Paul Bryan v. Children and Youth Services of

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 14-4411
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PAUL BRYAN; BONNIE BRYAN, Husband and Wife,
individually and as Parents and Natural Guardians
on behalf of their minor child, KB, and KB;
KENNETH BRYAN
v.
ERIE COUNTY OFFICE OF CHILDREN AND YOUTH;
PAUL CANCILLA, individually and as an employee of Erie
County Office of Children and Youth; CARMEN E. MERRIT,
individually and as an employee of Erie County Office of Children and Youth;
RENIE SKALKO, individually and as an employee of Erie County Office of
Children and Youth; CINDY BAXTER, individually and as an employee of
Erie County Office of Children and Youth; CINDY LEWIS, individually
and as an employee of Erie County Office of Children and Youth;
BRIGITTE SULLIVAN, individually and as an employee of Erie County
Office of Children and Youth; JOHN PETULLA, individually and as an
employee of Erie County Office of Children and Youth DPW Bureau of
County Children and Youth Programs
Kenneth Bryan,
Appellant
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Appeal from the United States District Court
for the Western District of Pennsylvania
(No. 1-03-cv-00259)
District Judge: Honorable J. Frederick Motz
Submitted Pursuant to Third Circuit LAR 34.1(a)
January 22, 2016
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Before: FISHER, CHAGARES, and BARRY, Circuit Judges.
(Filed: February 5, 2016)
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OPINION*
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CHAGARES, Circuit Judge.
This appeal concerns an attempt by the plaintiff to avoid what turned out to be an
ill-advised “high-low” settlement agreement (the “Agreement”). Kenneth Bryan brought
suit against Erie County Office of Children and Youth and several of its employees under
42 U.S.C. § 1983 for violation of his constitutional due process rights. During trial,
Bryan and the defendants entered into the Agreement, which capped Bryan’s recovery at
$2,700,000 but guaranteed him a minimum of $900,000, and entitled Bryan to the
amount of any jury verdict within that range. The jury returned a verdict for $8,654,769,
well over the Agreement’s ceiling.
Bryan now appeals the District Court’s enforcement of the Agreement, on the
ground that the defendants allegedly publicly disclosed its terms several weeks after the
verdict and thus materially breached. Because the Agreement did not require
confidentiality after the verdict, we will affirm.
I.
We write solely for the parties’ benefit and recite only the facts essential to our
disposition. Bryan brought suit against Erie County Office of Children and Youth and
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
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several of its employees after they were involved in placing in his foster parents’ home a
foster brother who sexually abused Bryan. Only claims against Erie County employees
Cindy Baxter and Renie Skalko proceeded to trial; the claims against Erie County Office
of Children and Youth and other employees were resolved on summary judgment.
During trial, Bryan and all the original defendants entered into the “high-low” settlement
Agreement that capped Bryan’s recovery at $2,700,000 but guaranteed him a minimum
of $900,000, regardless of the jury’s verdict, and entitled Bryan to the amount of any
verdict within that range. The Agreement provided that it would be confidential “‘subject
to the duties, if any, of the [Erie County Office of Children and Youth] and/or its
employees under the Pennsylvania Right to Know Act,’” but also that the parties would
“‘put this Agreement on the record with the court to memorialize the same following
entry of the verdict or court order disposing of the case.’” Defs. Br. 15 (quoting
Agreement ¶¶ 16, 18). The Agreement also declared that
[i]t is the intention of the parties to settle this matter once and for all within
the parameters of this Agreement and accordingly, no litigation shall extend
beyond the jury verdict, molding the verdict to the extent necessary based
upon the terms of this Agreement, and any other matters necessary to bring
the trial phase to a conclusion.
Defs. Br. 14-15 (quoting Agreement ¶ 7). The parties agreed not to file any Federal Rule
50 motions or to appeal.
The jury returned a verdict of $8,654,769 on June 1, 2012. The parties and the
judge then had the following discussion in chambers:
THE COURT: All right, we’re on the record.
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DEFENSE COUNSEL: I’d like to make an oral motion to mold the verdict
consistent with our agreement to $2.7 million, consistent with the terms set
forth therein.
THE COURT: I think the best way to handle it is to file a motion, style it
motion to mold — which incorporates all the material terms of your
agreement that you both signed. Just file a written motion to mold and I’ll
go ahead and sign it.
DEFENSE COUNSEL: Without the agreement attached to it?
THE COURT: It seems to me — was the agreement actually typed out?
DEFENSE COUNSEL: Yes.
THE COURT: I would include it.
DEFENSE COUNSEL: Fine, I’ll file it under seal.
THE COURT: You can’t file it under seal.
BRYAN COUNSEL: I’m bound by the contract. You have it on record. If
you file a motion to mold it’s going to be public anyway. I’m willing to do
whatever you want to do. You can decide later.
THE COURT: Put it this way, without an explanation on record why I am
molding the verdict, I’m not just going to go ahead and reduce the verdict
by that much. You should do one of two things. I don’t care what you do.
But either set forth within your motion the material terms of your high/low
agreement, which I think it probably the easier way to do it, if there is not
any dispute —
BRYAN COUNSEL: It’s not disputed. I’m bound by contract. It’s a
whole separate contractual matter, you don’t even need to do a motion to
mold. I’ve already entered into the contract, whatever you want to do.
THE COURT: He is obviously going to honor the terms. What is the high
of the agreement?
DEFENSE COUNSEL: $2.7 million.
THE COURT: Just file a motion that makes it clear why you are molding,
filing a motion to mold the verdict.
BRYAN COUNSEL: You can if you want to, but that’s going to make it
public.
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THE COURT: Otherwise — let me put it this way. It’s got to be clear why
the verdict is being reduced.
DEFENSE COUNSEL: Why don’t we do this. We have an agreement for
a high/low that we previously signed, we’re going to issue checks for $2.7
million to you. If you accept that, once we’ve issued the checks, we will
file a stipulation of dismissal.
BRYAN COUNSEL: That’s fine.
THE COURT: All right, we’re done.
Appendix (“App.”) 631-33. That same day, June 1, the District Court entered judgment
on the $8,654,769 verdict.
On June 20, the defendants sent Bryan $2,700,000, the amount owed under the
Agreement. Bryan informed the defendants that he was “able to accept the checks as
only partial payment on the judgment” because, as Bryan alleged, the defendants had
breached the Agreement’s confidentiality provision by disclosing its terms to its public
auditors. App. 140. Bryan refused to file a stipulation of dismissal.
Baxter and Skalko then filed a motion, which did not include the Agreement’s
terms, asking the District Court to mark the judgment satisfied pursuant to Federal Rule
60. Baxter and Skalko also moved for leave to file under seal a motion pursuant to
Federal Rule 59, which Baxter and Skalko styled as a “Motion to Alter or Amend
Judgment Under Rule 59(e), or in the Alternative, Motion for New Trial Under Rule
59(a)(1)(A).” App. 127-39.
In a conference regarding these motions, the District Court denied the motion to
file under seal and “direct[ed] that everything [be] filed of record . . . [b]ecause this is a
public entity . . . [a]nd the agreement they entered into and how they may be required or
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not be required to pay . . . is a matter in the interest of the public.” App. 643. The
District Court continued, “[t]his high/low agreement . . . notwithstanding the
confidentiality between the two of you, in all likelihood is a matter of public record . . . in
one form or fashion.” App. 646. “[S]ince a dispute has grown up around the terms and
conditions of [the] agreement . . . that dispute is properly put on the record,” concluded
the District Court. App. 646-47. Baxter and Skalko responded by publicly filing their
Rule 59 motion and attaching the Agreement.
On July 3, Bryan filed a motion to pursue discovery on the asserted breach of the
Agreement’s confidentiality provision. The District Court ultimately held that it lacked
jurisdiction to resolve the dispute over the enforceability of the Agreement.
Baxter and Skalko appealed. We held that the District Court did have jurisdiction
to decide Skalko and Baxter’s Rule 60 motion for relief from the judgment, and reversed
and remanded. Bryan v. Erie County Office of Children & Youth, 752 F.3d 316 (3d Cir.
2014). And we left for the District Court to decide whether Baxter and Skalko breached
the Agreement. Id. at 323.
On remand, the District Court granted Baxter and Skalko’s Rule 60 motion to
satisfy the judgment, finding the Agreement enforceable. The District Court reasoned
that the Agreement’s provision for placing the Agreement “on the record with the court”
after the verdict “clear[ly] and unambiguous[ly]” allowed for public disclosure. App. 3.
That conclusion was in line with “sound public policy.” App. 3. Accordingly, Baxter
and Skalko did not breach by attaching the Agreement to their publicly filed Rule 59
motion. The District Court also determined that Bryan’s refusal to accept the $2,700,000
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payment as satisfying the judgment materially breached the Agreement and Baxter and
Skalko were then free to file their post-trial motions and appeal.
Bryan timely appealed.
II.
The District Court had jurisdiction under 28 U.S.C. § 1331. We have appellate
jurisdiction under 28 U.S.C. § 1291. “The construction of an unambiguous contract is a
matter of law for the court and therefore is subject to plenary review.” U & W Indus.
Supply, Inc. v. Martin Marietta Alumina, Inc., 34 F.3d 180, 185 (3d Cir. 1994).
III.
“The fundamental rule in interpreting the meaning of a contract is to ascertain and
give effect to the intent of the contracting parties.” Murphy v. Duquesne Univ. Of The
Holy Ghost, 777 A.2d 418, 429 (Pa. 2001). The intent of the parties is found by
considering the whole instrument “taken together.” Id. Only where a contract is
ambiguous may extrinsic evidence be examined to determine intent. Id. And “[a]
contract contains an ambiguity if it is reasonably susceptible of different constructions.”
Id. at 430 (quotation marks omitted).
At issue in this appeal is the operation of the Agreement’s two provisions reading:
(1) “‘[t]his Agreement shall be CONFIDENTIAL subject to the duties, if any, of the [Erie
County Office of Children and Youth] and/or its employees under the Pennsylvania Right
to Know Act’” and (2) “‘[t]he parties herein will put this Agreement on the record with
the court to memorialize the same following entry of the verdict.’” Defs. Br. 15 (quoting
Agreement ¶¶ 16, 18).
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We first examine the confidentiality provision by itself. The Commonwealth of
Pennsylvania has made a “policy determination . . . that favors disclosure of public
records over the general policy of encouraging settlement.” Tribune-Review Pub. Co. v.
Westmoreland Cty. Hous. Auth., 833 A.2d 112, 120-21 (Pa. 2003). Specifically,
Pennsylvania’s Right-to-Know Law provides that “a public record . . . shall be accessible
for inspection and duplication” upon a written request. 65 P.S. §§ 67.701, 67.702.
Settlement agreements that involve public entities such as the Erie County Office of
Children and Youth are considered public records. Tribune-Review, 833 A.2d at 121.
Thus, absolute confidentiality provisions in such agreements are unenforceable. Id.
The parties here acknowledged this public policy in their Agreement and
accordingly included what can only be considered a “partial” confidentiality provision.
The Agreement’s partial confidentiality term explicitly provides that it is subject to the
duties of Erie County Office of Children and Youth and its employees “under the
Pennsylvania Right to Know Act.” In other words, if a written request is made under the
statute for this Agreement, the Agreement must be publicly disclosed. The
confidentiality provision is therefore far from absolute. Likely due to this limited ability
to prevent public disclosure, the parties added a provision prohibiting publication of the
Agreement to the jury.
It is in this context that we consider the intersection of this partial confidentiality
clause and the parties’ promise to “put this Agreement on the record with the court” after
the verdict. The District Court correctly construed the partial confidentiality provision as
operating only until the jury’s verdict for three reasons.
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First, the natural meaning of the requirement that the Agreement be placed “on the
record” is that the Agreement would become part of the public record of the judicial
proceeding. Of course, the word “public” does not appear in that provision — but nor
does any reference to filing the Agreement under seal (the only mechanism by which the
Agreement could be both on the record and nonpublic). However, the parties could have
no control over whether the District Court would allow the Agreement to be filed under
seal. It would make little sense for the parties to create an obligation that they would not
have the power to uphold. Indeed, the District Court ultimately did rule that all filings in
the case would be public given the involvement of the Erie County Office of Children
and Youth. Based on that reality, the only construction to which this language is
“reasonably susceptible,” Murphy, 777 A.2d at 430, is that “on the record” means
publicly available.
Second, the Agreement’s general term regarding confidentiality is qualified by its
more specific terms regarding that subject. See In re Alloy Mfg. Co. Emp. Trust, 192
A.2d 394, 396 (Pa. 1963). This canon of construction dictates that the partial
confidentiality term, which was never intended nor able to provide absolute secrecy,
operated only until the Agreement was to become publicly available after the jury’s
verdict.
Third, the parties made clear their “‘intention’” in entering into the Agreement to
“‘settle this matter once and for all’” so that “‘no litigation . . . [would] extend beyond the
jury verdict . . . .’” Defs.’ Br. 14-15 (quoting Agreement ¶ 7). To prolong the
confidentiality obligation beyond the verdict would only increase the possibility of
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litigation in this case, and not bring the desired finality. See Capek v. Devito, 767 A.2d
1047, 1050 (Pa. 2001) (holding that courts must “give effect to all of the provisions” of a
contract). The District Court’s construction of the Agreement therefore reflected “the
most reasonable, probable, and natural conduct of the parties, bearing in mind the objects
manifestly to be accomplished.” Unit Vending Corp. v. Lacas, 190 A.2d 298, 300 (Pa.
1963).
Given this contract construction, the asserted public disclosure by the defendants
— weeks after the verdict — was not a breach. In contrast, Bryan did materially breach,
as the District Court found, by refusing to stipulate to dismissal of the case after the
$2,700,000 payment by the defendants. That material breach, in turn, discharged the
defendants of any additional obligations under the Agreement.
IV.
For the foregoing reasons, we will affirm the judgment of the District Court.
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