McClure v. Chen, et al.

Filing 105

FINDINGS and RECOMMENDATIONS recommending that Plaintiff's Motion to Void the Settlement Agreement, filed on June 24, 2019 100 , be Denied ; referred to Judge Drozd, signed by Magistrate Judge Stanley A. Boone on 1/17/2020. Objections to F&R due 21-Day Deadline (Martin-Gill, S)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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GEORGE MCCLURE,

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Plaintiff,

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v.
C.K. CHEN,

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Defendant.

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Case No.: 1:14-cv-00932-DAD-GSA (PC)
FINDINGS AND RECOMMENDATION
RECOMMENDING PLAINTIFF’S MOTION TO
VOID THE SETTLEMENT AGREEMENT BE
DENIED
[ECF No. 100]

On June 7, 2019, the undersigned held a settlement conference with the parties, and the case

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settled with the terms placed on the record. On June 17, 2019, the parties filed a stipulation for

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voluntary dismissal, the case was closed on June 18, 2019. (ECF Nos. 98,99.)

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On June 24, 2019, Plaintiff filed a motion to void the settlement agreement. (ECF No. 100.)

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I.

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RELEVANT BACKGROUND

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Plaintiff filed the instant action on June 4, 2014.

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On March 22, 2019, Magistrate Judge Gary S. Austin determined the case would benefit from

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a settlement conference, and a conference was set before the undersigned on June 7, 2019. (ECF No.

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84.)

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On June 7, 2019, the undersigned conducted the settlement conference and the case settled and

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terms were placed on the record. (ECF No. 95.)

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On June 17, 2019, the parties filed a stipulation for voluntary dismissal with prejudice. (ECF
No. 98.)
On June 18, 2019, Magistrate Judge Gary S. Austin issued an order giving full effect to the

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stipulation for voluntary dismissal of the case and the case was dismissed and closed. (ECF No. 99.)

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As previously stated, on June 24, 2019, Plaintiff filed a motion to void the settlement

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agreement. (ECF No. 100.) On January 10, 2020, the Court directed Defendant to file a response.

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(ECF No. 102.) Defendant filed a response on January 15, 2020.

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II.

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LEGAL STANDARD

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“It is well settled that a district court has the equitable power to enforce summarily an

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agreement to settle a case pending before it.” Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987);

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accord Doi v. Halekulani Corp., 276 F.3d 1131, 1141 (9th Cir. 2002). This power only extends to the

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enforcement of complete settlement agreements. Callie, 829 F.2d at 890. Under federal law, there are

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two requirements for an oral agreement to be enforceable. First, the agreement must be complete.

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Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir. 1994), as amended (Nov. 22, 1994).

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Second, the parties must have agreed to be bound by the terms of the settlement, or have authorized

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their attorneys to settle the suit. Harrop v. W. Airlines, Inc., 550 F.2d 1143, 1144 (9th Cir. 1977).

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In addition, “[t]he construction and enforcement of settlement agreements are governed by

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principles of local law which apply to interpretation of contracts generally.” O’Neil v. Bunge Corp.,

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365 F.3d 820, 822 (9th Cir. 2004) (citations omitted). Therefore, California law regarding the

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formation and interpretation of contracts is applied to determine whether a legally enforceable

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settlement agreement was reached. United Commercial Ins. Serv., Inc. v. Paymaster Corp., 962 F.2d

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853, 856 (9th Cir. 1992). “Under California law, settlement agreements are governed by general

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principles of contract law.” Adams v. Johns-Manville Corp., 876 F.2d 702, 704 (9th Cir. 1989).

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The essential elements of a contract under California law are: “parties capable of contracting;

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the parties’ consent; a lawful object; and sufficient cause or consideration.” Lopez v. Charles Schwab

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& Co., 118 Cal.App.4th 1224, 1230 (2004). “An essential element of any contract is the consent of

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the parties, or mutual assent.” Lopez, 118 Cal.App.4th at 1230 (quoting Cal. Civ.Code, §§ 1550(2),
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1565(2)). Mutual assent is usually manifested by an offer that is communicated to the offeree and an

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acceptance that is communicated to the offeror.” Lopez, 118 Cal.App.4th at 1230.

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“Normally if a party enters into a settlement agreement knowingly and voluntarily, the

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agreement is treated as a binding contract and the party is precluded from raising the underlying

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claims.” Arnold v. United States, 816 F.2d 1306, 1309 (9th Cir. 1987) (citation omitted); Folsom v.

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Butte Cty. Assn. of Governments, 32 Cal.3d 668, 677 (1982) (“Compromise has long been

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favored…[A] valid compromise agreement has many attributes of a judgment, and in the absence of a

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showing of fraud or undue influence is decisive of the rights of the parties thereto and operates as a bar

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to the reopening of the original controversy.” (quotations omitted)). “However, if one part breaches a

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settlement, the other has the option of enforcing the terms of the settlement or rescinding the

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settlement and suing on the original claims.” Arnold, 816 F.2d at 1309 (citation omitted) (noting “for

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example, that the government could reinstate its case against a defendant if the defendant breached a

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settlement agreement.” (citations omitted)).

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California Civil Code section 1689 provides in pertinent part that a contract may be rescinded

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where (1) consent was “given by mistake, or obtained through duress, menace, fraud, or undue

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influence, exercised by or with the connivance of the party as to whom he rescinds….”; (2)

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consideration fails through the fault of the party as to whom he rescinds; (3) consideration “becomes

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entirely void from any cause”; (4) consideration, before it is rendered to the rescinding party, “fails in

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a material respect from any cause”; (5) “the contract is unlawful for causes which do not appear in its

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terms or conditions, and the parties are not equally at fault”; and (6) “the public interest will be

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prejudiced by permitting the contract to stand.” Cal. Civ. Code § 1689(b).

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Under California law, common law “[e]conomic duress can excuse an innocent party’s

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contractual obligations when the other contracting party does ‘a wrongful act which is sufficiently

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coercive to cause a reasonably prudent person faced with no reasonable alternative to succumb to the

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perpetrator’s pressure.” Hicks v. PGA Tour, Inc., 897 F.3d 1109, 1119 (9th Cir. 2018) (quoting Rich

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& Whillock, Inc. v. Ashton Dev., Inc., 157 Cal.App.3d 1154, 1158 (1984)). “When a party pleads

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economic duress, that party must have had no ‘reasonable alternative’ to the action it now seeks to

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avoid (generally, agreeing to contract).” Lanigan v. City of Los Angeles, 199 Cal.App.4th 1020, 1034
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(2011) (internal citation and quotation marks omitted).

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III.

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DISCUSSION

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In his motion to rescind the settlement agreement, Plaintiff contends that the undersigned

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“badgered” him “to take the very first offer which came along which was $2500[.]” (ECF No. 100.)

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Plaintiff further contends that Defendants initially offered him $10,000, but he signed the agreement

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under duress and pressure for $6,000.00 (Id.)

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Contrary to Plaintiff’s contention, the case did not settle for $6,000.00; rather, both Plaintiff

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and Defendant agreed to settle this case for $8,500.00. (Declaration of Aseil Mohmoud (Mohmoud

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Decl.) ¶ 4 & Ex. A.; see also Transcript of June 7, 2019 terms of settlement.) Furthermore, Defendant

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submits that there was never an offer or agreement to settle the case for $10,000.00. (Mohmoud Decl.

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¶ 3.) Although Plaintiff previously demanded to settle the case for $10,000.00, Defendant never

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agreed to settle the case for this amount. (Id.) In addition, Plaintiff has not provided any documentary

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evidence to support his contention that Defendant offered or agreed to settle this case for $10,000.00.

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(ECF No. 100.) Moreover, the record does not support Plaintiff’s contention that he was “badgered”

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or pressured to accept the $8,500.00 offer. The undersigned read the terms of the settlement

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agreement on the record, and asked Plaintiff if he agreed to settle the case for $8,500.00, to which

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Plaintiff affirmatively responded “yes.” Plaintiff was asked if he wished to add anything on the

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record, and he affirmatively responded “no.” After reviewing the settlement agreement in the

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courtroom on June 7, 2019, Plaintiff signed his initials next to the settlement agreement, and signed

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and dated it. (Mohmoud Decl. Ex. A.) Plaintiff never gave any indication that he was dissatisfied with

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or opposed to the settlement. In fact, defense counsel submits, under penalty of perjury, that Plaintiff

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was curious how soon he could receive the funds because he was set to be released from custody.

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(Mohmoud Decl. ¶ 4.) Thus, Plaintiff has not plausibly established that he signed the agreement under

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duress and pressure. Further, Plaintiff has not alleged any facts to demonstrate that he had no

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reasonable alternative but to sign the settlement agreement. Accordingly, there is no basis to “void”

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the settlement agreement, and Plaintiff’s motion should be denied.

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IV.

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RECOMMENDATION
Based on the foregoing, it is HEREBY RECOMMENDED that Plaintiff’s motion to void the

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settlement agreement, filed on June 24, 2019 (ECF No. 100), be DENIED.
This Findings and Recommendation will be submitted to the United States District Judge

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assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within twenty-one (21)

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days after being served with this Findings and Recommendation, the parties may file written

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objections with the Court. The document should be captioned “Objections to Magistrate Judge’s

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Findings and Recommendation.” The parties are advised that failure to file objections within the

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specified time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 838-

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39 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)).

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IT IS SO ORDERED.

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Dated:

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January 17, 2020
UNITED STATES MAGISTRATE JUDGE

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