Federal Deposit Insurance Corporation v. Broom et al
ORDER. ORDERED that the Pace defendants' Motion to Enforce Settlement 78 is DENIED. ORDERED that Plaintiffs Objection to Magistrate Judge's Recommendation on Motion to Enforce Settlement 112 is SUSTAINED. ORDERED t hat the Amended Recommendation of Magistrate Judge 111 is OVERRULED. ORDERED that, on or before September 8, 2014, the parties shall file a Stipulation of Dismissal pursuant to paragraph five of the Material Terms by Judge Philip A. Brimmer on 08/28/14.(jhawk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 12-cv-03145-PAB-MEH
FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for AmTrust Bank,
TERRANCE G. BROOM, an individual,
B&B APPRAISAL, INC., a Colorado corporation,
JOSEPH S. PACE, an individual,
JSP PROPERTIES AND APPRAISAL, a Colorado company, and
Does 1 through 40, inclusive,
This matter is before the Court on the Amended Recommendation of United
States Magistrate Judge (the “Recommendation”) [Docket No. 111] filed on June 26,
2014. The magistrate judge recommends that the Motion to Enforce Settlement
[Docket No. 78] filed by defendants Joseph S. Pace and JSP Properties and Appraisal
(collectively, the “Pace defendants”) be granted. Docket No. 111 at 5. The Court will
“determine de novo any part of the magistrate judge’s disposition that has been
properly objected to” by plaintiff. Fed. R. Civ. P. 72(b)(3). In the absence of a proper
objection, the Court may review a magistrate judge’s recommendation under any
standard it deems appropriate. See Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir.
1991); see also Thomas v. Arn, 474 U.S. 140, 150 (1985) (“[i]t does not appear that
Congress intended to require district court review of a magistrate’s factual or legal
conclusions, under a de novo or any other standard, when neither party objects to those
The facts relevant to reviewing the Recommendation are as follows. Plaintiff
brought this suit as receiver for AmTrust Bank (“AmTrust”), a failed insured depository
institution. Docket No. 1 at 2, ¶ 3. On March 5, 2014, the magistrate judge held a
settlement conference. Docket No. 77. The parties reached an agreement as to the
material terms of a settlement, reduced their agreement to writing, and signed the
agreement. Docket No. 78-1; Docket No. 78-2. The Material Terms of Settlement
Agreement (“Material Terms”) are as follows:
1. The Plaintiff agrees to release all claims that have been brought against
Defendants in this lawsuit.
2. The settlement is a compromise of disputed claims. No party admits any
liability to the other party.
3. Defendants agree to pay Plaintiff the total of one-hundred and ninety-five
thousand dollars ($195,000.000) in complete settlement of all claims that
were or could have been brought in this lawsuit, whether known or unknown,
4. Defendants make no representation as to the tax consequences of this
Settlement or the payments referenced herein.
5. The parties agree that this Material Terms of Settlement Agreement is
binding and enforceable. Plaintiff’s counsel will take the lead in drafting a
Final Settlement Agreement based on Plaintiff’s form agreement
encompassing the material terms set forth herein, and counsel for
defendants will cooperate, and will assist in preparing a Stipulation of
Dismissal with Prejudice to be filed within 20 days. Each party will pay its
own attorney’s fees and costs.
Docket No. 78-1. The Pace defendants later executed a nearly identical agreement
containing substantially the same terms, but providing that the Pace defendants would
pay $97,500.00 in complete settlement of all claims and that payment would be made
within thirty days of the execution of a final settlement agreement as contemplated in
paragraph five of the Material Terms. Docket No. 78-2.1 Pursuant to paragraph five of
the Material Terms, plaintiff proposed a form agreement (the “form agreement”) used
regularly by the FDIC when acting as a receiver containing the following reservation of
Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall be construed or interpreted as limiting, waiving, releasing,
or compromising the jurisdiction and the authority of the Federal Deposit
Insurance Corporation in the exercise of its supervisory or regulatory
authority or to diminish its ability to institute administrative enforcement or
other proceedings seeking removal, prohibition, or any other relief it is
authorized to seek pursuant to its supervisory or regulatory authority against
Docket No. 96-1 at 4, ¶ III.C.2. The Pace defendants state that they did not agree to
the inclusion of this provision and filed the present motion. Docket No. 78 at 2-5.2
Defendants Terrance G. Broom and B&B Appraisal, Inc. (collectively, the “Broom
defendants”) joined in the Pace defendants’ motion. Docket No. 83 at 1. The Pace
defendants seek the following relief: “Pace Defendants move the court to adopt
paragraphs 1 and 3 of the material terms [sic] the settlement agreement . . . as an order
of the court. Pace defendants further move that the court find no further settlement or
release agreement ‘form’ is needed to effect ‘the complete settlement of all claims.’”
It appears that the Broom defendants also subsequently executed a nearly
identical agreement. Docket No. 78 at 1.
Although the Pace defendants’ reply brief identifies all of section III.C as
conflicting with the Material Terms, Docket No. 95 at 4, the Pace defendants’ assertion
is unsupported. Moreover, the parties’ dispute and plaintiff’s objection centers on
paragraph III.C.2. As such, the Court interprets the parties’ dispute as one over the
inclusion of paragraph III.C.2 in the Final Settlement Agreement as defined in the
Docket No. 78 at 6. Plaintiff responded that the parties agreed to abide by the form
agreement and, further, that the form agreement “make[s] clear that the FDIC-R, acting
in its receivership capacity, does not and cannot release any potential claims belonging
to other government entities, including the FDIC in its corporate or regulatory capacity.”
Docket No. 91 at 5.3
After conducting a hearing on the motion to enforce, Docket No. 108,4 the
magistrate judge found that the form agreement contained a different material term
than those contained in the Material Terms, namely, a reservation of legal rights against
defendants by the FDIC in its regulatory capacity. Docket No. 111 at 4. The magistrate
judge therefore found that the parties’ agreement consisted of “the long form submitted
by the FDIC, with the exception that the release is a global release of the Defendants
by the FDIC, with no reservation of rights.” Id. Plaintiff objects “to the extent that the
Recommendation finds that the FDIC as Receiver for a failed bank is not a separate
legal entity from the FDIC in its general capacity as a regulator of banks.” Docket No.
112 at 1.
Generally, a “trial court has the power to summarily enforce a settlement
agreement entered into by the litigants while the litigation is pending before it.” United
States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993) (citation omitted);
References to “FDIC-R” are to the FDIC in its capacity as a receiver of failed
banks and references to “FDIC-C” are to the FDIC in its regulatory or corporate
See Yaekle v. Andrews, 169 P.3d 196, 200 (Colo. App. 2007) (noting that,
where the terms of a settlement agreement are in dispute and a party requests a
hearing, an evidentiary hearing to resolve the dispute between the parties is required).
DiFrancesco v. Particle Interconnect Corp., 39 P.3d 1243, 1247 (Colo. App. 2001) (“A
court may summarily enforce a settlement agreement if it is undisputed that a
settlement exists”). “Issues involving the formation and construction of a purported
settlement agreement are resolved by applying state contract law.” Shoels v. Klebold,
375 F.3d 1054, 1060 (10th Cir. 2004).
The issue before the Court is not, strictly speaking, whether FDIC-R and FDIC-C
are separate legal entities. Rather, the question the Court must first resolve is whether
the Material Terms had the effect of releasing defendants from future supervisory,
regulatory, or administrative claims that could be brought by FDIC-C. The Court
concludes that the Material Terms had no such effect.
When acting as a receiver, the FDIC shall “succeed to . . . all rights, titles,
powers, and privileges of the insured depository institution.” 12 U.S.C.
§ 1821(d)(2)(A)(i); see also O’Melveny & Myers v. F.D.I.C., 512 U.S. 79, 86 (1994)
(interpreting § 1821(d)(2)(A)(i) and holding that the “FDIC as receiver ‘steps into the
shoes’ of the failed [institution], obtaining the rights ‘of the insured depository institution’
that existed prior to receivership”). In this case, plaintiff was standing in the shoes of
AmTrust and asserting only those claims plaintiff acquired through receivership. See
O’Melveny, 512 U.S. at 86; F.D.I.C. v. St. Paul Cos., 634 F. Supp. 2d 1213, 1219 (D.
Colo. 2008) (rejecting argument that FDIC-R cannot bring suit because the asset at
issue belonged to the insured depository institution, “to which FDIC succeeded to all
rights”). The complaint’s caption and allegations bear this out:
Under the Federal Deposit Insurance Act (“FDIA”), the FDIC is authorized to
be appointed as receiver for failed insured depository institutions. AmTrust
was a federally chartered savings bank with its principal place of business in
Cleveland, Ohio. On December 4, 2009, AmTrust was closed by the Office
of Thrift Supervision and the FDIC was appointed as Receiver pursuant to
12 U.S.C. § 1464(d)(2)(A) and 12 U.S.C. § 1821(c)(5). Under the FDIA, the
FDIC as receiver succeeds to all claims held by banks for which it is the
receiver. 12 U.S.C. § 1821(d)(2)(A)(i). Plaintiff owns the subject claims and
has standing to prosecute this action as receiver for AmTrust.
Docket No. 1 at 1, 2, ¶ 3 (emphasis added).5 The Material Terms upon which the Pace
defendants rely also contains a caption stating that plaintiff is a “receiver” for AmTrust
Bank. Docket No. 78-1 at 1. The Pace defendants provide no persuasive authority or
evidence that the FDIC appears in this case in anything other than its capacity as a
receiver.6 Thus, the disputed paragraph of the form agreement expresses a simple
legal fact, namely, that plaintiff releases defendants from any claims plaintiff acquired
from AmTrust, whether such claims were or could have been brought in this case, and
does not release any claims that could be brought by FDIC-C, which plaintiff does not
have the capacity as a receiver to do. See Dababneh, 971 F.2d at 432 (“FDIC-C may
not be held directly liable for the actions of FDIC-R.”). In other words, AmTrust did not
possess the right to bring regulatory or administrative claims against defendants and,
The Pace defendants argue that plaintiff failed to allege that the FDIC brought
this suit “solely in its capacity as Receiver” and that plaintiff’s complaint did not state
that “FDIC-R” was bringing suit. Docket No. 115 at 8 (emphasis in original). There was
no need for the plaintiff to so allege given that the complaint is clear that plaintiff brings
this suit, not in its regulatory capacity, but in its capacity as a receiver.
Moreover, courts in the Tenth Circuit regularly recognize the distinction between
FDIC-R and FDIC-C. See, e.g., Dababneh v. FDIC, 971 F.2d 428, 432 (10th Cir. 1992)
(“FDIC-R was solely responsible for marshalling and distributing the receivership assets
and liabilities [and b]y contrast, FDIC-C merely purchased Moncor’s unassumed assets
from FDIC-R in the transaction”); FDIC v. Isham, 777 F. Supp. 828, 830 (D. Colo. 1991)
(noting that “FDIC-Receiver sold and assigned the right to sue the Bank’s former
directors and officers to FDIC-Corporate”).
because plaintiff had no capacity to release defendants from claims other than those
acquired from AmTrust through receivership, the regulatory or administrative claims of
FDIC-C are not those that “were or could have been brought in this lawsuit.” See
Docket No. 78-1 at 1, ¶ 3. The Court finds no inconsistency between the Material
Terms and the disputed paragraph of the form agreement. Thus, the Recommendation
is overruled with respect to this issue.
Given the Court’s interpretation of the Material Terms and paragraph III.C.2 of
the form agreement, the remaining question becomes whether the parties had a
meeting of the minds. The Court concludes that they did. Generally, “when parties to a
contract ascribe different meanings to a material term of a contract, the parties have not
manifested mutual assent, no meeting of the minds has occurred, and there is no valid
contract.” Sunshine v. M. R. Mansfield Realty, Inc., 575 P.2d 847, 849 (Colo. 1978).
However, “when the meaning that either party gives to the document’s language was
the only reasonable meaning under the circumstances[,] both parties are bound to the
reasonable meaning of the contract’s terms.” Id.; see also Jorgensen v. Colo. Rural
Props., LLC, 226 P.3d 1255, 1260 (Colo. App. 2010) (“When the parties to an alleged
contract assign different meanings to an essential term, a contract may or may not
exist, depending on the nature of the term. Unless there is only one reasonable
meaning for the term, courts generally conclude there is no meeting of the minds and,
thus, no contract.”). Here, the complaint, the case caption, and the nature of the
litigation manifest that the FDIC appears in this case in its capacity as a receiver.
Nothing suggests, and it is unreasonable to assume, that the FDIC appears in any other
capacity. Moreover, the Material Terms incorporate a reference to “Plaintiff’s form
agreement,” which demonstrates defendants’ general familiarity with the form
agreement. Given that, as noted above, paragraph III.C.2 of the form agreement is
consistent with the Material Terms, defendants’ interpretation of paragraph III.C.2 of the
form agreement in conjunction with the Material Terms is unreasonable. Thus, the
Court finds that the Material Terms and paragraph III.C.2 of the form agreement are
enforceable and subject to the interpretation discussed above.
For the foregoing reasons, it is
ORDERED that the Pace defendants’ Motion to Enforce Settlement [Docket No.
78] is DENIED. It is further
ORDERED that Plaintiff’s Objection to Magistrate Judge’s Recommendation on
Motion to Enforce Settlement [Docket No. 112] is SUSTAINED. It is further
ORDERED that the Amended Recommendation of Magistrate Judge [Docket No.
111] is OVERRULED. It is further
ORDERED that, on or before September 8, 2014, the parties shall file a
Stipulation of Dismissal pursuant to paragraph five of the Material Terms.
DATED August 28, 2014.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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