At Law Group, PLLC v. ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, et al
Filing
119
OPINION AND ORDER: (1) ADOPTING 105 MAGISTRATE JUDGE GRANDS MAY 27, 2021 ORDER, CONSTRUED AS A REPORT AND RECOMMENDATION ; (2) OVERRULING 107 DEFENDANT ALLSTATE INSURANCE COMPANYS OBJECTIONS ; AND (3) DENYING 56 DEFENDANT ALLSTATE'S MOTION TO ENFORCE SETTLEMENT AGREEMENT WITH DEFENDANT VELOCITY MRS FUND IV, LLC. Signed by District Judge Paul D. Borman. (DTof)
Case 2:19-cv-13757-PDB-DRG ECF No. 119, PageID.4206 Filed 09/08/21 Page 1 of 20
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
AT LAW GROUP, PLLC,
Case No. 19-cv-13757
Plaintiff,
v.
Paul D. Borman
United States District Judge
ALLSTATE INSURANCE
COMPANY, et al.,
David R. Grand
United States Magistrate Judge
Defendants.
______________________________/
OPINION AND ORDER:
(1) ADOPTING MAGISTRATE JUDGE GRAND’S MAY 27, 2021 ORDER,
CONSTRUED AS A REPORT AND RECOMMENDATION (ECF NO. 105);
(2) OVERRULING DEFENDANT ALLSTATE INSURANCE COMPANY’S
OBJECTIONS (ECF NO. 107); AND
(3) DENYING DEFENDANT ALLSTATE’S MOTION TO ENFORCE
SETTLEMENT AGREEMENT WITH DEFENDANT VELOCITY MRS
FUND IV, LLC (ECF NO. 56)
On May 27, 2021, Magistrate Judge David R. Grand issued an Order, in part,
denying Defendant Allstate’s Motion to Enforce Settlement Agreement with
Velocity. (ECF No. 105, Order.) For the reasons set forth below, this part of the
Order is construed as a report and recommendation (R&R). The Allstate Defendants
filed Objections to the Order/R&R which are now before this Court for resolution.
(ECF No. 107, Allstate’s Objections.) Defendant Velocity MRS-Fund IV, LLC filed
a Response to Defendant Allstate’s Objections. (ECF No. 109, Velocity’s
Response.) Defendant Allstate filed a reply in support of its objections (ECF No.
Case 2:19-cv-13757-PDB-DRG ECF No. 119, PageID.4207 Filed 09/08/21 Page 2 of 20
110, Allstate Reply), and Defendant Velocity filed, with the Court’s permission, a
sur-reply in opposition to Defendant Allstate’s Objections (ECF No. 118, Velocity
Sur-reply.) The Court, having conducted de novo review under 28 U.S.C. §
636(b)(1) and Fed. R. Civ. P. 72(b) of those portions of the R&R to which specific
and timely objections have been filed, OVERRULES Defendant Allstate’s
Objections (ECF No. 107), ADOPTS Magistrate Judge Grand’s Report and
Recommendation (ECF No. 105), and DENIES Defendant Allstate’s Motion to
Enforce Settlement Agreement (ECF No. 56).
I.
FACTUAL AND PROCEDURAL BACKGROUND
This is an interpleader action commenced by Plaintiff AT Law Group, PLLC
(AT Law) pursuant to 28 U.S.C. § 1335. The defendants are Allstate Insurance
Company, Allstate Fire and Casualty Insurance Company, Allstate Property and
Casualty Insurance Company, Esurance Insurance Company, and Esurance Property
and Casualty Insurance Company (collectively “Allstate”), Mercyland Health
Services, PLLC (Mercyland), and Velocity MRS Fund IV, LLC (Velocity).
Defendants Allstate and Velocity have each filed an answer to the interpleader
complaint, and each have also filed a crossclaim against the other.
A.
Prior Allstate Litigation, Case No. 18-cv-13336
On October 25, 2018, Allstate filed a Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. § 1962, and fraud action in this Court against
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18 defendant medical providers, including Mercyland. Case No. 18-cv-13336 (E.D.
Mich.) Allstate alleges the existence of a well-organized and complex fraudulent
scheme whereby the defendant medical providers submitted false and fraudulent
medical records, bills, and invoices to Allstate seeking reimbursement under the
Michigan No-Fault Act, Mich. Comp. Laws § 500.3101, et seq., for (1) medical
treatment and services that were not actually provided, (2) were medically
unnecessary, (3) were not lawfully rendered, and (4) were charged at unreasonable
rates. The Allstate Complaint alleges that when defendants, including Mercyland,
were unable to procure payment from insurers, including Allstate and others, they
sold their accounts receivable to third parties, including HMRF Fund III, LLC
(which Defendant Velocity MRS Fund IV, LLC in this case refers to as its
“predecessor in interest”), for a fraction of the amount billed to insurers. (Case No.
18-13336, ECF No. 1, Complaint.)
This Court entered judgment in Allstate’s favor against Mercyland and its
owner on October 22, 2019. (Case No. 18-13336, ECF No. 132, Opinion and Order,
and ECF No. 133, Consent Judgment.) Allstate then worked to collect on the
judgment, including serving a writ of garnishment on AT Law, which represented
Mercyland in state court actions seeking money from insurers. (Case No. 18-13336,
ECF No. 161.) AT Law served its garnishee disclosure, reflecting that it “is not
indebted to the defendant [Mercyland] and does not possess or control the
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defendant’s property, money, etc.” because “account receivables were sold to
Velocity.” (Case No. 18-13336, ECF No. 168.)
B.
Present Interpleader Action, Case No. 19-cv-13757
AT Law subsequently filed this interpleader action to deposit currently
retained funds into the registry of the Court, as well as “any monies obtained via
settlement, trial adjudication, etc. in the pending healthcare provider cases.” (ECF
No. 6 ¶ 50; ECF No. 2, Ex Parte Motion to Deposit Funds.) Defendants Allstate and
Velocity each asserted claims to the interpleaded funds, and also asserted crossclaims against one another. Defendants Allstate and Velocity engaged in mediation
efforts to attempt to settle their respective claims to the interpleader funds at issue in
this matter, as well as a resolution to a settlement of their respective cross-claims.
1.
Mediation
According to Defendants Allstate and Velocity, they both agreed to a
mediation that took place on October 29, 2020 with mediator Clarence L. Pozza, Jr.
The parties did not reach an agreement at that time, and their settlement discussions
continued in the following days, but they still did not reach an agreed settlement.
Allstate contends that the settlement discussions failed because Velocity wanted a
global release of claims, to which Allstate was opposed. Allstate states that it was
only interested in settling this interpleader action.
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On November 2, 2020, counsel for Velocity sent counsel for Allstate an email
at approximately 1:19 p.m. stating:
Revised Stipulation and Order attached for Allstate’s review and
consideration.
In addition to executing and filing the attached with the Court, Fund IV
and Allstate would enter into a Confidential Settlement Agreement
pursuant to which they would split the insurance proceeds interpleaded
by AT-Law 50/50 and Allstate would discharge its Consent Judgment
against Mercyland upon Allstate’s receipt of its 50% share of those
insurance proceeds. Fund IV cannot be left in a position where it is
again subject to another proceeding with Allstate involving Mercyland
receivables.
Please advise whether Allstate is agreeable to these terms.
(ECF No. 107-3, 11/2/2020 Velocity email, PageID.3807.) The email attached a
proposed Stipulation of Dismissal of Cross-Claims With Prejudice and Proposed
Stipulated Order. (ECF No. 107-3, Proposed Stipulation and Order, PageID.380913.) The proposed Stipulation contained the /s/ electronic signatures of counsel for
Allstate and Velocity, but the date on the Stipulation was left blank. (Id.
PageID.3811.) Velocity explained that it created the Stipulation by taking the last
stipulation that Allstate and Velocity had submitted to the Court, revising the title
and body, leaving the signature blocks of each party’s counsel untouched, but
intentionally leaving the date blank. (Velocity Resp. PageID.3902, citing ECF No.
67-2, Declaration of Krista Hosmer, ¶ 10, PageID.1811.)
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Allstate argues that Velocity’s email and Stipulation constituted a settlement
offer and that it accepted the terms in those documents by sending an email to
Velocity’s counsel approximately an hour later, at 2:13 p.m., stating:
Allstate agrees to and accepts the settlement terms and the language of
the stipulation and order of dismissal as you set out below and in your
attached stipulation and order, which resolves all issues and disputes in
this case.
As both parties accept and agree on all settlement terms, my office will
proceed with submitting the S&O you drafted with the Court (I note
that you already have the attorney signatures in there so we will just
insert today’s date). I believe Judge Grand will appreciate the quick
notice since we presently have oral argument scheduled for November
18.
(ECF No. 107-4, 11/2/2020 Allstate email, PageID.3815.) Allstate did not hear back
from Velocity’s counsel but nevertheless submitted the Stipulation and Order to the
Court less than three hours later that same day.
2.
Velocity’s Objection to Stipulation of Dismissal
The next day, November 3, 2020, Velocity filed Objections to the Stipulation
of Dismissal of Cross-Claims With Prejudice That Was Submitted Without Its
Consent. (ECF No. 55.) Velocity argued that the parties had not reached a settlement
and that Allstate submitted the Stipulation and Order to the Court without Velocity’s
consent and before the parties had drafted their formal Settlement Agreement, which
Velocity asserted was a precondition to the dismissal of the lawsuit. (Id.) Velocity
stated that the terms of the Confidential Settlement Agreement had not been
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negotiated, including, most importantly, the scope and language of the release
provision. (Id.)
3.
Allstate’s Motion to Enforce Settlement
Two days later, Allstate filed its Motion to Enforce Settlement Agreement
with Velocity. (ECF No. 56, Allstate Mot.) Allstate contends that Velocity’s
November 2nd email with Stipulation constituted an offer of settlement which
contained all of the necessary terms and resolved every issue in the case, and which
Allstate accepted. Allstate claims that Velocity now refuses to go forward with the
settlement after learning that Allstate had recently filed a complaint against Velocity
in a separate matter alleging, inter alia, a RICO violation, Allstate Insurance
Company, et al. v. 411 Help, LLC, et al., 20-cv-12939 (E.D. Mich.) (the “411 Help
litigation”).
Velocity filed, under seal, a Response in opposition to Allstate’s Motion,
arguing that it had consistently sought a settlement that would include a release of
claims beyond those related to Mercyland asserted in this interpleader action. (ECF
No. 60, Velocity Resp.) Velocity contended that the November 2nd email was only
submitted to Allstate for its “review and consideration” and that there has been no
“meeting of the minds” on all material settlement terms of a settlement agreement.
(Id.) Velocity further argues that even if there had been such a “meeting of the
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minds,” Allstate breached the confidentiality terms of the parties’ alleged agreement
by publicly disclosing the 50/50 split term in its motion to enforce. (Id.)
Allstate filed a reply brief in support of its motion, reasserting that the
November 2nd email and Stipulation contained all essential terms for settlement,
and that Allstate never agreed to consider a global release of all claims. (ECF No.
61, Allstate Reply.) Allstate further contends that Velocity breached the agreement
first by refusing to go forward with the settlement. (Id.)
Velocity filed a sur-reply brief, with leave of the Court, reasserting that the
parties did not have a “meeting of the minds” on all material settlement terms. (ECF
No. 79, Velocity Sur-reply.)
4.
Magistrate Judge Grand Denies Allstate’s Motion to Enforce
Settlement Agreement
On May 26, 2021, Magistrate Judge Grand held a hearing on Allstate’s motion
to enforce and heard oral argument from counsel for Allstate and Velocity. (ECF
No. 107, Transcript of Motion Hearing 5/26/2021.)1 At the conclusion of that
hearing, Judge Grand ruled from the bench, denying Allstate’s motion. (Id.
PageID.3757-60.) He found that there is a question as to whether there was a meeting
of the minds on all material terms of a settlement agreement, finding “a difference
1
Judge Grand also heard oral argument at that hearing on Allstate’s and Velocity’s
competing motions for sanctions (ECF Nos. 67, 91), which were both denied, and
Velocity’s motion for leave to file notice of supplemental proceedings and
authorities (ECF No. 94), which was granted. (ECF No. 105, Order.)
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of opinion about the clarity of [the November 2nd email] and the detail of that
document and the comprehensiveness of that document and also what is missing.”
(Id. PageID.3758.) He also noted the statement in the November 2nd email
contemplating entering a separate “Confidential Settlement Agreement,” which he
said its “an important part of the overall settlement.” (Id. PageID.3759.) He further
found a question of fact about Velocity counsel’s understanding or belief that they
were engaged in a “building block approach” to this settlement, in which the parties
would first work on the more easily agreed aspects of the settlement before moving
on to the more highly contested terms, such as the scope of the release. (Id.
PageID.3758-59.)
The Magistrate Judge entered an Order the next day denying Allstate’s motion
“for the reasons set forth in detail on the record.” (ECF No. 105.)
Defendant Allstate has filed objections to the Magistrate Judge’s Order –
which will be construed as report and recommendation for the reasons that follow –
that are now before this Court for resolution. (ECF No. 107, Allstate’s Obj.)
Defendant Velocity filed a Response in opposition to Allstate’s Objections. (ECF
No. 109, Defendant Velocity’s Response.) Allstate filed a reply in support of its
objections (ECF No. 110, Defendant Allstate Reply), and Velocity filed, with the
Court’s permission, a sur-reply in opposition to Defendant Allstate’s Objections
(ECF No. 118, Defendant Velocity Sur-reply.)
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Although the Court referred Allstate’s motion to the Magistrate Judge for
hearing and determination (ECF No. 72), Allstate correctly argues that the motion
to enforce settlement agreement should have been referred for report and
recommendation. Velocity does not dispute Allstate’s position, and the Court agrees
inasmuch as an order enforcing a settlement would be dispositive. See 28 U.S.C. §
636(b)(1)(B); Fields v. AT&T Umbrella Benefit Plan No. 1, No. 18-13259, 2020 WL
8970351, at *1 (E.D. Mich. July 31, 2020). Therefore, the Court will construe the
part of the Magistrate Judge’s Order denying Allstate’s motion to enforce settlement
agreement as a report and recommendation.
II.
STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 72(b) and 28 U.S.C. § 636(b)(1),
the Court conducts a de novo review of the portions of the Magistrate Judge’s Report
and Recommendation to which a party has filed “specific written objection” in a
timely manner. Lyons v. Comm’r Soc. Sec., 351 F. Supp. 2d 659, 661 (E.D. Mich.
2004). A district court “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.” 28 U.S.C. §
636(b)(1)(C). Only those objections that are specific are entitled to a de novo review
under the statute. Mira v. Marshall, 806 F.2d 636, 637 (6th Cir. 1986). “The parties
have the duty to pinpoint those portions of the magistrate’s report that the district
court must specially consider.” Id. (quotation marks and citation omitted). “A
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general objection, or one that merely restates the arguments previously presented is
not sufficient to alert the court to alleged errors on the part of the magistrate judge.”
Aldrich v. Bock, 327 F. Supp. 2d 743, 747 (E.D. Mich. 2004). “‘[B]are disagreement
with the conclusions reached by the Magistrate Judge, without any effort to identify
any specific errors in the Magistrate Judge’s analysis that, if corrected, might warrant
a different outcome, is tantamount to an outright failure to lodge objections to the R
& R.’” Arroyo v. Comm’r of Soc. Sec., No. 14-cv-14358, 2016 WL 424939, at *3
(E.D. Mich. Feb. 4, 2016) (quoting Depweg v. Comm’r of Soc. Sec., No. 14-11705,
2015 WL 5014361, at *1 (E.D. Mich. Aug. 24, 2015) (citing Howard v. Secretary
of Health & Human Services, 932 F.2d 505, 509 (6th Cir. 1991)).
III.
ANALYSIS
Before the Court can enforce a settlement agreement, it must first “conclude
that agreement has been reached on all material terms.” Therma-Scan, Inc. v.
Thermoscan, Inc., 217 F.3d 414, 419 (6th Cir. 2000). “Whether the parties actually
reached an agreement is a question of fact for the district court,” Moore v. U.S. Postal
Serv., 369 F. App’x 712, 717 (6th Cir. 2010), which is governed by state contract
law, Cuyahoga Valley Ry. Co. v. U.S. Bank Trust Nat’l Ass’n, 515 F. App’x 494,
498 (6th Cir. 2013) (“Because settlement agreements are a type of contract, the
formation and enforceability of a purported settlement agreement are governed by
state contract law.”).
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Under Michigan law, a “contract is formed upon offer and acceptance and a
mutual assent or meeting of the minds on all essential terms.” Masco Cabinetry
Middlefield, LLC v. Cefla N.A., Inc., 637 F. App’x 192, 197 (6th Cir. 2015).
Determining whether there was mutual assent between the parties “is judged by an
objective standard, looking to the express words of the parties and their visible acts,
not their subjective states of mind,” Tillman v. Macy’s Inc., 735 F.3d 453, 459 (6th
Cir. 2013), which requires consideration of the “relevant circumstances surrounding
the transaction, including all writings, oral statements, and other conduct by which
the parties manifested their intent,” Innotext, Inc. v. Petra’Lex USA Inc., 694 F.3d
581, 589 (6th Cir. 2012); see also Huntington Nat’l Bank v. Daniel J. Aronoff Living
Trust, 305 Mich. App. 496, 508 (2014) (“Courts judge whether there was a meeting
of the minds from objective evidence.”).
Defendant Allstate submitted three numbered objections to the Magistrate
Judge’s R&R denying Allstate’s motion to enforce settlement agreement.
A.
Objection No. 1: There is No “Minimum Length” Requirement to
Form a Binding Settlement Agreement
Allstate first argues that the Magistrate Judge erred by finding that the
November 2nd email was too short and therefore could not have encompassed all of
the material terms of the settlement. (Allstate Obj., PageID.3792-94.) Allstate asserts
that there is “no legal requirement that a settlement agreement be a certain length or
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that it include a certain number of provisions in order to be enforceable,” so long as
there is a meeting of the minds as to all material issues. (Id. PageID.3792.)
Contrary to Allstate’s objection, Judge Grand did not deny Allstate’s motion
to
enforce
because
the
November
2nd
email
was
“too
short.”
Rather, he commented on the brevity of the email – two sentences comprising five
lines of text – in response to Allstate’s counsel’s repeated characterizations of the
email as a “detailed and comprehensive explanation of the parties’ settlement.”
(5/26/2021 Hearing Tr. PageID.3757; see also id. PageID.3715 (“the e-mail was
very detailed”), 3717 (“This is a detailed e-mail. It was highly negotiated by
counsel.”), 3718 (characterizing the Stipulation as “very detailed” and “highly
negotiated”), 3722 (“And if you look at the stipulation itself, it’s very detailed.”),
3726 (“But there is an e-mail with detailed settlement terms.”), 3737 (“But when
you do look at the actual facts here, a comprehensive November 2nd email that was
clearly accepted by All State, a highly negotiated --).) Judge Grand stated in response
to those repeated assertions by Allstate’s counsel that “[t]hat e-mail, that is not a
comprehensive email you previously detailed. That is not a detailed e-mail. Now,
I’m not saying that it necessarily is dispositive, the fact that it is not comprehensive
in my mind and not detailed. Maybe it’s still sufficient to constitute an offer that can
be accepted. That is not a comprehensive settlement email.” (Id. PageID.3737-38.)
Judge Grand continued that “[a] comprehensive settlement email, it would have also
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had the draft settlement agreement and whatever confidentiality terms. Maybe it
would have had terms about if you violate the confidentiality provisions there will
be the following penalty or, you know, whatever. I don’t know. But that was not a
comprehensive detailed e-mail.” (Id. PageID.3738.)
Judge Grand then found that there was not a “meeting of the minds here
between the parties on what this email meant and did not mean,” noting “we have a
difference of opinion about the clarity of that document and the detail of that
document and the comprehensiveness of that document and also what is missing.”
(Id. PageID.3758 (“Sometimes part of the objective evidence is what is not there.”).)
He stated that the email expressly contemplates a formal “Confidential Settlement
Agreement” and “that is an important part of the overall settlement.” (Id.
PageID.3759.)
The Court further notes that the November 2nd email was sent to Allstate’s
counsel only for “review and consideration,” and the terms of an expressly
contemplated Confidential Settlement Agreement had not yet been negotiated,
including the confidentiality provision and the scope and language of the release
provision. The scope of a release was hotly contested by the parties before and
throughout mediation, with Allstate admitting at the hearing that Velocity always
wanted a global release and that Allstate was adamantly opposed to such a release.
(Id. PageID.3721.) The scope of any release is absent from the November 2nd email,
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and the Magistrate Judge noted that Velocity’s counsel submitted affidavits attesting
that the release provision was “tabled” at that time and not included in the November
2nd email so that the parties could engage in a “building block” approach to
settlement as suggested by the mediator, Mr. Pozza. (Id. PageID.3757-58.)2 The
Magistrate Judge noted “I do settlement conferences three or four of them every
single week for the last nine plus years. I have never seen a stip and order filed before
the documents are all signed off on. Nobody ever once has done that.” (Id.
PageID.3736.) He stated that this also raised a question of fact as to whether there
was a meeting of the minds as to the meaning of the November 2nd email. (Id.)
The Court finds that the Magistrate Judge did not deny Allstate’s motion to
enforce settlement agreement because the purported settlement agreement was “too
short,” and Defendant Allstate’s first objection is OVERRULED.
B.
Objection No. 2: The Lack of a Formal Settlement Document Does
Not Render the Settlement Unenforceable
Allstate contends in its second objection that the Magistrate Judge improperly
relied on the parties’ intention to formalize their settlement through a “Confidential
Settlement Agreement” to find that there was not a meeting of the minds on all
2
According to Velocity, the mediator, Mr. Pozza, had advised Velocity to first reach
an agreement on the language of the Stipulation and accompanying Order regarding
the “monies and the cross-claims, etc.,” and only then turn their focus to finalizing
the terms of the actual Confidential Settlement Agreement, including the
confidentiality and release terms. (5/26/2021 Hrg. Tr. PageID.3713-14.) Allstate
denies knowing about this “building block” approach to settlement. (Id.)
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material terms because a draft of that document was not included with the November
2nd email. (Allstate Obj. PageID.3794.) Allstate relies on case law stating that
“[w]hen parties have agreed on the essential terms of a settlement, and all that
remains is to memorialize the agreement in writing, the parties are bound by the
terms of the oral agreement.” (Id. citing Re/Max Int’l, Inc. v. Realty One, Inc., 271
F.3d 633, 646 (6th Cir. 2001).)
However, the Magistrate Judge did not rule that the parties’ settlement
agreement must be reduced to writing to be enforceable. Instead he found that the
parties had not agreed on all essential terms, and that the objective acts of the parties
did not reflect that an agreement had been reached. (5/26/2021 Hrg. Tr.
PageID.3758-59.) The November 2nd email from Velocity to Allstate submitted the
proposed Stipulation and Order for Allstate’s “review and consideration,” and
expressly contemplated that Allstate and Velocity “would enter into a Confidential
Settlement Agreement pursuant to which they would split the insurance proceeds
interpleaded by AT-Law 50/50 and Allstate would discharge its Consent Judgment
against Mercyland upon Allstate’s receipt of its 50% share of those insurance
proceeds.” (11/2/2021 email, PageID.3807.) Judge Grand found that there was no
meeting of the minds regarding the confidentiality provision of a settlement
agreement, stating that “[w]hat is confidential are the terms, the details, the monetary
split. And Velocity did not share any of those details,” and that “the email that said
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that there needs to be a confidential settlement agreement, I don’t know what those
terms were because it was never drafted. All State [sic] rushed to the court to have
the stip and order entered before the Settlement Agreement was in hand, before the
confidentiality provisions were in hand. So I don’t know what the parties had in
minds about confidentiality.” (5/26/2021 Hrg. Tr. PageID.3748-49.) The Magistrate
Judge asked Allstate’s counsel twice during the hearing, “[w]hat are the terms of the
confidentiality?” and Allstate’s counsel did not have an answer, referring only to the
“detailed” and “highly negotiated” email, stating “[t]here is no other settlement term
that is out there for the parties to negotiate.” (Id. PageID.3716-19.) The Magistrate
Judge stated in his ruling that “the document All State [sic] is relying on as
characterizing it as the, quote, objective evidence, it references a confidential
Settlement Agreement in capital letters, formal, contemplated document that is not
part of the record that apparently was never circulated, never executed.” (Id.
PageID.3759 (noting “any settlement that I ever have been a part of where there says
there is going to be a confidential Settlement Agreement, that is an important part of
the overall settlement.”); see also id. PageID.3736 (noting “I have never seen a stip
and order filed before the documents are all signed off on. Nobody ever once has
done that.”).) He thus found that there was no meeting of the minds regarding all
material terms of the settlement. (Id. PageID.3760.)
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Allstate has failed to demonstrate that this ruling was in error, and Defendant
Allstate’s second objection therefore is OVERRULED.
C.
Objection No. 3: It Was Error to Refuse to Enforce the Settlement
Based on Subjective Evidence of Velocity’s Intent
Allstate argues that the Magistrate Judge improperly refused to enforce the
purported settlement agreement based on evidence of Velocity’s subjective intent
that it was engaged in a “building block” approach to settlement, and that there were
more terms to be negotiated, including the release. (Allstate Obj. PageID.3795-96.)
Allstate notes the Magistrate Judge’s statement in the hearing that a claim that a
global release was possible did not make “any sense in a hundred thousand dollar
dispute,” asking “[w]hy in the world -- … [t]he interpleader funds – you guys
reached an agreement to resolve that piece, assuming you reached a deal. They have
$50 million dollars worth of other claims that are at issue. They are not going to do
a global release as to $50 million dollars in exchange for a hundred thousand dollar
deal. So that don’t makes [sic] any sense.” (Id. PageID.3730.)
Velocity responded that while Allstate did not want a global release, Velocity
was “just as adamant that [it] did want one and that is why [they] never have been
able to reach agreement.” (Id. PageID.3730.) Velocity explained that the scope of a
release was not discussed in the November 2nd email because Velocity was
employing the building block approach suggested by the mediator, in which they
were going to try to agree on the language of the Stipulation first. (Id. PageID.3731.)
18
Case 2:19-cv-13757-PDB-DRG ECF No. 119, PageID.4224 Filed 09/08/21 Page 19 of 20
Velocity explained that the date in the proposed Stipulation sent to Allstate for its
review and consideration was intentionally left blank for this reason, indicating that
no agreement had been reached, but that Allstate “exploited that mistake” and rushed
to file the Stipulation. (Id. PageID.3733-34.)
In reaching his ruling, the Magistrate Judge did not rely alone on Velocity’s
stated intent regarding the “building blocks” approach, but looked at the record
evidence as a whole and ruled that “it at least shows there is a question about whether
there was a meeting of the minds here between the parties on what this email means
and did not mean.” (Id. PageID.3758.) As discussed above, the Magistrate Judge
noted that in his practice of conducting three to four settlement conferences a week
for the past nine years, he has “never seen a stip and order filed before the documents
are all signed off on,” characterizing Allstate’s rush to file the Stipulation and Order
in this case as “opportunistic.” (Id. PageID.3730.) He stated that he “understand[s]
the notion that while maybe that is subjective evidence and what All State [sic] is
relying on is objective evidence, but to me it goes beyond that and it’s more nuanced
than that because even the so-called objective evidence on which All State [sic] is
relying, as I have said, I do not -- we have a difference of opinion about the clarity
of that document and the detail of that document and the comprehensiveness of that
document and also what is missing.” (Id. PageID.3758.) He noted that the November
2nd email specifically contemplated a Confidential Settlement Agreement and stated
19
Case 2:19-cv-13757-PDB-DRG ECF No. 119, PageID.4225 Filed 09/08/21 Page 20 of 20
“in light of that, in light of this issue of the affidavits from counsel and about their
conversations with Mr. Posa [sic] and the building block approach, and, frankly, part
of the objective evidence in my opinion is All State’s [sic] rushing to the court. And
I think All State [sic] even said, we were surprised. And I think that that is reflective
of, yes, something was probably very unusual here that would have warranted
confirmation of some sort” of the settlement. (Id. PageID.3759.)
The Court finds that Allstate has failed to show that the Magistrate Judge
improperly denied Allstate’s motion to enforce settlement agreement based on
subjective evidence, and Allstate’s third objection accordingly is OVERRRULED.
IV.
CONCLUSION
For the foregoing reasons, the Court:
(1) OVERRULES Defendant Allstate’s Objections (ECF No. 107);
(2) ADOPTS Magistrate Judge Grand’s May 27, 2021 Order construed as a
Report and Recommendation (ECF No. 105); and
(3) DENIES Defendant Allstate’s Motion to Enforce Settlement Agreement
(ECF No. 56).
IT IS SO ORDERED.
Dated: September 8, 2021
s/Paul D. Borman
Paul D. Borman
United States District Judge
20
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