Fitlife Brands, Inc. v. Supreme Sports Enhancement, L.L.C.

Filing 25

ORDER - The plaintiff's Motion to Enforce Settlement Agreement or Motion to Enter Default and Request for Sanctions (filing 14 ) is denied. The Magistrate Judge's Findings, Recommendation, and Order (filing 24 ) are adopted. The Clerk of the Court is directed to enter Supreme Sports Enhancement, LLC's default. Ordered by Judge John M. Gerrard. (Copy mailed to pro se party)(GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
FITLIFE BRANDS, INC.,
Plaintiff,

8:14-CV-241

vs.
ORDER
SUPREME SPORTS
ENHANCEMENT, LLC,
Defendant.
This matter is before the Court on the plaintiff's Motion to Enforce
Settlement Agreement or Motion to Enter Default and Request for Sanctions
(filing 14) and the Magistrate Judge's findings and recommendation (filing
24) recommending that the Court enter a default and/or default judgment
against defendant Supreme Sports Enhancement, LLC, as a result of
Supreme Sports' failure to comply with the Court's orders. The Court will
deny the plaintiff's motion without prejudice, but will adopt the Magistrate
Judge's findings and recommendation and direct the Clerk of the Court to
enter the defendant's default.
The plaintiff's motion (filing 14) asks the Court to enforce a settlement
agreement that, according to the plaintiff, was reached between counsel for
the parties. In support, the plaintiff has submitted copies of an unsigned
settlement agreement and proposed consent decree, along with email
correspondence and a declaration from plaintiff's counsel suggesting that the
defendant's counsel—or at least, the defendant's putative counsel—believed
that a settlement had been reached. See filing 15.
But the question presented by the record is whether the defendant's
counsel had actual authority to settle—or even, in fact, whether the
defendant's counsel was actually the defendant's counsel. See filing 16. Under
Nebraska law, apparent authority is insufficient to create an enforceable
settlement—a lawyer cannot settle a client's claim without express authority
from the client. Luethke v. Suhr, 650 N.W.2d 220, 226 (Neb. 2002). The
ordinary employment or retainer of a lawyer to represent a client with
respect to litigation does not of itself give the lawyer the implied or apparent
authority to bind the client by a settlement or compromise of the claim; and,
in the absence of express authority, knowledge, or consent, the lawyer cannot
do so. Id. at 225.

The only evidence in the record on that point is the declaration of
plaintiff's counsel that the terms of the settlement were agreed to by
defendant's counsel "after discussions with and confirmation from his
client"—but the foundation for that statement is unclear. See filing 15-4 at 1.
And there may even be factual questions with respect to whether the counsel
who appeared for the defendant was employed or retained in the first place,
and the scope of that representation.1
In other words, there is a factual dispute over the existence of the
settlement, requiring an evidentiary hearing. See Chaganti & Assocs., P.C. v.
Nowotny, 470 F.3d 1215, 1222-23 (8th Cir. 2006); see Enter. Rent-A-Car Co. v.
Rent-A-Wreck of Am., Inc., 181 F.3d 906, 909-10 (8th Cir. 1999). The evidence
submitted in support of the plaintiff's motion is not sufficient for the Court to
find that the settlement was agreed to by the defendant, or an agent of the
defendant with express authority from the defendant to settle.
The plaintiff's motion also asks, in the alternative, for an entry of
default. Filing 14 at 3. That request is moot in light of the Court's adoption of
the Magistrate Judge's findings and recommendation, discussed below. And
finally, the plaintiff asks that the defendant be ordered to pay the plaintiff's
attorney fees associated with enforcement of the settlement agreement.
Filing 14 at 3. That request will be denied. The plaintiff cites no authority
supporting the Court's power to award fees under such circumstances, and in
any event, the plaintiff's request for fees is tied to the merits of its motion to
enforce the settlement agreement, which are undetermined.2
So, the Court will deny the plaintiff's motion. But it will do so without
prejudice. The plaintiff may pursue the relief requested again, based upon a
proper evidentiary showing, should the plaintiff determine that attempting to
enforce the settlement agreement is a preferable course of action to litigating
based on the defendant's default.

This is not to say that the lawyer who appeared for the defendant did so unethically.
There are a number of reasons to question the story told by the defendant's
owner/president. It is simply to say that on the evidence at present, the Court cannot
answer these questions one way or the other.
1

That said, it appears that attorney fees for pursuing enforcement of a settlement
agreement fall under state law concerning the availability of attorney fees as damages or
costs resulting from a breach of contract. See Gjerlov v. Schuyler Labs, Inc., 131 F.3d 1016,
1025 (Fed. Cir. 1997); see also, Monsour's, Inc. v. Menu Maker Foods, Inc., 381 F. App'x 796,
803 (10th Cir. 2010); Republic Res. Corp. v. ISI Petroleum W. Caddo Drilling Program 1981,
836 F.2d 462, 466 (10th Cir. 1987). And there is cause to believe that Nebraska law
prohibits recovery of an attorney fee as costs in a contract suit. First Nat. Bank in Ord v.
Schroeder, 355 N.W.2d 780, 400 (Neb. 1984).
2

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What remain are the Magistrate Judge's findings and recommendation
(filing 24) recommending that the Court enter a default against the
defendant. No objection has been lodged to the findings and recommendation.
28 U.S.C. § 636(b)(1) provides for de novo review only when a party has
objected to the Magistrate Judge's findings or recommendations. Peretz v.
United States, 501 U.S. 923 (1991). The Magistrate Judge's findings and
recommendation advised the parties that failure to object to the findings and
recommendation may be held to be a waiver of the right to appeal the Court's
adoption of the recommendation. See filing 24 at 2. And the failure to file an
objection eliminates not only the need for de novo review, but any review by
the Court. Thomas v. Arn, 474 U.S. 140 (1985); Leonard v. Dorsey & Whitney
LLP, 553 F.3d 609 (8th Cir. 2009); see also United States v. Meyer, 439 F.3d
855, 858-59 (8th Cir. 2006).
Accordingly, the Court deems any objection to the Magistrate Judge's
findings and recommendation waived, and will adopt the findings and
recommendation. The Court will order the clerk's office to enter Supreme
Sports' default. A final judgment in this matter will be entered upon a
properly supported motion for default judgment and, if necessary, a hearing
to determine the amount of damages. See, Fed. R. Civ. P. 55(b)(2); Everyday
Learning Corp. v. Larson, 242 F.3d 815, 818-19 (8th Cir. 2001).
IT IS ORDERED:
1.

The plaintiff's Motion to Enforce Settlement Agreement or
Motion to Enter Default and Request for Sanctions (filing
14) is denied.

2.

The Magistrate Judge's Findings, Recommendation, and
Order (filing 24) are adopted.

3.

The Clerk of the Court is directed to enter Supreme Sports
Enhancement, LLC's default.

Dated this 1st day of April, 2015.
BY THE COURT:

John M. Gerrard
United States District Judge

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