Farmer v. Banco Popular of North America

Filing 179

ORDER. ORDERED that Magistrate Judge Hegarty's First Recommendation 145 and Supplemental Recommendation 152 are AFFIRMED as set forth in this Order. ORDERED that Defendant Banco Popular North America's Second Motion to Enforce Settle ment Agreement 132 is GRANTED. ORDERED that Plaintiff's Fed. R. Civ. P. 72 Objections 148 and 153 are OVERRULED. ORDERED that in accordance with the settlement agreement, Banco Popular shall pay Plaintiff $30,000 within 30 days of the date of this Order. ORDERED that in accordance with the settlement agreement, Plaintiff shall pay Banco Popular $137,380.84 within 60 days of the date of this Order. ORDERED that in accordance with the settlement agreement, the parties sh all file dismissal documents with this Court within 75 days of the date of this Order. ORDERED that should either party fail to comply with the terms of this Order, I will impose the most severe sanctions and penalties available under the law by Judge Wiley Y. Daniel on 05/15/13.(jjhsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 11-cv-01268-WYD-MEH
GEORGE FARMER (a/k/a George L. Farmer),
Plaintiff,
v.
BANCO POPULAR OF NORTH AMERICA;
JOHN DOES 1-100,
Defendants.

ORDER
_____________________________________________________________________
I.

INTRODUCTION
THIS MATTER is before the Court on the following filings: (1) Defendant Banco

Popular North America’s (“Banco Popular”) Second Motion to Enforce Settlement
Agreement (ECF No. 132), filed November 16, 2012; (2) Magistrate Judge Hegarty’s
Recommendation (“First Recommendation”) (ECF No. 145), filed January 11, 2013; (3)
Magistrate Judge Hegarty’s Supplement to Recommendation (“Supplemental
Recommendation”) (ECF No. 152), filed February 7, 2013; and Plaintiff’s Fed. R. Civ. P.
72 Objections to Magistrate Judge Hegarty’s First Recommendation and Supplemental
Recommendation (ECF Nos. 148 and 153).
On May 14, 2013, I held an evidentiary hearing in this matter. After carefully
considering all pleadings, evidence, and arguments presented by the parties at the May
14, 2013 hearing, Plaintiff’s objections are overruled and Magistrate Judge Hegarty’s
First Recommendation and Supplemental Recommendation are affirmed as set forth

below.
II.

BACKGROUND
A.

Procedural Background

On or about March 1, 2011, Plaintiff filed this action in the Boulder County,
Colorado District Court. On May 12, 2011, Defendant removed the matter to this Court.
Plaintiff alleges fifteen claims for relief in this suit: (1) violation of the Colorado
Consumer Protection Act (“CCPA”); (2) violation of the Colorado Consumer Credit Code
(“CCCC”); (3) Fraud; (4) Tortious Interference; (5) Civil Theft; (6) violation of Colo. Rev.
Stat. § 18-4-405; (7) Defamation; (8) federal racketeering; (9) violation of the Colorado
Organized Crime and Control Act (“COCCA”); (10) violation of Real Estate Settlement
Practices Act (“RESPA”); (11) wrongful dishonor; (12) Intentional Infliction of Emotional
Distress; (13) Negligent Infliction of Emotional Distress; (14) violation of Fair Debt
Collection Practice Act (“FDCPA”); and (15) violation of Colo. Rev. Stat. § 12-14-101, et
seq.
B.

Background Regarding Settlement

On May 1, 2012, Magistrate Judge Hegarty initiated settlement discussions with
the parties. During those discussions, Plaintiff made a settlement offer to Banco
Popular. On May 7, 2012, Banco Popular wrote to Plaintiff declining his settlement
offer. Banco Popular gave Plaintiff a counteroffer of a $15,000 upfront payment, and
offering to forgive interest, late charges, attorneys’ fees, and some of the principal on
the HELOC. In exchange, Plaintiff would pay off the remaining balance on the line of
credit, which was $137,380.84 after the forgiven amounts.
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After further settlement discussions, in early June 2012 Banco Popular increased
its upfront payment offer to $30,000 and extended various deadlines set forth in its May
7, 2012 letter. The net effect was the reduced sum of $107,370.34 to Banco Popular
($137,380.84 payment from Plaintiff - $30,000.00 payment to Plaintiff = $107,380.84 to
Banco Popular).
On June 15, 2012, Magistrate Judge Hegarty held a hearing to read the terms of
the settlement into the record. During the hearing, Plaintiff raised questions, and
Magistrate Judge Hegarty discussed them all. With respect to tax issues, Magistrate
Judge Hegarty advised the parties “to do whatever the tax laws require and you make
no explicit representation on the tax consequences of the transaction.” (Doc. 168
at 8:8-10.) The hearing concluded with the parties affirming a settlement was reached:
THE COURT: So given everything you guys have said, do you believe you
have a settlement?
MR. SHIVPURI: Yes.
THE COURT: Mr. Farmer?
MR. FARMER: Yes, Judge.
THE COURT: Okay.
MR. FARMER: Yeah.
THE COURT: Thank you all, and let’s get those documents exchanged,
okay?
MR. FARMER: Okay.
(Doc. 168 at 13:16-22.)
Later that same afternoon, Banco Popular emailed Plaintiff the written settlement
agreement. The settlement agreement provided for Plaintiff to give Banco Popular an
IRS Form W-9 listing his father’s estate tax identification number. The settlement
agreement also stated that Banco Popular made no representations regarding the

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tax consequences of the settlement. (Exh. G at ¶ 24). Plaintiff signed the IRS Form
W-9 the same day and returned it to Banco Popular. Exhibit A to the settlement
agreement was a satisfaction of mortgage, and exhibit B was a deed in lieu of
foreclosure. (Exh. G.) Because the property securing the HELOC was in New Jersey, a
New Jersey title insurance company was involved in preparing and reviewing these two
documents. Unfortunately, the title company in New Jersey was not expeditious in
preparing these real estate documents.
On June 22, 2012, Magistrate Judge Hegarty issued a Minute Order stating that
at the last court hearing, on June 15, 2012, “the parties represented that they had
reached an agreement; however, the Court has not yet seen any documents to this
effect.” (ECF No. 104).
On June 26, 2012, Banco Popular had received exhibit A, the satisfaction of
mortgage, and emailed it to Plaintiff. Plaintiff had also requested additional changes to
the settlement agreement, and Banco Popular responded to those requests in the cover
email. Also on June 26, 2012, Plaintiff emailed Banco Popular with requested changes
to the settlement. On June 27, 2012, Banco Popular declined all of Plaintiff’s requests.
On July 2, 2012, Banco Popular emailed the settlement agreement, which was
placed on the record at the June 15, 2012 hearing, to Plaintiff. (ECF No. 169-4, Exh.
K). Banco Popular noted that the title company was still reviewing a few small issues,
but would notify Plaintiff if there were any further changes to the exhibits attached to the
settlement agreement. On July 20, 2012, Banco Popular received exhibit B to the
settlement agreement from the New Jersey title company and emailed the complete
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settlement agreement with all exhibits to Plaintiff. No changes were made the language
of the settlement agreement, just changes to exhibit B. Plaintiff then made his own
changes to exhibit B.
On July 27, 2012, Plaintiff and Banco Popular filed a joint motion stating the
parties had placed a settlement on the record on June 15, 2012, and were waiting on
more information from the New Jersey title company regarding an exhibit.
On August 7, 2012, Plaintiff contacted Banco Popular and advised that he
wanted to change the settlement because it had taken too long to complete the real
estate exhibits to the settlement agreement. Banco Popular declined. On August 8,
2012, Magistrate Judge Hegarty held another settlement conference with the parties.
(ECF No. 117). After the hearing, Plaintiff sent an email to Banco Popular stating “I am
in agreement with the last version of the Settlement Agreement.” (Exh. O).
On August 13, 2012, Banco Popular filed its first motion to enforce settlement.
(ECF No. 118). On August 29, 2012, Magistrate Judge Hegarty held another settlement
conference with the parties. (ECF No. 124). After the settlement conference, Plaintiff
offered to streamline the payment process by replacing Banco Popular’s $30,000
upfront payment and his subsequent $137,380.84 payment with a single payment from
him for $100,000. Banco Popular responded that a single payment was agreeable so
long as it was for the original net amount of $107,380.84 and the payment was made by
October 15, 2012. The $107,380.84 payment would go towards paying the outstanding
HELOC balance.
On September 10, 2012, Magistrate Judge Hegarty held another settlement
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conference. (ECF No. 125). At that settlement conference, Plaintiff stated he was
willing to pay the $107,380.34, but he wanted to extend the payment due date to
December 15, 2012. The parties agreed to a payment date of November 15, 2012. No
material terms were placed on the record.
The next day, September 11, 2012, Magistrate Judge Hegarty directed the
parties to file dismissal papers because the case had settled. (ECF No. 127). On
September 13, 2012, Banco Popular emailed Plaintiff the settlement agreement with
the single payment provision. On September 17, 2012, Plaintiff emailed Banco Popular
with changes to the settlement agreement and several pages of new handwritten
additions to the settlement agreement. On October 25, 2012, Banco Popular agreed to
limited changes, such as explicitly stating the New Jersey foreclosure action would be
dismissed, and declined the remaining changes.
On November 9, 2012, Banco Popular emailed Plaintiff inquiring about the status
of the settlement agreement which had been sent to him for signature. On November
13, 2012, two days before the settlement payment was due, Plaintiff emailed Banco
Popular claiming “I have been very clear that there will be no tax ramifications with
respect to settlement,” and requesting the addition of a new paragraph to the settlement
agreement regarding the issuance of an IRS Form 1099. (Exh. EE). Plaintiff also
sought to add a new paragraph providing for liquidated damages in the event of a
breach. (Exh. EE). Finally, Plaintiff stated that due to Hurricane Sandy, his cousin
would not give him the $107,380.84 by the November 15, 2012 due date, and he sought
a six week extension. (Exh. EE.)
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On November 14, 2012, Banco Popular responded that it would only agree to
extend the payment deadline if Plaintiff signed the settlement agreement. Banco
Popular declined the remaining changes requested by Plaintiff. November 15, 2012
was the due date for Plaintiff to make the settlement payment to Banco Popular. No
payment was made. Plaintiff refused to sign the settlement agreement. On November
16, 2012, Plaintiff emailed Banco Popular thanking the bank for agreeing to
a 45-day extension. However, Banco Popular immediately contacted Plaintiff to tell him
that there was no such extension. That same day, Banco Popular filed its second
motion to enforce settlement. (ECF No. 132). I referred the motion to Magistrate Judge
Hegarty.
On December 4, 2012, Magistrate Judge Hegarty held an evidentiary hearing on
Banco Popular’s second motion to enforce settlement. (ECF No. 140). On January 11,
2013, Magistrate Judge Hegarty issued his First Recommendation that Banco Popular’s
second motion to enforce settlement be granted. (ECF No. 145). On January 14, 2013,
anticipating that he might be called as a witness as part of Plaintiff’s Rule 72 objection,
Magistrate Judge Hegarty recused himself from this action pursuant to 28 U.S.C.
§455(a). (ECF No. 146). In compliance with my order for clarification, on February 7,
2013, Magistrate Judge Hegarty issued his Supplemental Recommendation. (ECF No.
152). Plaintiff objects to both the First Recommendation and the Supplemental
Recommendation. (ECF Nos. 148 and 152).
III.

DISCUSSION
Since the Plaintiff’s objections were timely filed, I conduct a de novo review of
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Magistrate Judge Hegarty’s conclusions to which objection is made since the nature of
the matter is dispositive. Fed. R. Civ. P. 72(b); 28 U.S.C. § 636(b)(1).
A.

Magistrate Judge Hegarty’s First Recommendation

Magistrate Judge Hegarty noted that he presided over numerous and lengthy
settlement negotiations in this case starting more than a year ago. On September 10,
2012, Magistrate Judge Hegarty held a hearing in this matter where both parties
represented, and Plaintiff stated verbatim that they were “all in agreement to enforce the
settlement, the date of payment is all that’s left.” (ECF No. 145 at 1). With Magistrate
Judge Hegarty’s assistance, the parties agreed that Plaintiff shall make his payment to
Banco Popular not later than November 15, 2012. (ECF No. 145 at 1).
Magistrate Judge Hegarty further stated that while Plaintiff does not dispute that
an agreement was reached, Plaintiff has refused to sign the written agreement.
Magistrate Hegarty noted that
[p]art of Mr. Farmer’s obligations necessitated, as a practical matter (but
not as a legal matter under the settlement agreement), his obtaining
financing on a property on the East Coast. After the parties agreed to a
final settlement and prior to their signatures on the actual document, that
region suffered the Hurricane Sandy disaster. Although Plaintiff’s property
was not materially impacted, it has interfered with his ability
to obtain financing.
(ECF No. 145 at 2).
Magistrate Judge Hegarty concluded that the parties stipulated that there was a
settlement agreement. Plaintiff was to pay Banco Popular an amount certain on or
before November 15, 2012. “The payment obligation was not contingent upon Mr.
Farmer [Plaintiff] obtaining a loan on his property.” (ECF No. 145 at 2). As described
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more fully in the First Recommendation, Magistrate Judge Hegarty further rejected
Plaintiff’s argument that an ‘act of God’ relieved him of his payment obligations. (ECF
No. 145 at 2). Magistrate Judge Hegarty thus recommended that Banco Popular’s
Second Motion to Enforce Settlement be granted. As I previously stated, Plaintiff
objected to the First Recommendation. Based on my reading of Plaintiff’s objection, I
remanded this matter back to Magistrate Judge Hegarty to clarify his First
Recommendation.
B.

Magistrate Judge Hegarty’s Supplemental Recommendation

In his Supplemental Recommendation, Magistrate Judge Hegarty stated that
Plaintiff’s objections involving tax consequences and a liquidated damages provision are
matters that Plaintiff “wished were in the written settlement, but as to which he never
received agreement from Defendant.” (ECF No. 152 at 1-2). “In most settlement
negotiations, one or both parties desire provisions that do not end up in the final
agreement.” (ECF No. 152 at 2).
Thus, Magistrate Judge Hegarty concluded that since Plaintiff raised no
disagreement with the written agreement at ECF No. 132-1, Plaintiff has “thereby
waived any other objection and has conceded that the contents of docket #132-1 have
been agreed to by both parties.” (ECF No. 152 at 2). Finally, Magistrate Judge Hegarty
again rejected Plaintiff’s ‘act of God’ argument because it is not a legal basis to void the
agreement.
C.

Analysis

Turning to my analysis, I note that “‘[a] trial court has the power to summarily
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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) (quoting
United States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993)). “Issues involving the
formation and construction of a purported settlement agreement are resolved by
applying state contract law.” Id. (citing United States v. McCall, 235 F.3d 1211, 1215
(10th Cir. 2000)). In Colorado, “[i]n order for a settlement to be binding and
enforceable, there must be a ‘meeting of the minds' as to the terms and conditions of
the compromise and settlement.” H.W. Houston Constr. Co. v. District Court, 632 P.2d
563, 565 (Colo. 1981). “[T]he evidence must show that the parties agreed upon all
essential terms.” I.M.A., Inc. v. Rocky Mountain Airways, Inc., 713 P.2d 882, 888 (Colo.
1986).
Under Colorado law, the essential elements of a contract include “mutual assent
to an exchange, between competent parties, with regard to a certain subject matter, for
legal consideration.” Indus. Prod. Int'l v. Emo Trans., Inc., 962 P.2d 983, 988 (Colo. Ct.
App. 1997) (citation omitted). “An offer is a manifestation by one party of a willingness
to enter into a bargain [and a]n acceptance is a manifestation of assent to the terms of
the offer.” Id. (citing Restatement (Second) of Contracts §§ 24, 32 (1979)). “‘It is
established that a signature is not always necessary to create a binding agreement.’”
City and County of Denver v. Adolph Coors Co., 813 F. Supp. 1476, 1480 (D. Colo.
1993) (quoting Presidential Motor Yacht Corp. v. President Marine, Ltd., 753 F. Supp. 7,
13 (D.D.C.1990)).
Plaintiff objects to Magistrate Judge Hegarty’s First Recommendation and
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Supplemental Recommendation arguing that the agreement found at ECF No. 132-1
was drafted after the September 10, 2012 hearing where the settlement was placed on
the record. (ECF No. 153 at 2). Thus, Plaintiff asserts that the agreement found at ECF
No. 132-1 is just a “draft of what Defendant would like to see in a written agreement,”
but contains additional terms not placed on the record on September 10, 2012 and
omits terms that were negotiated and understood to be included in the final agreement.
(ECF No. 153 at 2).
With respect to the tax issue, Plaintiff argues that the “non-tax consequence of
any settlement was a condition precedent to Plaintiff entering into a settlement in the
first place. During settlement discussion with Magistrate Judge Hegarty, I specifically
recall discussing with his Honor the importance of there not being any tax
consequences of any settlement.” (ECF No. 153 at 4).
Here, after carefully reviewing the entire record in this case and hearing from the
parties at the May 14, 2013 hearing, I reject Plaintiff’s objections and affirm Magistrate
Judge Hegarty’s conclusion that a settlement agreement was reached. However, I
affirm on a separate basis. I find that the evidence shows that the parties mutually
agreed to the terms placed on the record at the June 15, 2012 hearing before
Magistrate Judge Hegarty, which were then memorialized in a writing found at exhibit K.
Banco Popular emailed exhibit K to Plaintiff on July 2, 2013. On August 8, 2012,
Plaintiff emailed Banco Popular stating that “I am in agreement with last version of the
Settlement Agreement.” (Exh. O). Upon my questioning of the parties at the May 14,
2013 hearing, counsel for Banco Popular represented that the “last version of the
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Settlement Agreement” is the document found at exhibit K. Moreover, in Plaintiff’s
response to Banco’s first motion to enforce settlement, Plaintiff states that “I concur that
a settlement was reached and the terms of which were placed on the record on June
15, 2012.” (Exh. Q).
I find no error with Magistrate Judge Hegarty’s conclusion that the parties came
to a full and complete meeting of the minds over the essential terms of agreement to
resolve the litigation between them. However, based on my review of the record
coupled with the evidence and arguments presented at the May 14, 2013 hearing, I find
that the parties expressly stated an intention to be bound by the terms of the settlement
agreement placed on the record at the June 15, 2012 hearing and memorialized in a
written document, exhibit K. Thus, this agreement will be enforced.
IV.

CONCLUSION
For the reasons stated on the record at the May 14, 2013 hearing and set forth

above, it is
ORDERED that Magistrate Judge Hegarty’s First Recommendation (ECF No.
145) and Supplemental Recommendation (ECF No. 152) are AFFIRMED as set forth in
this Order. In accordance therewith, it is
ORDERED that Defendant Banco Popular North America’s Second Motion to
Enforce Settlement Agreement (ECF No. 132) is GRANTED as set forth in this Order. It
is
FURTHER ORDERED that Plaintiff’s Fed. R. Civ. P. 72 Objections (ECF Nos.
148 and 153) are OVERRULED. It is
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FURTHER ORDERED that in accordance with the settlement agreement, Banco
Popular shall pay Plaintiff $30,000 within 30 days of the date of this Order. It is
FURTHER ORDERED that in accordance with the settlement agreement,
Plaintiff shall pay Banco Popular $137,380.84 within 60 days of the date of this
Order. It is
FURTHER ORDERED that in accordance with the settlement agreement, the
parties shall file dismissal documents with this Court within 75 days of the date
of this Order. It is
FURTHER ORDERED that should either party fail to comply with the terms
of this Order, I will impose the most severe sanctions and penalties available
under the law.
Dated: May 15, 2013
BY THE COURT:

s/ Wiley Y. Daniel
Wiley Y. Daniel
Senior United States District Judge

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