 836-39. In his brief closing argument at the
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hearing, Lee stated “for the record” that he would “withdraw that clause from [the
City’s] motion to enforce the settlement agreement.” Id. at 863.
Two letters exchanged between Wahab and Lee set out their differing views
of the critical communication to Magistrate Judge Argo on June 24 that prompted
the magistrate judge and the district court judge to issue the orders noted above
reciting that the case had settled. Wahab insisted that the communication had
done nothing more than authorize an administrative closure:
Around June 24, 2009, after counsel had an opportunity to enter in
certain edits [to the working draft of the franchise agreement], you
and I advised the judge that an administrative order be entered.
However, at that point, I certainly did not advise the judge that our
clients had settled.
Aplt. Addendum at 139. Lee insisted that the message conveyed was the same as
the representation of settlement incorporated in the ensuing orders:
This case settled. You and I agreed that it was settled on June 23,
2009, and agreed that I could advise Magistrate Judge Argo of this
fact. I did so. Judge Argo then filed an Order on June 24, 2009,
stating that the case had settled. Also on June 24, 2009, [District
Court] Judge Russell issued an Administrative Closing Order also
stating that the case had settled. You never objected to either of
those two Orders. All that remained after June 25, 2009 was
formalizing documents that would reflect the terms of the settlement
that had been agreed to by the parties’ representatives. Mr. Jernigan
and Ms. Karns can verify this and all other aspects of your
negotiations and conversations.
Id. at 140 (citations omitted).
GET obtained an extension of the soon-to-expire Administrative Closing
Order and then filed a motion to reopen the case. The City did not oppose the
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motion and the case was reopened on August 24, 2009. Three weeks later, on
September 15, 2009, the City filed a motion to enforce the settlement, which was
set for hearing on November 20, 2009.
II. DISTRICT COURT HEARING AND DECISIONS
At the hearing, the parties submitted the various communications and draft
agreements discussed above. The district court also heard testimony from Karns,
Jernigan, and Wahab. Most of the salient aspects of this testimony has already
been touched upon. But given the centrality of the point, it is important to focus
further on Wahab’s explanation for his silence in the face of the two orders
expressly reciting the critical fact–which he later denied–that the parties had
settled the case.
Wahab acknowledged that he had read the orders and made no objection.
Aplt. App. at 857-58. Both the district court and counsel for the City pressed him
for an explanation as to how he could acquiesce in language explicitly confirming
settlement while continuing to maintain that the parties had not settled the case.
His response was to deflect the critical point about the parties’ representation of
settlement, by focusing instead on the procedural effect of the closure order. He
stated that he was not concerned about the order because, as it was merely
“administrative” and preserved the possibility of reopening the case, it “was
sufficient for the purposes [he] had in mind.” Id. at 860; see also id. at 858-61.
In short, his gloss on the court’s unqualified reference to the parties’ settlement of
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the case interjected the novel qualification “that we settled [but only] for purposes
of administrative closure of the case.” Id. at 860 (emphasis added).
Sometime after the hearing, the district court issued its order granting the
City’s motion to enforce. The court found as a matter of fact that (1) the parties
had reached a tentative settlement at the June 9, 2009, conference, based on their
resolution of the material points of the franchise agreement; (2) this accord was
set out, in a form admittedly requiring further revisions to language, in a draft
agreement approved by the City Council on June 17, 2009; (3) the parties told the
court they were prepared for administrative closure of the case and, after orders
effecting closure were issued, did not object to the unqualified recitation therein
that they had informed the court that the case was settled; (4) a revised draft of
the franchise agreement, reflecting all of the material terms previously agreed
upon (with two deviations that the City later conceded and corrected 2), was
approved by Wahab on behalf of GET; (5) thereafter, however, Wahab informed
Karns that GET wanted to renegotiate numerous terms; (6) Lee informed Wahab
that the City insisted on adherence to their existing accord, including execution of
the settlement agreement Lee had prepared reflecting the terms agreed upon at the
June 9 conference (though with one deviation that Lee conceded and agreed to
2
These involved the parties’ agreement on the limitation of the franchise fee
to 3.5% (with no provision for any upward revision), and the exclusion of internet
services from the determination of the gross revenues on which the franchise fee
would be computed.
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drop at the evidentiary hearing on the motion to enforce 3). See District Court
Order dated Dec. 23, 2009, at 2-6 (Aplt. App. at 453-57).
After setting out these factual findings, the court recited several pertinent
legal principles, including (1) the basic contractual requirement of agreement on
material terms, with the related qualification that such material agreement is not
nullified by the reservation of unspecified details; (2) the recognition that
settlement agreements are contracts summarily enforceable by the court and may
not be repudiated absent fraud, duress, undue influence, or mistake; (3) the
presumption (found by the court not to have been rebutted here) that a party’s
attorney, in particular GET attorney Wahab, has the authority to enter a
settlement agreement on behalf of his client; and (4) the power of the court to
reform a written agreement when (as the court found here) the writing does not
express the parties’ real intentions or actual agreement due to accident, mutual
mistake, or unilateral mistake coupled with inequitable conduct by the other
party. See id. at 6-8 (Aplt. App. at 457-59). These basic legal premises are not
challenged on appeal, though, as we will discuss shortly, GET does object to the
applicability of the reformation principle to the facts here.
3
This involved the prohibition on Deffner seeking any other cable franchise,
to be effectuated by his own personal execution of the settlement agreement.
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Finally, the court set out its disposition of the motion to enforce in light of
the preceding facts and law. As to the overarching settlement agreement, the
court concluded:
Plaintiff and Defendant herein entered into a settlement
agreement in which they agreed to all material terms of a new
franchising agreement between Get, L.L.C. and the City of Blackwell
and mutual releases, dismissal of this action with prejudice; that each
party would bear its own costs and attorney fees; that Get, L.L.C.
would within forty-five days of execution of a written settlement
agreement pay to the City of Blackwell all franchise fees [on
revenues] collected from January 1, 2009 through the date of the
City’s approval of the franchise agreement, accompanied by the
reports and documentation required in the new franchise agreement;
that Get, L.L.C. would immediately discontinue charging City of
Blackwell customers a $5.00 fee for litigation expenses; and that the
pole attachment agreement would provide for a total charge to
Plaintiff of $3.50 per pole.
Id. at 8 (Aplt. App. at 459). As to the franchise agreement on which the
settlement was based, the court concluded:
The franchise agreement to which the parties agreed is the Blackwell
Franchise Draft . . . approved by the City Council of the City of
Blackwell on June 17, 2009, as revised in form as reflected in the
Blackwell Franchise Agreement Draft dated July 1, 2009 but
reformed to reflect the terms to which the parties actually agreed at
the Settlement Conference of June 9, 2009, as follows: [the clause
permitting upward revision of the agreed upon 3.5% franchise fee is
stricken] because it is inconsistent with the franchise fee to which the
parties agreed; and [the reference to revenue from internet services is
stricken from the definition of gross revenues] as contrary to the
terms to which the parties agreed.
Id. at 8-9 (Aplt. App. at 459-60) (citations omitted).
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GET sought reconsideration of the court’s decision by filing a motion for
new trial or to alter or amend judgment, arguing in pertinent part that the court
erred by (1) sua sponte considering reformation of the parties’ agreements;
(2) finding that reformation was warranted on the facts; and (3) failing to address
a statute of frauds defense raised by GET in opposition to the City’s motion to
enforce the settlement. In support of the first point, GET cited Hardiman v.
Reynolds, 971 F.2d 500 (10th Cir. 1992), which recognized that “[g]enerally,
where the parties have not raised a defense, the court should not address the
defense sua sponte.” Id. at 502. The district court rejected this argument, holding
that “Hardiman and the proposition for which it is cited are inapposite” because
“reformation of the franchise agreement drafts to reflect or conform to the parties’
actual oral agreement was not a defense to enforcement.” District Court Order
dated Feb. 16, 2010, at 2 (Aplt. App. 633) (emphasis added).
As to the second point, GET argued that the equitable requirements for
reformation (mutual mistake, or unilateral mistake coupled with inequitable
conduct) were not present to support the district court’s correction of the
proffered settlement documents to reflect the parties’ prior agreement. That is,
GET did not challenge the substance of the reformed terms (which actually
favored GET) but only the court’s justification for engaging in the reformation.
On its face, this seems an oddly self-denying position to take: the success of the
challenge, i.e., a recognition that the terms should not have been reformed, would
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entail a settlement less favorable to GET. But GET pressed this point to insist
that “[t]he appropriate holding in this case would have been for the Court to have
found that reformation of the agreement presented by the [City] at the hearing
was not appropriate and to have denied the Motion to Enforce.” Aplt. App. at 541
(emphasis added). Its cursory argument did not, however, explain how a
successful challenge to reformation would lead to the denial of the motion to
enforce, as opposed to enforcement of the proffered agreement with its terms
intact. In any event, the district court did not probe this analytical disconnect in
GET’s argument, but chose instead to reject it head-on by holding that testimony
at the hearing clearly and convincingly showed that the reformed terms were
consistent with the parties’ contractual intent and that the deviations therefrom
had been “scrivener’s errors or were due to a mutual mistake on the part of the
parties’ agents in reducing the parties’ actual agreement to writing.” District
Court Order at 2 (Aplt. App. at 633).
Finally, the district court held that GET had waived any argument based on
the statute of frauds. The court noted that GET had not raised the defense in its
written response to the City’s motion to enforce settlement or at the hearing on
the motion. Id. at 4 (Aplt. App. at 635). GET had attempted to raise the defense
in its proposed findings and conclusions submitted after the hearing, but the court
pointed out that by then it had already announced its decision on the existence
and enforceability of the settlement at the hearing and had solicited proposed
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findings and conclusions from the parties solely to memorialize its decision, not
to interject new issues. Id. at 3-4 (Aplt. App. at 634-35). This “belated,
after-the-ruling assertion of a statute of frauds defense came too late” and hence
was “deemed waived.” Id. at 4 (Aplt. App. at 635).
III. ISSUES ON APPEAL
A. Whether Negotiations Culminated in a Binding Settlement
GET contends the district court erred in finding that the parties’ settlement
negotiations had culminated in a binding agreement to settle the case. As noted
earlier, we review this finding for clear error. Under this standard, we defer to
the district court’s finding unless, “view[ing] the evidence in the light most
favorable to the district court’s ruling,” we are “left with the definite and firm
conviction that a mistake has been committed.” Rio Grande Silvery Minnow v.
Bureau of Reclamation, 599 F.3d 1165, 1175 (10th Cir. 2010) (internal quotation
marks omitted). It is not our province to second-guess the district court’s
assessment of an inconclusive evidentiary record:
Where there are two permissible views of the evidence, the
factfinder’s choice between them cannot be clearly erroneous. If the
district court’s account of the evidence is plausible in light of the
record viewed in its entirety, the court of appeals may not reverse.
That proposition holds true, not only when the district court’s factual
findings are predicated upon assessments of witness credibility, but
also when they arise from consideration of documentary evidence.
Id. (alteration, citations, and internal quotation marks omitted).
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The evidence is sufficient under this standard to affirm the district court’s
finding that a binding settlement on material terms had been reached by the time
the parties told Magistrate Argo it was appropriate to enter the administrative
closure order. The attorneys’ communications to each other as they completed
work on the draft agreement, their representation to the magistrate judge, and
their acquiescence in the ensuing orders expressly reciting that they had reached
settlement, support the court’s determination.
GET contends that the record reflects only a series of proposals and
counter-proposals, which never culminated in a binding agreement, comparing
this case with In re De-Annexation of Real Property, 204 P.3d at 89, 92. We
disagree. The evidence recounted in detail earlier was quite plausibly considered
by the district court to reflect a series of corrections and refinements converging
on a binding settlement intended to capture a set of previously agreed-upon
material terms. And, significantly, the parties’ representations and conduct with
respect to the administrative closure order properly colored the district court’s
assessment of the record here in a way that has no counterpart in the case on
which GET seeks to rely.
GET argues strenuously that the rejection of its demand for reduction of the
security fund, made by Wahab to Karns before the draft franchise agreement was
presented to the City Council, reflects the absence of an accord on a material
term. But the testimony on this point was conflicting. Wahab testified that
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reduction of the security fund was a critical point–“that [it] could be a terrible
deal breaker,” Aplt. App. at 851–while Karns testified that, after she explained
that the City would not accept the change, Wahab “withdrew it,” id. at 731.
Resolution of the matter was clearly the province of the district court as
factfinder. And we note that other, undisputed circumstances surrounding the
incident support the district court’s determination that the draft presented to the
City Council, with the original security fund provision intact, reflected the parties
existing accord (albeit, with certain other terms reformed by the court). In
particular, Wahab did not even mention the provision, included since the first
working draft was prepared months before, when he received subsequent drafts
retaining it–drafts on which he commented favorably in very broad terms and
upon which he ultimately agreed to the administrative closure order. That is
entirely consistent with Karns’s account that Wahab had withdrawn his request
for alteration of the security fund provision. Mention of the matter did not recur
until the email of July 13 that interposed a whole set of new terms and material
changes to the agreement previously reached.
Finally, GET points to those new terms and changes as indicative of the
lack of agreement, but they do not negate the existence of the prior agreement
reached and communicated to the court. We are not aware of any authority, and
GET cites none, supporting the facially untenable notion that a party may nullify
a binding accord after the fact by simply interjecting new demands.
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B. Whether Reformation of the Agreements Proffered for Enforcement
was Procedurally and Substantively Proper
As in its post-judgment motion below, GET objects, on procedural and
substantive grounds, to the district court’s reformation of the agreements
submitted by the City with its motion to enforce settlement. Again, GET’s
procedural objection relates to the district court’s sua sponte consideration of
reformation to correct certain terms to conform with material points it found the
parties had agreed on in settlement negotiations. But on appeal GET does not
challenge the district court’s rationale for rejecting this objection, i.e., that the
restriction on sua sponte recognition of defenses recited in the Hardiman case
relied on by GET is inapplicable because reformation was not used here as a
defense in the settlement dispute. Indeed, GET does not even mention Hardiman.
Instead, its argument on appeal is that sua sponte reformation somehow “relieved
and absolved the [City] from establishing the necessary elements required for
reformation.” Aplt. Opening Br. at 23. But this essentially collapses the
procedural objection into the substantive issue whether reformation was warranted
on the facts. If the district court properly ruled that the errant terms warranted
reformation, GET’s current challenge to the sua sponte nature of that ruling has
nothing to stand on. Thus, it would appear that GET has effectively abandoned
its purely procedural objection regarding reformation.
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In any event, we would not reverse the district court’s reformation ruling
for procedural irregularity. Even if the rule against sua sponte consideration of
issues applied beyond defenses, so as to reach the reformation issue considered by
the district court, the rule has “at least two important exceptions,” Hardiman,
971 F.2d at 502, one of which is implicated here. That exception permits courts
to acknowledge unargued legal issues when “values that may transcend the
concerns of the parties to an action” are involved. Id. “[J]udicial
efficiency”–avoiding “the expenditure of scarce federal judicial resources”–is one
of those values. Id. at 503. It is also one of the recognized benefits for which the
private settlement of litigation is favored in the federal courts. Flex-Foot, Inc. v.
CRP, Inc., 238 F.3d 1362, 1369 (Fed. Cir. 2001) (noting “compelling public
interest and policy in upholding and enforcing settlement agreements” and
thereby “fostering judicial economy”); Stewart v. M.D.F., Inc., 83 F.3d 247, 252
(8th Cir. 1996) (noting “judicial policy favoring settlement . . . rests on the
opportunity to conserve judicial resources”). And reformation of the agreements
proffered for enforcement by the City, which enabled the court to reach a fair and
final resolution of the matter, was certainly “relevant to the proper disposition of
[the City’s] motion,” United States v. Lugo, 170 F.3d 996, 1002 (10th Cir. 1999).
Under the circumstances, the court did not err procedurally in considering
reformation.
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Turning to the substantive objection, we note that GET fails to explain how
its challenge to the district court’s reformation of certain terms could support the
relief it seeks on appeal. GET argues for a reversal of the order enforcing
settlement and remand for trial on the merits, Aplt. Opening Br. at 30–not for a
remand directing the district court to enforce the settlement with unreformed
terms. The disconnect between argument and relief sought does not arise to the
extent GET challenges reformation on the threshold basis that there was no
antecedent agreement to serve as the touchstone for reforming the drafts proffered
at the hearing. See generally Dennis v. American-First Title & Trust Co.,
405 P.2d 993, 997 (Okla. 1965) (explaining that reformation requires “a
preliminary agreement, a prior contract, either written or verbal, by which to
make the rectification, or to which the instrument can be conformed” (quotation
omitted)). But, of course, our affirmance of the district court’s finding on that
factual point above forecloses such a challenge here. 4
4
In its Reply Brief, GET develops a new, legal challenge to the antecedent
accord used by the district court as the basis for reformation. GET contends that
City Council approval was necessary to bind the City to a franchise agreement
and, hence, the first binding accord on material terms could only be reflected in
the draft agreement approved by the Council on June 17. Thus, any erroneous
terms present in that draft–such as the franchise fee terms later reformed by
the district court–would necessarily have lacked the antecedent accord required
for reformation. See Aplt. Reply Br. at 7-8. GET bases this argument on
Okla. Stat. Ann. tit. 11, § 22-107.1(A), which states that “[a] municipality may by
ordinance or otherwise issue a certificate, license or permit, for the operation of a
cable television system,” and on id. § 22-107, which states that “[m]unicipal
(continued...)
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In any event, notwithstanding the disconnect with the relief GET seeks, the
bulk of its substantive argument is that an equitable basis for reforming terms in
the enforced agreement–clear and convincing evidence of mutual mistake or
unilateral mistake and inequitable conduct by the other party–was not established.
See generally Okla. Oncology & Hematology P.C. v. US Oncology, Inc., 160 P.3d
936, 947 n.22 (Okla. 2007) (“Reformation requires proof of the contract to be
reformed and proof, by clear and convincing evidence, of a mutual mistake or
mistake by one party and inequitable conduct on the part of the other that resulted
in a written contract that did not reflect the parties’ intent.”). Even taken on its
own terms, this argument fails. There is no reversible error in the district court’s
finding that the provisions it reformed had deviated from the parties’ prior
common understanding due to “a mutual mistake on the part of the parties’ agents
in reducing the parties’ actual agreement to writing.” District Court Order at 2
4
(...continued)
licenses and license fees shall be regulated by ordinance.” The qualification “by
ordinance or otherwise” potentially undercuts this argument in a way that GET
fails to address, and GET also does not explain why a need for City Council
action to license a cable operator would necessarily bar the City from separately
negotiating franchise terms capable of judicial enforcement. But we need not
pursue the matter. GET did not adequately develop this argument in its Opening
Brief, nor did it make an argument in this regard to the district court, even when
it raised other objections to reformation in its motion for new trial. The matter
has been waived and we decline to consider it. See, e.g., Emp’rs Mut. Cas. Co. v.
Bartile Roofs, Inc., 618 F.3d 1153, 1176 n. 20 (10th Cir. 2010).
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(Aplt. App. at 633). 5 Although proof of mutual mistake requires clear and
convincing evidence, the trial court’s determination that this burden was met is
afforded some deference:
Evidence to sustain a judgment reforming a contract must be clear,
unequivocal, and decisive, but this does not mean that it must be
uncontradicted; and the judgment of the trial court in such an action,
where the evidence is conflicting, should be given weight, and should
be affirmed on appeal, unless the appellate court is satisfied that the
standard of proof required has not been met and the conclusion
reached is wrong.
Nelson v. Daugherty, 357 P.2d 425, 432 (Okla. 1960) (internal quotation marks
omitted); see also Henderson v. Henderson, 595 P.2d 462, 464 (Okla. Civ. App.
1979) (holding “mere existence of contradictory evidence in the record does not
prevent some of it from being clear, full, unequivocal, or convincing”). And this
includes a recognition of the trial court’s advantage in assessing the testimony of
witnesses it has observed first-hand. Nelson, 357 P.2d at 432 (noting precedent
affirming reformation where “evidence was conflicting” and “pointing out that the
trial court, which had the witnesses before it and had an opportunity to observe
their demeanor and to determine their credibility, had decided the issue in favor
5
The district court also referred to “scrivener’s errors,” District Court Order
of Feb. 16, 2010, at 2 (Aplt. App. at 633), but in context this was just another way
of referring to the mutual mistake in drafting cited above. Numerous Oklahoma
cases reflect the same relationship between scrivener error and mutual mistake.
See, e.g., Pangaea Exploration Corp. v. Ryland, 173 P.3d 108, 113 n.11
(Okla. Civ. App. 2007); Davenport v. Beck, 576 P.2d 1199, 1201 (Okla. Civ. App.
1977).
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of the plaintiff” (internal quotation marks omitted)); Henderson, 595 P.2d at 465(affirming judgment reforming instrument and stressing trial court’s “significant
advantage of observing the demeanor of the witnesses”).
As already recounted in considerable detail, ample evidence, testimonial
and documentary, indicated that the modifications effected by the district court to
bring the reformed terms in line with the parties’ prior agreement were
necessitated by mutual errors and oversights in the back-and-forth process of
getting the draft documents into final form. After the deviating terms–provisions
unfavorable to GET and Deffner regarding the franchise fee, the definition of
gross revenue to which the fee applied, and the personal prohibition on Deffner’s
operation of another cable franchise–were eventually recognized and pointed out,
the City conceded that it was appropriate to correct them so as to effectuate the
prior understanding that counsel for GET insisted had been mutually reached. 6
6
Indeed, while we agree with the district court that the evidence supported
these corrections, we are not at all sure they are reformations to which GET,
whom they favored, may even object. The burden of justification obviously rests
on the party seeking the reformation. See, e.g., Thompson v. Estate of Coffield,
894 P.2d 1065, 1067 (Okla. 1995); Smiley v. Jaggers, 327 P.2d 652, 654
(Okla. 1958); Bellamy v. Bellamy, 220 P. 844, 846 (Okla. 1923). The terms
reformed by the district court were modified in accordance with points insisted
upon by GET, not by the City (which just conceded the corrections). We are not
aware of any Oklahoma authority placing a proof-of-reformation burden on a
contracting party who makes a concession to its counterpart, nor any authority
permitting the latter to challenge the agreement modified in its own favor. But
our affirmance of the modifications made by the district court obviates further
consideration of these other potential deficiencies in GET’s position on appeal.
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Under the standard of review specified above, we are satisfied that the district
court did not err in its handling of the matter.
C. Statute of Frauds
Finally, the district court rejected GET’s belated attempt to interject a
statute-of-frauds objection after it had announced its decision, at the hearing on
the motion to enforce, that the parties had reached a binding settlement. Our
standard of review on this point is not entirely clear. “Generally, whether a party
has waived an affirmative defense is a mixed question of law and fact, requiring
us to accept the district court’s factual conclusions unless clearly erroneous but
review the application of the facts to the law under a de novo standard.” Creative
Consumer Concepts, Inc. v. Kreisler, 563 F.3d 1070, 1075 (10th Cir. 2009)
(internal quotation marks omitted). But here we are not dealing with the typical
affirmative defense asserted in response to a pleading at the commencement of the
action and governed, for purposes of preservation and waiver, by the directives of
Fed. R. Civ. P. 12. We are dealing with a response to a motion, where the trial
court’s judgment regarding preservation and waiver of objections is not guided by
these directives. This circuit has precedent in non-pleading contexts applying an
abuse-of-discretion standard in reviewing the district court’s judgment that a
party has waived an issue. See, e.g., O’Tool v. Genmar Holdings, Inc., 387 F.3d
1188, 1207 (10th Cir. 2004) (involving waiver of argument about post-judgment
interest rate); United States v. Coyote, 963 F.2d 1328, 1332 (10th Cir. 1992)
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(involving waiver of motion to suppress evidence). Neither of these lines of
authority specifically involves waiver of an affirmative defense to enforcement of
a challenged settlement agreement.
In light of this uncertainty, we review the district court’s ruling so as to
take account of both standards: we will affirm if we can do so under the strict
de novo standard, Taumoepeau v. Mfrs. & Traders Trust Co. (In re Taumoepeau),
523 F.3d 1213, 1218 (10th Cir. 2008) (noting choice between de novo and
deferential review standard “is immaterial to our conclusion, for we would affirm
even under the de novo standard”); and we will reverse if we must do so under the
generous abuse-of-discretion standard, Lorillard Tobacco Co. v. Engida, 611 F.3d
1209, 1214 n.5 (10th Cir. 2010) (noting choice between de novo and deferential
review standard was unnecessary if “we must reverse the district court even under
the more generous abuse-of-discretion standard”). Of course, these dispositional
alternatives are not exhaustive, and if neither is open to us, a definitive choice of
the controlling review standard would be necessary. As it happens, we conclude
that affirmance is proper here under a de novo standard.
GET contends the district court erred in holding that it had waived the
statute of frauds objection, because (1) counsel raised the issue in his opening
statement at the hearing; and (2) the objection could have been supported by facts
that came out at the hearing. Neither point has merit. Counsel for GET merely
referred to the statute of frauds once in passing, without any attempt whatsoever
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to tie the conclusory reference to any basis in law or fact applicable to this case.
See Aplt. App. at 675. 7 That was patently inadequate to present and preserve the
issue. See, e.g., United States v. Hardwell, 80 F.3d 1471, 1492 (10th Cir. 1996);
Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 721-22 (10th Cir. 1993). And
simply because the hearing record “could conceivably have provided a factual
basis for [the issue], that is not enough; a party must also present the legal basis
of the claim to the district court clearly and explicitly.” Shoels, 375 F.3d at 1061.
We agree with the district court that any statute-of-frauds argument was waived.
The judgment of the district court is AFFIRMED.
Entered for the Court
David M. Ebel
Circuit Judge
7
After summarizing GET’s basic position that no settlement had been
reached, counsel simply added, with no antecedent (or subsequent) development
of the point: “And . . . [w]e think it [the settlement] is barred by the statute of
frauds.” Aplt. App. at 675.
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