Wallace v. Powell et al

Filing 1756

MEMORANDUM (Order to follow as separate docket entry) re 1752 MOTION to Interpret Powell Defendants' Master Stipulation and Agreement of Settlement. Signed by Honorable A. Richard Caputo on 12/7/17. (dw)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
FLORENCE WALLACE, et al.,
Plaintiffs,

NO. 3:09-cv-286

v.
ROBERT J. POWELL, et al.,

(JUDGE CAPUTO)

Defendants.
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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
WILLIAM CONWAY, et al.,
Plaintiffs,

NO. 3:09-cv-0291

v.
MICHAEL T. CONAHAN, et al.,

(JUDGE CAPUTO)

Defendants.
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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
H.T., et al.,
Plaintiffs,
v.

NO. 3:09-cv-0357
(JUDGE CAPUTO)

MARK A. CIAVARELLA, JR., et al.,
Defendants.
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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
SAMANTHA HUMANIK,
CIVIL ACTION NO. 3:09-cv-

Plaintiff,

0630

v.
MARK A. CIAVARELLA, JR., et al.,

(JUDGE CAPUTO)

Defendants.
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MEMORANDUM
Presently before me is Plaintiffs’ Motion to Interpret Powell Defendants’ Master
Stipulation and Agreement of Settlement. (See Doc. 1752, generally). Specifically,
Plaintiffs seek an order interpreting the terms of the settlement agreement between
Plaintiffs and Powell Defendants,1 including, inter alia, a determination of the amount
of time necessary for the Net Worth Professional to complete his evaluation of Powell’s
net worth. For the reasons that follow, the motion will be granted.
I. Relevant Background
Plaintiffs’ motion is predicated upon the Master Stipulation and Agreement of
Settlement (“MSA”) entered into by Plaintiffs and Powell Defendants on March 10,
2015, (see Doc. 1676-1, generally), and approved by the Court on December 21, 2015.
(See Doc. 1716, generally). Under the MSA, Powell Defendants were required to make
an initial payment totaling $4.75 million into the designated Escrow Account and then,
based upon Powell's net worth, potentially a second payment not to exceed $2.75
million. (See Doc. 1676-1, ¶¶ 1(uu), 5(a)-(c)). This second payment is to be made only

1

“Powell Defendants” are Robert Powell (“Powell”), Vision Holdings, LLC, and
the Powell Law Group, P.C.
2

if Powell’s net worth is found to exceed $4.75 million as of the Net Worth
Determination Date. (See id. at ¶ 6(c)). Within thirty (30) days after the Net Worth
Determination Date, Powell Defendants were required to notify Plaintiffs of their
estimation of Mr. Powell’s net worth. (See id. at ¶ 7). Within ten (10) business days
of receiving this figure, Plaintiffs were permitted to reject this estimation, in which case
the parties were required to jointly engage the Net Worth Professional (the “NWP”),
identified in the MSA as Thomas Pratt, CPA. (See id.; see also id. at ¶ 1(z)). In this
scenario, the NWP determines Powell’s net worth in accordance with the formula and
process specified in paragraph 9(a) of the MSA. (See id. at ¶ 9). The MSA requires
Powell Defendants to provide the NWP with “all documentation that the [NWP] may
reasonably request for the purpose of determining Powell’s net worth as of the Net
Worth Determination Date[.]” (Id. ¶ 9(c)).
On January 20, 2017, counsel for Powell Defendants provided Plaintiffs with
their estimation of Powell’s net worth. (See Doc. 1744, Ex. C). Plaintiffs rejected this
estimation that same day, triggering the retention of the NWP to determine Powell’s
net worth. (See id. at Ex. D). On February 7, 2017, the parties executed the NWP’s
engagement agreement. (See id. at Ex. F).
On February 17, 2017, the NWP sent Powell Defendants’ counsel the First
Information Request. (See id. at Ex. G). A week later, the NWP requested additional
information from Powell Defendants’ counsel that he deemed relevant to determining
Powell’s net worth. (See id. at Ex. J). Thereafter, the NWP sent an updated First
Information Request on March 15, 2017. (See id. at Ex. K). This request contained
thirty-one (31) itemized requests for documents and materials. (See id.).
On August 15, 2017, I denied without prejudice Plaintiffs’ motion to enforce
settlement and for sanctions against Powell Defendants. (See Docs. 1748-1749,
generally). Therein, I noted that Powell Defendants represented that they would
produce all documents requested by the NWP before the end of May 2017. (See Doc.
1748, 5-6). Given the representation by counsel, I denied without prejudice Plaintiffs’
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request that Powell Defendants be directed to respond to the NWP’s information
request. (See id.). I also denied without prejudice Plaintiffs’ motion for sanctions
because Plaintiffs failed to present any convincing grounds supporting the imposition
of sanctions for an approximate ten (10) week delay in producing documents
responsive to the request by the NWP. (See id. at 6).
On August 10, 2017, Plaintiffs requested from the NWP an update of the status
of his analysis. (See Doc. 1753, Ex. D). The NWP in response noted that the parties
“have disagreed about the disclosure of our work between the parties” and suggested
that the dispute be resolved by the parties. (See id.). In view of the NWP’s response,
Plaintiffs’ counsel contacted Powell Defendants’ counsel seeking an agreement
allowing the NWP to list the documents he was provided (without revealing the
contents of the documents), to identify by name only any outstanding documents
requested but not produced by Powell Defendants (if any), and to provide a status
update of his analysis. (See id.). Counsel for Powell Defendants responded to
Plaintiffs that the terms of the MSA apply and the NWP will perform his duties
outlined therein and in the retainer agreement. (See id.).
On September 8, 2017, Plaintiffs’ counsel again contacted Powell Defendants’
counsel about whether he would be “willing to provide Plaintiffs with information
identifying what information and documentation has been provided to Mr. Pratt, what
additional information Mr. Pratt has requested and when these requests were made. To
be clear, Plaintiffs are not seeking to see any of the materials that were provided to Mr.
Pratt.” (See id. at Ex. F). Counsel for Powell Defendants responded by requesting
Plaintiffs’ counsel to provide “citations to the MSA or other authority supporting [the]
request.” (Id. at Ex. G).
On September 13, 2017, Plaintiffs’ counsel wrote to Powell Defendants’ counsel
again regarding the information produced to the NWP. (See id. at Ex. H). Powell
Defendants’ counsel in response reiterated his position that Powell was in compliance
with the MSA and if he was not, the NWP’s report would reflect that fact. (See id. at
4

Ex. I).
Based on the foregoing, Plaintiffs filed the instant motion to interpret the MSA
on September 29, 2017. (See Doc. 1752, generally). Plaintiffs seek an order
interpreting the terms of the MSA, including whether Powell Defendants have the
ability under the agreement to prohibit the NWP from providing an update on the status
of his evaluation. (See Doc. 1753, 1). Plaintiffs also request an order to determine the
amount of time necessary for the NWP to complete his evaluation. (See id.). Plaintiffs
acknowledge that although the MSA is silent as to when the NWP must issue his report
on Powell’s net worth, the MSA provides that this Court retained jurisdiction to
interpret the terms of the agreement. (See id. at 2, 9). Thus, Plaintiffs argue that an
order should be issued interpreting the MSA to ensure the fair and orderly
administration of the settlement. (See id. at 13).
In opposition, Powell Defendants argue that nothing in the MSA permits the
disclosure of the documents relied on by the NWP in performing his analysis. (See
Doc. 1754, 1). Additionally, Powell Defendants emphasize that Paragraph 9(a) of the
MSA “contains no time limitations or deadlines for the Net Worth Professional to
complete this analysis.” (Id. at 5 (emphasis omitted)). Powell Defendants highlight
that the MSA was a heavily negotiated agreement involving numerous lawyers
negotiating the MSA’s terms and conditions. (See id. at 9). Nonetheless, Powell
Defendants note that the MSA “does not provide any date or deadline for the
completion of the Net Worth Report” and “[t]here is no such need” “to add terms
related to time lines or deadlines for preparation of the Net Worth Determination.”
(Id.). Powell Defendants therefore conclude that the motion to interpret the MSA
should be denied and to discourage such filings in the future, Plaintiffs should be
directed to reimburse Powell Defendants for the costs and fees incurred in preparing
the response to the instant motion. (See id. at 11).
Plaintiffs filed a timely reply brief, arguing that the Court should determine
whether Powell Defendants are in compliance with the MSA and whether the NWP is
5

permitted to provide a status update regarding his analysis. (See Doc. 1755, generally).
Plaintiffs’ motion to interpret the MSA has now been fully briefed and is ripe for
disposition.
II. Discussion
Settlement agreements are governed by the ordinary principles of contract law.
See In re Cendant Corp. Prides Litig., 233 F.3d 188, 193 (3d Cir. 2000). It is not
contested by the parties that the MSA contains no contractually agreed upon deadline
by when the NWP must issue his report. Nonetheless, “it is a well-settled principle that
where no time for performance is provided in the written agreement the law implies it
shall be done within a reasonable time depending upon the nature of the business.”
Walther & Cie v. U.S. Fidelity & Guaranty Co., 397 F. Supp. 937, 943 (M.D. Pa. 1975)
(citations omitted); see also Everest Stables, Inc. v. Jester, No. 14-1631, 2016 WL
892359, at *4 (M.D. Pa. Mar. 9, 2016) (“when a contract does not specify the time for
performance, Pennsylvania courts routinely ‘require that the obligation be performed
within a reasonable time.’”); Hodges v. Penn. Millers Mut. Ins. Co., 673 A.2d 973, 974
(Pa. Super. Ct. 1996) (holding that when no time is specified for performance of a
contractual obligation, the law implies that the obligation be performed within a
“reasonable time.”). “A ‘reasonable time’ is one which ‘comports with community
standards of fairness and policy.’” Siematic Mobelwerke GmbH & Co. KG v. Siematic
Corp., 643 F. Supp. 2d 675, 687 (E.D. Pa. 2009) (quoting Restatement Contracts §
204).
Here, as stated, the MSA is silent as to the deadline by which the NWP must
complete his analysis of Powell’s net worth and issue his final report. (See Doc. 16761, ¶ 9). As such, the net worth calculation must be completed within a reasonable time.
Given that the parties executed the engagement agreement with the NWP on or about
February 7, 2017, I find that one (1) year is a reasonable time for the NWP to ascertain
Powell’s net worth and advise the parties of same. Therefore, in accordance with the
MSA, the NWP shall issue his final report on or before February 6, 2018.
6

III. Conclusion
For the above stated reasons, Plaintiffs’ motion to interpret settlement agreement
will be granted in part, and the Net Worth Professional’s evaluation of Robert Powell’s
net worth shall be completed on or before February 6, 2018.
An appropriate order follows.

December 7, 2017
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

7