CitiMortgage, Inc. v. PMC Bancorp

Filing 89

MEMORANDUM AND ORDER re: 73 MOTION for Settlement (Enforce Terms of Settlement) filed by Defendant PMC Bancorp; motion is DENIED. Signed by District Judge Stephen N. Limbaugh, Jr on 4/26/13. (CSG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

CITIMORTGAGE, INC.
Plaintiff,
vs.
PMC BANCORP,
Defendant.

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Case No. 4:10-cv-1675 SNLJ

MEMORANDUM AND ORDER
This matter is before the Court on defendant PMC BANCORP’s Motion to Enforce
Mediated Settlement against plaintiff CITIMORTGAGE, INC. (“CMI”) (#73).
I.

Background
Plaintiff CMI had a long history of purchasing residential mortgage loans from defendant

PMC. The parties conducted business together pursuant to a series of contracts that the parties
refer to as the “Lease/Purchase Agreement” or “LPA.”
CMI’s complaint alleges that PMC sold loans to CMI that did not meet — or as to which
PMC did not meet — various requirements under the LPA, and that CMI was damaged as a
result. CMI claims that PMC is required to indemnify CMI under the LPA for its losses. CMI
claims breach of contract and seeks damages and specific performance of PMC’s obligations.
After this lawsuit was filed, the parties entered into Alternative Dispute Resolution and
engaged in a series of mediation sessions. The parties reported that they had reached a settlement
on February 29, 2012 (#59). The parties’ agreement in mediation was memorialized in a
handwritten document that was signed by both parties on February 24, 2012 (the “Mediation
Terms”). Subsequently, the parties attempted to prepare a final, written settlement agreement

pursuant to the Mediation Terms, but they have been unable to agree on the terms of that
document.
On October 17, 2012, defendant PMC filed the instant Motion to Enforce Mediated
Settlement (#73). Plaintiff filed a motion for summary judgment and opposes the Motion to
Enforce on the grounds that the Mediation Terms is not an enforceable contract.
II.

Discussion
The handwritten February 24, 2012 Mediation Terms provides the amounts PMC agreed

to pay CMI for its claims. The document also states,
This Agreement is a mediated settlement agreement setting out the essential
terms of the [settlement agreement] which is binding upon the parties, who
will execute a formal agreement within days [a numeral is marked out]
March 24.
Despite that language in the Mediation Terms, the execution of such a formal agreement has not
yet occurred. PMC states that the Mediation Terms provide that this Court has jurisdiction to
resolve disputes, and that the Court should enforce the terms of the settlement.
Meanwhile, plaintiff CMI wants this Court to hold that the Mediation Terms are
unenforceable and allow it to proceed on summary judgment. Plaintiff CMI’s memorandum
provides a history of the parties’ negotiation of the “formal agreement” that followed the
February 24, 2012 agreement on “Mediation Terms.” Essentially, CMI states that the parties
could not agree on formal language related to two critical terms. Those terms are as follows:
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The “Stipulated Judgment Term,” which sets out the process by which CMI
may seek cure of any payment default by PMC, and, failing cure by PMC, how
may seek stipulated judgment. The handwritten Terms state, “If a missed
payment, 25 days notice of default, 25 days to cure. If no cure, upon x-parte
notice (5 business days) for the entry of the stipulated judgment in the amount of
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$[amount redacted by the Court], less all payments.” The terms reflect that CMI
sought to give only 72 hours notice, but that time period was stricken, and the
parties agreed to five business days.
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The “Indemnity Term,” which states that the “indemnity in LPA survives” (amid
other stricken language).

Plaintiff contends that because the parties were unable to agree on language going to
these two terms in the final agreement, the parties never had an agreement in the first place, and
there is thus nothing for this Court to enforce.
Indeed, “contract law governs the question of whether the parties entered into an
enforceable settlement agreement.” St. Louis Union Station Holdings, Inc. v. Discovery Channel
Store, Inc., 301 S.W.3d 549, 551 (Mo. Ct. App. 2009) (citing Emerick v. Mutual Benefit Life Ins.
Co., 756 S.W.2d 513, 518 (Mo. banc 1988)). The “essential elements of an enforceable contract
are parties competent to contract, a proper subject matter, legal consideration, mutuality of
agreement, and mutuality of obligation.” Bath Junkie Branson, L.L.C. v. Bath Junkie, Inc., 528
F.3d 556, 561 (8th Cir. 2008) (Missouri law) (quoting L.B. v. State Comm. of Psychologists, 912
S.W.2d 611, 617 (Mo. Ct. App. 1995)). “The moving party (here, the defendant[]) must prove
the existence of the agreement by clear, convincing and satisfactory evidence.” Eaton v.
Mallinckrodt, Inc., 224 S.W.3d 596, 599 (Mo. banc 2007) (internal quotation omitted).
Defendant argues that an enforceable agreement exists because the Mediation Terms are
signed by both parties, the mediator reported that the parties had settled, and that the statute of
frauds did not require that the final agreement be created. Plaintiff, however, contends that there
was no mutuality or meeting of the minds because defendant and plaintiff failed to agree on the
Indemnity and Stipulated Judgment Terms in the formal agreement. As proof, plaintiff submits

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the “formal agreement” drafts traded by the parties and provides a play-by-play of the
negotiation. Plaintiff offered drafts to defendant that included (1) that the indemnity obligations
under the original Agreement survive, and (2) the process by which plaintiff could obtain
stipulated judgment in the event of a default, both in accordance with the Mediation Terms.
Defendant sought to limit the indemnity and change the process by which plaintiff could obtain
stipulated judgment.
Defendant PMC does not address CMI’s argument. Defendant does not even attempt to
explain its positions as characterized by plaintiff. Rather, defendant primarily discusses the
Statute of Frauds, which is a non-issue, and argues that both it and plaintiff are in breach of the
contract by refusing to execute a formal agreement. Defendant states that it is “ready, willing,
and able to perform under the payment terms of the mediated settlement.” (#81 at 7.) It asks that
the Court enforce the settlement by entering an order that would trigger defendant’s payment
obligations while allowing the Mediation Terms to stand on their own, in effect voiding the
Terms’ requirement of a separate, formal agreement.
The Court’s analysis is somewhat different from either party’s. On the one hand, it could
be said that the defendant has not met its burden to show that a meeting of the minds occurred
because defendant itself refuses to put the purportedly agreed-upon indemnity and stipulated
judgment terms into a formal agreement. Defendant does not deny that it attempted to materially
change those terms in its drafts of the formal agreement. To the extent there was no meeting of
the minds, then, there is no contract for this Court to enforce.
On the other hand, it appears that the parties did agree on essential terms (defendant does
not now disavow them and rather claims that the Terms are “concise,” #81 at 7), but that
defendant simply refuses to memorialize those agreed-upon terms in the formal agreement.

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Peculiarly, defendant wants to enforce the Mediation Terms as written, but it refused to sign
plaintiff’s proposed formal agreement, which recites those terms appropriately. Again, defendant
does not argue otherwise. Defendant in fact contends that there was a meeting of the minds, but
that both parties are in breach. This Court disagrees that both parties are in breach under this
analysis. Plaintiff has shown itself willing to sign the required formal agreement pursuant to the
Mediation Terms, but defendant has breached by not executing the required formal agreement
that reflects the Mediation Terms.
So, at the end of this puzzling set of facts are two plausible conclusions, but both lead the
Court to the same remedy. Either there was no meeting of the minds and the contract is
unenforceable, or there was a meeting of the minds and the defendant is in breach. Either way,
plaintiff’s requested remedy — to deny the motion and move forward with the litigation — is
proper.1
III. Conclusion
Defendant’s motion will be denied.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to enforce settlement (#73) is
DENIED.
Dated this

26th

day of April, 2013.
____________________________________
STEPHEN N. LIMBAUGH, JR.
UNITED STATES DISTRICT JUDGE

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Ironically, there is another possible remedy in view of defendant’s breach, which is to
enforce the settlement according to the Mediation Terms and order specific performance,
requiring defendant to execute a formal agreement that properly reflects the Terms. But that
relief has not been requested by plaintiff.
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