MedVision Inc et al v. Medigain LLC et al
Filing
162
MEMORANDUM OPINION AND ORDER accepting as herein modified the 140 Findings and Conclusions of the Magistrate Judge. The court rejects the magistrate judge's findings and conclusions regarding an agreed judgment; accepts the magistrate judg e's findings and conclusions that Plaintiffs have not established an uncured default by Defendants; and accepts the magistrate judge's findings and conclusions regarding Plaintiffs' request for attorney's fees and sanctions. P laintiffs' Motion for Leave to File Under Seal Plaintiffs' Reply in Support of Objections to Findings, Conclusions, and Recommendation of the United States Magistrate Judge (Doc. 158 ) is granted, and the clerk shall file under seal wit h a file date of 9/7/2016. The parties are, therefore, directed to file by 5/1/2017, a joint stipulation or notice of dismissal of this action or an agreed motion to dismiss. The court denies Plaintiffs' Motions (Docs. 100 , 115 ). (Ordered by Judge Sam A Lindsay on 3/31/2017) (ndt)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
MED VISION, INC., et al.,
Plaintiffs,
v.
MEDIGAIN, LLC, et al.,
Defendants.
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Civil Action No. 3:15-CV-77-L
Filed Under Seal
MEMORANDUM OPINION AND ORDER
Before the court are Plaintiffs’ Opposed Motion to Enforce Mediated Settlement Agreement
(“Motion”) (Doc. 100), filed December 15, 2015; Plaintiffs’ Supplemental Motion to Enforce
Mediated Settlement Agreement (“Supplemental Motion”) (Doc. 115), filed January 21, 2016; and
Plaintiffs’ Motion for Leave to File Under Seal Plaintiffs’ Reply in Support of Objections to
Findings, Conclusions, and Recommendation of the United States Magistrate Judge (Doc. 158), filed
September 7, 2016.1 In their Motion and Supplemental Motion (collectively, “Motions”), Plaintiffs
request that the court require Defendants “to execute the settlement documents which have been
agreed upon, with the previously agreed upon but unincorporated modifications, including the
Agreed Final Judgement proposed by Plaintiffs. Alternatively, Plaintiffs respectfully request that the
Court enforce the mediated Settlement Agreement as written.” Pls.’ Mot. 7, Pls.’ Supp. Mot. 5.
On July 7, 2016, United States Magistrate Judge Paul D. Stickney entered the Findings,
Conclusions and Recommendation of the United States Magistrate Judge (“Report”) (Doc. 140),
1
After receiving notice from the mediator that this case had settled, the court administratively closed the case
on November 12, 2015, and directed the parties to file a stipulation or notice of dismissal or agreed motion to dismiss
this action by May 10, 2016. The court subsequently vacated the parties’ May 10, 2016 deadline pending resolution of
the parties’ dispute that is the subject of this order and, hereby, reopens the case.
Memorandum Opinion and Order – Page 1
recommending that the court grant in part and deny in part Plaintiffs’ Motions. Specifically, the
magistrate judge recommended that the court grant Plaintiffs’ request to enforce the mediated
settlement agreement to the extent set forth in the Report but deny Plaintiffs’ request for an award
of attorney’s fees and sanctions against Defendants.
Plaintiffs MedVision, Inc. (“MedVision”); Medi-Tech Medical Billing Services, Inc. (“MediTech”); Phycom Group, Inc. (“Phycom”); Kenneth S. Alston (“Alston”); and Alexander Wang
(“Wang”) (collectively, “Plaintiffs”) and Defendant Gregory Hackney (“Hackney”) filed objections
to the Report. Plaintiffs object to the magistrate judge’s recommendation regarding attorney’s fees.
Plaintiffs also seek clarification or object to the extent that the magistrate judge “did not recommend
that the District Court also Order the Defendants to execute the Agreed Judgment and the
Defendants’ Notice of Dismissal of Counterclaims with Prejudice which will be presented to
Defendants due to their uncur[]ed default.” Pls.’ Obj. 4. In addition, Plaintiffs object to the extent
that the magistrate judge did not address their request for the court to retain jurisdiction “over this
matter to ensure compliance with the [MSA] and for purposes of enforcement of the judgment.”
Pls.’ Obj. 4. Hackney objects to the magistrate judge’s recommendation requiring Defendants to
execute an agreed judgment and contends that the magistrate judge correctly denied Plaintiffs’
request for attorney’s fees and sanctions.
Plaintiffs’ Motion for Leave to File Under Seal Plaintiffs’ Reply in Support of Objections
to Findings, Conclusions, and Recommendation of the United States Magistrate Judge (Doc. 158)
is granted, and the clerk shall file under seal with a file date of September 7, 2016, the reply brief
and the exhibits to the reply brief that are attached to the Motion for Leave. After considering
Plaintiffs’ Motions to enforce the parties’ mediated settlement agreement (“MSA”), Plaintiffs’
Memorandum Opinion and Order – Page 2
Complaint, the parties’ briefs, the MSA, the documents that Plaintiffs seek to have Defendants
execute, Plaintiffs’ evidence of Defendants’ default, and the Report, and conducting a de novo
review of the portions of the Report to which objection was made, the court, for the reasons set forth
herein, accepts as herein modified the findings and conclusions of the magistrate judge.
Specifically, the court rejects the magistrate judge’s findings and conclusions regarding an agreed
judgment; accepts the magistrate judge’s findings and conclusions that Plaintiffs have not
established an uncured default by Defendants; and accepts the magistrate judge’s findings and
conclusions regarding Plaintiffs’ request for attorney’s fees and sanctions. The court overrules
Plaintiffs’ objections, sustains Hackney’s objections to the extent that the court concludes that
Plaintiffs are not entitled to the relief sought, and denies Plaintiffs’ Motions (Docs. 100, 115).
Additionally, Plaintiffs’ request in their objections to submit evidence in support of their request for
attorney’s fees is denied.
I.
Factual and Procedural Background
On January 12, 2015, Plaintiffs brought this action against Butani Capital Investment Fund
II, LLC (“BCIF”); Dinesh K. Butani (“Butani”) (collectively, “Butani Defendants”); and Hackney.
For purposes of this order, the court refers collectively to the foregoing parties as “Defendants.”
Plaintiffs also sued MediGain, LLC (“MediGain”), which was dismissed from this action on
December 21, 2015, pursuant to an agreed motion.
In their Second Amended Complaint
(“Complaint”), Plaintiffs allege that this litigation pertains to certain Asset Purchase Agreements or
“APAs” whereby BCIF, as buyer, and MediGain, as guarantor, agreed to purchase substantially all
of the assets of medical billing companies MedVision, MediTech, and Phycom. Plaintiffs allege that
Defendants, including Medigain, breached the APAs by failing to make required scheduled payments
Memorandum Opinion and Order – Page 3
and fraudulently induced Plaintiffs to enter the APAs. Plaintiffs’ Complaint includes claims against
Defendants for breach of contract (BCIF); common law fraud (BCIF, Hackney, Butani); statutory
fraud (BCIF, Hackney, Butani); negligent misrepresentation (BCIF, Hackney, Butani); breach of
guaranty (Hackney, Butani); conspiracy (BCIF, Hackney, Butani); and breach of fiduciary duty
(BCIF, Hackney, Butani). Plaintiffs also requested relief against BCIF under the equitable theories
of money had and received, restitution, and unjust enrichment, and sought to recover economic
damages, exemplary damages, an accounting, a constructive trust, disgorgement of monies and
profits received by Defendants, attorney’s fees, interest, and costs.
On November 4, 2015, Plaintiffs and Defendants participated in mediation and reached what
the parties refer to as a “Mediated Settlement Agreement” or “MSA,” which is signed by Plaintiffs
and Defendants. Pls.’ App. 1-4 (Doc. 102). The MSA includes certain standard typed settlement
language, as well as handwritten language regarding the specific terms of the parties’ agreement.
The MSA provides in pertinent part as follows:
Settlement Agreement
On this 4th day of November, 2015, [Plaintiffs and Defendants] met in
mediation in the matter of: MedVision, Inc. et al. v. MediGain, LLC, et al., Case No.
3:15-CV-00077-L and settled all matters in controversy between and among the
parties whose signature appear below. All parties acknowledge that: (1) they freely
participated in the mediation process; (2) they enter[ed] into this settlement
agreement in good faith; (3) they relied upon their own good judgment and
independent legal advice of their own counsel and not on the representation, if any,
of the mediator; and (4) that no coercion, duress or undue influence was used by any
party, attorney, or mediator to obtain their signature and consent to settle this matter
on the following terms:
1. Parties to request administrative closure of case within 3 days after final
Settlement Agreement executed.
Memorandum Opinion and Order – Page 4
2. Settlement Payment made specifically for breach of contract claims against [BCIF]
and breach of guaranty claims against . . . Hackney and . . . Butani. In consideration
for the Settlement Payment, and other good and valuable consideration, the parties
to this [MSA] release all claims as set forth in Paragraph 7 below.
3. Total payment of $850,000 (the “Settlement Payment”) by [BCIF], . . . Hackney,
and/or . . . Butani, as follows:
(a) $50,000 on or before Jan. 15, 2016;
(b) $50,000 on or before May 15, 2016; and continuing $50,000 per month
on the 15th of each month thereafter for sixteen months. . . ($8[5]0,000 in
total monthly payments). This payment obligation by Defendants is joint and
several.2
4. Secured by an Agreed Judgment in favor of . . . Alston and . . . Wang, individually,
against BCIF, . . . Hackney, and . . . Butani, jointly and severally, in the amount of
$850,000 less amounts paid, including interest at the state judgment rate. Agreed
Judgment will include statement that all five Plaintiffs sued and it is agreed that the
Agreed Judgment is in favor of Alston and Wang.
5. Maximum of two notices of default and seven calendar day opportunity to cure.
6. In the event of uncured default, Plaintiffs may present Agreed Judgment for entry
and Defendants’ Notice of Dismissal of Counterclaims with Prejudice. If all
settlement funds are paid, Plaintiffs shall file an Agreed Dismissal with Prejudice and
return the Agreed Judgment to counsel for [BCIF], Butani, and Hackney.
7. Except for the payment obligations contained herein and the Agreement Judgment,
Plaintiffs/Counter-Defendants, on the one hand, and Defendants, on the other hand,
including officers, directors, representative, etc. of each, fully and completely
mutually release the others (including officers, directors, representatives, etc.) [f]rom
any and all claims, liabilities, causes of action, demands, and damages that they have
alleged or could have alleged against the other. This includes release of obligations
under the APAs and APA Amendments.
8. Mutual [s]tandard confidentiality.
2
The formal unexecuted versions of the MSA that were prepared after mediation similarly include sixteen
monthly payments of $50,000, starting May 15, 2016, for a total of $850,000. Although the MSA states that a total of
eighteen payments of $50,000 will be made by Defendants, it is clear in interpreting the MSA as a whole that the parties
intended that Defendants would make 16 monthly payments of $50,000 for a total payment of $850,000.
Memorandum Opinion and Order – Page 5
9. Mutual [n]o admission of liability.
10. Mutual [n]o assignment of claims.
11. All parties bear [their] own costs, and attorney’s fees, and expenses in connection
with claims against each other.
12. Defendants to file Dismissal of Counterclaims Without Prejudice within 3
business days of for[mal] signed final settlement documents.
13. Mutual standard knowing and voluntary agreement.
14. No unwritten representations, not induced to enter Settlement Agreement by
representations by the other parties/their counsel.
15. Governed by Texas law without regard to conflicts of law principles.
16. Applies to successors in interest, purchasers, and assigns.
17. Standard severability provision.
18. Language of Settlement Agreement construed as a whole and not for or against
any party hereto.
This settlement agreement is intended to be a full and final settlement agreement
containing all material terms even though the parties may prepare a more formal
settlement document, release language and dismissal papers, and it is [an] otherwise
valid and enforceable agreement. . . . Butani’s counsel will prepare release and
dismissal papers and send them to opposing counsel by Nov. 16, 2015. Signed this
4th day of November, 2015.
Pls.’ App. 1-4 (Doc. 102).
By letter dated November 10, 2015, the mediator notified the court that the case had settled,
and it was the mediator’s understanding that agreed filings would be submitted pursuant to the
parties’ settlement. The court, therefore, administratively closed the case on November 12, 2015,
and directed the parties to file a stipulation or notice of dismissal or agreed motion to dismiss this
action by May 10, 2016.
Memorandum Opinion and Order – Page 6
After the case was administratively closed, the parties, according to Plaintiffs’ Motion,
undertook efforts through their counsel to “finalize their settlement with formal settlement
documentation.” Pls.’ Mot. 2. The parties’ efforts in this regard, however, were stymied when they
were unable to agree whether certain additional language should be included in the final versions of
the MSA and, in particular, the “Agreed Judgment” referenced in the MSA, based on the parties’
respective understandings of the MSA. Plaintiffs’ Motions to enforce the MSA (Docs. 100, 115)
followed on December 31, 2015, and January 21, 2016, respectively, and the Butani Defendants and
Hackney filed responses in opposition to the motions.
Although styled as Motions to enforce the MSA, the major issue of contention is the parties’
disagreement regarding the scope and substance of the “Agreed Judgment” referenced in the MSA,
and whether the MSA required the parties to execute an agreed judgment and other formal
documentation to finalize the parties’ settlement. During the course of the parties’ briefing,
Plaintiffs also asserted that Defendants had failed to make payments as required by the MSA. The
briefing with respect to these motions and related motions filed by the parties was completed on
September 20, 2016, including their briefing regarding objections to the magistrate judge’s findings
and recommendation. For the reasons herein explained, the court concludes that Plaintiffs are not
entitled to the relief requested.
II.
Plaintiffs’ Motions and Requested Relief
A.
Original Motion to Enforce MSA (Doc. 100)
In their Motion, Plaintiffs contend that Defendants breached the MSA by failing to finalize
and execute “formal settlement documents” and an agreed judgment in accordance with the MSA.
Pls.’ Mot. 2-3. Plaintiffs contend that the withdrawal of Defendants’ counsel “is yet another tactic
Memorandum Opinion and Order – Page 7
by these Defendants to delay the finalization of formal settlement documents and to delay the
required and agreed performance of these same Defendants under the terms of their [MSA].” Id. at
3. Plaintiffs, therefore, assert that they had no option but to file their Motion to enforce the MSA,
“as they have worked diligently over a more than reasonable period of time to get these Defendants
to cooperate and finalize the settlement consistent with the terms of the [MSA], to no avail.” Id.
In addition, Plaintiffs express concern regarding deadlines included in the MSA for Defendants’
payment obligations:
Despite the passage of almost two months since mediation, repeated and constant
attempts by Plaintiffs’ counsel to secure the cooperation and attention of these
Defendants and their counsel to finalize their settlement with formal settlement
documentation, and rapidly approaching obligations on the part of these Defendants,
Defendants have now, at the eleventh hour, inserted and insist upon language in an
Agreed Final Judgment which was not contemplated by the parties in the mediated
settlement agreement and which is not agreeable to Plaintiffs.
Id. at 2. Plaintiffs request that the court enter an order enforcing the MSA by requiring Defendants
to:
execute the formal settlement documents which have been agreed upon by these
parties [App. 118-125; 174-204], as modified by the additional previously agreed
upon but unincorporated changes as noted in Plaintiffs’ counsel’s email of December
22, 2015 [App. 222] and that the Court further Order these Defendants to execute the
Agreed Final Judgment proposed by Plaintiffs [App. 233-242] or otherwise enter a
Final Judgment consistent with the mediated settlement agreement providing the
relief to which Plaintiffs are entitled and to which Defendants agreed.
Pls.’ Mot. 3; Pls.’ Reply in Support of Mot. 5 (Doc. 137). Plaintiffs contend that “Defendants
misrepresent that Plaintiffs seek to have the Court order Defendants to sign an agreed judgment
[that] would be a judgment on all causes of action.” Pls.’ Reply 4 (Doc. 137). Plaintiffs assert that,
although their proposed agreed judgment lists all of the claims and counterclaims asserted by the
parties in this case, it “does not make a specific finding as to any cause of action.” Id.
Memorandum Opinion and Order – Page 8
Alternatively, Plaintiffs request that the court enforce the MSA as written. Plaintiffs contend
that Defendants should be required to execute an agreed judgment at this time because “[a]n Agreed
Judgment was obviously agreed upon by the parties and is a material part of the MSA.” Id. Plaintiffs
contend that an agreed judgment “was to be prepared contemporaneously with the formal settlement
documents since it is the security for the settlement payments and [was ] to be entered in the event
of an uncur[]ed default.” Id. Plaintiffs also request that the court “extend the administrative closure
of this case and otherwise retain jurisdiction until such time as Motions are filed dismissing all
claims and all parties and/or a final judgment is entered, and if same becomes necessary, to enforce
any final judgment.” Id. at 9.
B.
Supplemental Motion to Enforce MSA
Three weeks after Plaintiffs filed their Motion, and after the magistrate judge extended
Defendants’ deadline to respond to the Motion over Plaintiffs’ opposition, Plaintiff sought and was
granted leave to file their Supplemental Motion. In their Supplemental Motion, Plaintiffs repeat their
contentions regarding Defendants’ allegedly improper failure and refusal to comply with the MSA
by delaying in finalizing and executing formal settlement documents, including Plaintiffs’ proposed
agreed judgment. Plaintiffs also repeat their concern regarding Defendants’ “rapidly approaching
payment obligations” under the MSA. Pls.’ Supp. Mot. 2.
Plaintiffs further assert for the first time in their Supplemental Motion that Butani breached
the confidentiality provision of the MSA by disclosing terms of the MSA to Ian Maurer (“Maurer”),
the chief information officer of Medigain. In an affidavit, Maurer states that, on January 2, 2016,
Butani told him that (1) he was not going to pay his half of the settlement with Plaintiffs; and (2)
Hackney had told Butani that Hackney was not going to pay his share of the settlement. Plaintiffs
Memorandum Opinion and Order – Page 9
contend that Maurer’s affidavit is newly discovered evidence that “confirm[s] material breaches of
the confidential [MSA] and the stated intent of these Defendants to not comply with their significant
payment obligations to which they agreed.” Pls.’ Supp. Mot. 5. In addition to the relief requested
previously in their Motion, Plaintiffs’ Supplemental Motion includes a new request for an award of
“attorney’s fees and/or sanctions” against Defendants for their “willful and intentional breaches of
confidentiality and . . . their purposeful delays and now expressed intent to not comply with their
payment obligations under the [MSA].” Id. at 6. Plaintiffs also requested an expedited ruling on
their Motions because “the payment obligations required by Defendants under the . . . [MSA] are
imminent and the failure of Defendants to make a payment will cause immediate and irreparable
harm to Plaintiffs.” Id. at 7.
By electronic order, the magistrate judge denied without prejudice the Supplemental Motion,
to the extent Plaintiffs requested an expedited ruling on their Motions, and advised that his findings
and recommendations would be issued with respect to both Motions after briefing on the motions
was complete.3
III.
Defendants’ Responses in Opposition to Plaintiffs’ Motions
Defendants acknowledge that the MSA is enforceable, but they oppose Plaintiffs’ request for
the court to enforce the MSA by requiring them to execute the agreed judgment proposed by
Plaintiffs. Defendants contend that Plaintiffs have not cited to any authority that would allow the
court to force Defendants to execute an agreed judgment that includes terms to which they did not
consent in mediation. Defendants contend that, because the MSA states that Defendants’ settlement
3
Although the Report references only Plaintiffs’ Motion (Doc. 100), the court treats the Report as the magistrate
judge’s recommended disposition for both of the Motions filed by Plaintiffs, as it is clear from the magistrate judge’s
electronic order that any findings and recommendations by him would address both Motions.
Memorandum Opinion and Order – Page 10
payment is made for Plaintiffs’ breach of contract and guaranty claims, any agreed judgment should
also be limited to these claims. Defendants contend that, in any event, execution and entry of an
agreed judgment is premature because there has been no default to date by them in making payments
under the MSA.
The Butani Defendants, joined by Hackney, initially asserted that, while the MSA
contemplates preparation and execution of an agreed judgment at some time in the future, there was
no meeting of the minds regarding the terms of any judgment other than the amount. Defendants,
therefore, assert that the MSA, as it pertains to the parties’ agreement to execute an agreed judgment,
is ambiguous, and the language in the MSA regarding execution of a future agreed judgment should
be severed out under the MSA’s severability clause. In a subsequent amended response, Defendants
contend that the parties’ agreement in the MSA with respect to the terms to be included in a future
agreed judgment is unambiguous such that the court should not consider the correspondence
submitted by Plaintiffs in support of their motions. Defendants continue to maintain that Plaintiffs’
proposed agreed judgment, which includes all claims asserted in this action, including breach of
contract, specific performance, accounting, money had and received, restitution, unjust enrichment,
common law fraud, statutory fraud, negligent misrepresentation, breach of guaranty, fraud by
nondisclosure, rescission, conspiracy, breach of fiduciary duty, exemplary damages, constructive
trust, disgorgement, and attorney’s fees, is inconsistent with scope of the agreed judgment
contemplated by the MSA, and would require the court to impermissibly supply terms or conditions
not previously agreed to by the parties in the MSA, although the MSA provides that it contains the
parties’ entire agreement. The Butani Defendants further assert that the MSA merely contemplates
that an agreed judgment would be prepared and executed by the parties at some time in the future.
Memorandum Opinion and Order – Page 11
IV.
The Magistrate Judge’s Report and Recommendation
The parties’ dispute focuses in large part on the scope and substance of the “Agreed
Judgment” referenced in the MSA. Based on the MSA, Plaintiffs contend the parties agreed that the
“Agreed Judgment” would apply to any and all claims that were asserted or could have been asserted
in this case. Defendants, on the other hand, contend that, because the parties agreed in the MSA that
Defendants’ Settlement Payment was being made specifically for Plaintiffs’ breach of contract and
guaranty claims, they intended that any agreed judgment in favor of Alston and Wang in the event
of Defendants’ breach would be similarly limited to these claims, notwithstanding the parties’
separate agreement in the MSA to mutually release any and all claims against each other in
consideration for the Settlement Payment by Defendants.
The magistrate judge rejected Defendants’ interpretation of the MSA, as it pertains to the
scope of the “Agreed Judgment” referenced in the MSA, and recommended that the court grant
Plaintiffs’ motions and enter an order requiring Plaintiffs:
to file an Agreed Dismissal with Prejudice and return the Agreed Judgment to
defense counsel upon fulfillment of all payment obligations, or present an Agreed
Judgment that is consistent with Paragraph 4 of the parties’ Settlement Agreement,
along with Defendants’ Notice of Dismissal of Counterclaims with Prejudice, if an
uncured default has occurred.
Report 8. The foregoing recommendation was provided in the alternative because it was unclear to
the magistrate judge whether an “uncured default” of the MSA had occurred as contended by
Plaintiffs. Id. at 5 (“As previously discussed, Defendants contend that they are not in default,
because they made their January 2016 payment in accordance with the payment schedule in
Paragraph 3 of the [MSA]. Further, while Plaintiffs state that Defendants expressed their intent not
to comply with the payment schedule, Plaintiffs’ Reply does not dispute Defendants’ contention that
Memorandum Opinion and Order – Page 12
they timely made their January 2016 payment and are not in default. Therefore, it is unclear to the
undersigned whether [an] ‘uncured default’ has occurred.” Id. at 8.
Regarding Plaintiffs’ request for “attorneys’ fees and/or sanctions for Defendants’ breaches
of confidentiality, purposeful delays, and expressed intent not to comply with their payment
obligations,” the magistrate judge recommended that the court deny the request because it was raised
for the first time in Plaintiffs’ reply brief, and Plaintiffs failed to set forth any legal authority to
support the request. Id. at 7.
V.
Standard of Review
A magistrate judge’s determination regarding a dispositive matter is reviewed de novo if a
party timely objects. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b). A magistrate judge’s
determination regarding a nondispositive matter is reviewed under the “clearly erroneous or contrary
to law” standard. 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). As explained by the court in
Arters v. Univision Radio Broadcasting TX, L.P., No. 3:07-CV-0957-D, 2009 WL 1313285 (N.D.
Tex. May 12, 2009):
The clearly erroneous standard applies to the factual components of the
magistrate judge’s decision. The district court may not disturb a factual finding of the
magistrate judge unless, although there is evidence to support it, the reviewing court
is left with the definite and firm conviction that a mistake has been committed. If a
magistrate judge’s account of the evidence is plausible in light of the record viewed
in its entirety, a district judge may not reverse it. The legal conclusions of the
magistrate judge are reviewable de novo, and the district judge reverses if the
magistrate judge erred in some respect in [his] legal conclusions. [T]he abuse of
discretion standard governs review of that vast area of choice that remains to the
[magistrate judge] who has properly applied the law to fact findings that are not
clearly erroneous.
Id. at *2 (citations and internal quotation marks omitted). As Plaintiffs seek to enforce a mediated
settlement agreement and have requested that the court require Defendants to execute an agreed
Memorandum Opinion and Order – Page 13
judgment that not only disposes of the claims in this case, but will also be a judgment against
Defendants in the event any of them breaches the MSA, their motions are dispositive and will be
reviewed de novo.
VI.
Objections Regarding Enforcement of the MSA (Execution of Agreed Judgment and
Other Formal Documents)
A.
The Parties’ Arguments
Hackney continues to maintain in his objections to the Report that Plaintiffs’ proposed agreed
judgment exceeds what was agreed to in the MSA, and he cites Texas authority for the following
propositions: (1) “A court’s power to render an agreed judgment is based on the existence of the
consent of all parties at the time of rendition of the judgment, and a party may withdraw his consent
at any time prior to the time of rendition”; and (2) “A final judgment which is founded upon a
settlement agreement must be in strict or literal compliance with that settlement agreement.”).
Hackney’s Obj. 9 n.32 (quoting Vickrey v. American Youth Camps, Inc., 532 S.W.2d 292, 292 (Tex.
1976); and Grasso v. Ellis, 608 S.W.2d 347, 349 (Tex. App.—San Antonio 1980, no writ)).
Hackney further asserts that, under Texas law, Plaintiffs’ Motion is procedurally improper such that
Plaintiffs should be required to pursue enforcement of the MSA through a separate breach of contract
claim that would be subject to normal rules of pleading and proof. Alternatively, Hackney asserts
that the MSA is ambiguous regarding the scope and substance of any “Agreed Judgment.”
Hackney argues that, regardless of whether Plaintiffs’ Motion is procedurally proper, he has
not agreed to Plaintiffs’ version of the “Agreed Judgment.” In this regard, Hackney clarifies that he
is not challenging, and has not challenged, the validity or enforceability of the [MSA].” Hackney’s
Reply in Support of Obj. 1 (Doc. 157). He instead challenges the entry “of an agreed judgment, or
Memorandum Opinion and Order – Page 14
consent judgment, to which he has not agreed.” Id. (footnote omitted). Hackney contends that he
and Plaintiffs “did not enter into an ‘Agreed Judgment’ as anticipated by the MSA because they were
unable to reach agreement as to the scope and substance of the agreed judgment.” Id. at 1-2.
Specifically, Hackney contends:
Plaintiffs and Hackney disagree as to whether the “Agreed Judgment” applies only
to the breach of guaranty claim against Hackney – as Hackney contends – or to all
claims Plaintiffs asserted in their Second Amended Complaint – as urged by
Plaintiffs. To the extent that Magistrate Judge Stickney concluded or this Court
concludes that Hackney did agree to the “Agreed Judgment” proposed by Plaintiffs,
such consent or agreement has been and is hereby revoked.
Id. at 1-2 & n.2 (Doc. 157) (citing Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 268 (5th
Cir. 1995), for the proposition that “revocation of consent prior to entry of an agreed judgment has
the effect of voiding the judgment under Texas law”)).
Plaintiffs do not address Hackney’s revocation of any agreed judgment or the effect of such
revocation under Texas law. Plaintiffs disagree that Texas’s procedural rules apply to the
enforcement of a settlement agreement in federal court and contend that the Report should be
adopted to the extent it recommends that the court should grant Plaintiffs’ Motion. In addition,
Plaintiffs contend that the court should not consider Hackney’s procedural and ambiguity arguments
because they were not presented to the magistrate judge, and Hackney’s objections ignore established
precedent in the Fifth Circuit and the cases cited by Plaintiffs regarding a district court’s inherent
power and discretion to enforce a settlement agreement when one party in a civil action initially
agrees to settle but later refuses to execute a formal agreement reciting the terms of the settlement.4
4
Pls.’ Resp. to Hackney’s Obj. 6 (Doc. 150) (citing Chen v. Highland Capital Mgmt., L.P., Case No. 3:10-CV1039-D, 2012 WL 5935602 (N.D. Tex. Nov. 27, 2012); and Weaver v. World Fin. Corp. of Tex., No. 3:09-CV-1124-G,
2010 WL 1904561 (N.D. Tex. May 12, 2010). Plaintiff also relies on this court’s opinion in International Truck and
Engine Corporation v. Quintana but miscites the opinion. The correct citation is International Truck and Engine
Corporation v. Quintana, Case No. 3:02-CV-168-L, 2004 WL 1380181 (N.D. Tex. June 18, 2004).
Memorandum Opinion and Order – Page 15
Plaintiffs’ response to Hackney’s objections also includes the following conclusory statement:
“Plaintiffs hereby notify the Court that Defendants are in uncur[]ed default of the MSA and
judg[]ment should be entered against them, jointly and severally, in the amount of $700,000 without
further delay” because of “Defendants[’] uncur[]ed default of the MSA and Hackney’s asserted
intent not to pay Plaintiffs pursuant to the very MSA he signed.” Pls.’ Resp. 3 (emphasis in
original).
Plaintiffs continued to contend that, contrary to Hackney’s assertions, they are not requesting
the court to order Defendants to sign an agreed judgment that would be a judgment on all causes of
action because their proposed agreed judgment makes no specific finding as to any cause of action.
Plaintiffs contend that it is instead Hackney who is demanding that the court enter an agreed
judgment that includes specific language limiting the judgment to Plaintiffs’ breach of contract and
beach of guaranty claims, even though the MSA does not state that the “Agreed Judgment” would
be limited as such.
Plaintiffs assert that the language proposed by Hackney for inclusion in the Agreed Judgment
would impermissibly narrow the scope of the Agreed Judgment that was given as security in the
event Defendants fail to make payments under the MSA or is an attempt by Hackney to evade the
judgment through bankruptcy:
Hackney asks the Court to add language to the MSA and require the Agreed
Judgment to be entered only on the contract claims, and to exclude the other claims
that were asserted in the lawsuit. Hackney’s request would require this Court to
materially change the terms of the parties’ agreement and weaken the judgment given
as security for breach. The Magistrate Judge properly refused to rewrite the MSA in
favor of Hackney.
Memorandum Opinion and Order – Page 16
Pls.’ Reply 6-7 (Doc. 158). Plaintiffs, therefore, request that the court “order specific performance
of the Defendants’ contractual obligation to sign an Agreed Judgment” based on their contention that
“[s]pecific performance of a mediated settlement agreement is an appropriate remedy.” Id. at 7.
Plaintiffs assert that they do not object to the Report to the extent it recommends that Plaintiffs’
Motion be granted. Pls.’ Obj. 1-2 (Doc. 142).
Plaintiffs, however, seek clarification or object to the Report to the extent that the magistrate
judge “did not recommend that the District Court also Order . . . Defendants to execute the Agreed
Judgment and . . . Defendants’ Notice of Dismissal of Counterclaims with Prejudice which will be
presented to Defendants due to their uncur[]ed default” because Defendants have not actually signed
any formal Agreed Judgment or Defendants’ Notice of Dismissal of Counterclaims with Prejudice
(although the terms of such Dismissal of Counterclaims were agreed).” Id. at 3-4. Plaintiffs further
contend that, “as Defendants are in default of their payment obligations under the mediated
settlement agreement, [Plaintiffs] should, consistent with the [Report], be permitted to present an
Agreed Judgment for entry along with Defendants’ Notice of Dismissal of Counterclaims with
Prejudice.” Id.
Plaintiffs do not specifically object to the magistrate judge’s finding that the record does not
support a determination that an uncured default by Defendants has occurred, and they acknowledge
that “[t]he “Butani Defendants were correct in their Response and Amended Response to Plaintiffs’
Motion to Enforce that Defendants were not in default under the MSA’s payment terms as of
February 12, 2016 (the date the Amended Response was filed).” Pls.’ Reply 6 n.6 (citation omitted).
Plaintiffs, however, continue to contend that Defendants have breached the MSA by failing to
perform their payment obligations and “note for the Court’s information that, as a factual matter,
Memorandum Opinion and Order – Page 17
Defendants have since defaulted on their payment obligations under the MSA.” Id. Plaintiffs,
therefore, contend that, “as Defendants are in default of their payment obligations under the [MSA],
[Plaintiffs] should, consistent with the [Report], be permitted to present an Agreed Judgment for
entry along with Defendants’ Notice of Dismissal of Counterclaims with Prejudice.” Pls.’ Obj. 3.
B.
Applicable Law and Analysis
As noted, Plaintiffs have moved to enforce the MSA to require Defendants to execute formal
documentation in accordance with the MSA, including their proposed version of an agreed judgment.
Plaintiffs also contend that judgment in accordance with the MSA should be entered in their favor
as a result of Defendants’ allegedly uncured default in failing to make required payments under the
MSA.
While “federal courts possess the inherent power to enforce agreements entered into in
settlement of litigation, the construction and enforcement of settlement agreements is governed by
principles of state law applicable to contracts generally.” Lockette v. Greyhound Lines, Inc., 817 F.2d
1182, 1185 (5th Cir. 1987) (per curiam) (quoting Lee v. Hunt, 631 F.2d 1171, 1173-74 (5th Cir.
1980) (footnote omitted). “More specifically, the enforceability of a settlement agreement in a
diversity case tried in a federal district court in Texas is governed by the provisions of Rule 11,
Texas Rules of Civil Procedure (‘Texas Rule 11’).” Borden v. Banacom Mfg. and Mktg., Inc., 698
F. Supp. 121, 123 (N.D. Tex. 1988) (citing Anderegg v. High Standard, Inc., 825 F.2d 77, 80-81 (5th
Cir. 1987)). Texas substantive law applies to Plaintiffs’ Motions to enforce the MSA because this
is a diversity case involving state law claims, Lockette, 817 F.2d at 1185, not substantive rights or
liabilities under federal law. Mid-S. Towing Co. v. Har-Win, Inc., 733 F.2d 386, 389 (5th Cir. 1984).
Although Texas Rule 11 is a Texas Rule of Civil Procedure, it is considered to be substantive in
Memorandum Opinion and Order – Page 18
nature in the same way Texas’s parol evidence rule is a rule of substance and, therefore, applies to
Texas diversity cases that are tried in federal court. Anderegg, 825 F.2d at 80-81. To be enforceable
under Rule 11, the settlement must be documented, that is, the settlement agreement must be “in
writing, signed and filed with the papers as part of the record, or unless it be made in open court and
entered of record.” Lefevre v. Keaty, 191 F.3d 596, 598 (5th Cir. 1999) (quoting Tex. R. Civ. P. 11).
In addition, the trial court “must render judgment by officially announcing its decision in open court
or filing a written order with the clerk.” Lefevre, 191 F.3d at 598 (citing Anderegg, 825 F.2d at 80);
Samples Exterminators v. Samples, 640 S.W.2d 873, 874 (Tex. 1982) (“A judgment is in fact
rendered whenever the trial judge officially announces his decision in open court . . . whether orally
or by written memorandum.”) (citation omitted).
“Until the court renders judgment, either party may revoke the settlement.” Lefevre, 191 F.3d
at 598 (citing S & A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995)). A “court cannot
render a valid agreed judgment absent consent at the time it is rendered.” Padilla, 907 S.W.2d at
461. “[N]otwithstanding a valid Rule 11 agreement, consent must exist at the time an agreed
judgment is rendered.” Kennedy v. Hyde, 682 S.W.2d 525, 528 (Tex. 1984). “It is not sufficient to
support the judgment that a party’s consent thereto may at one time have been given; consent must
exist at the very moment the court undertakes to make the agreement the judgment of the court.”
Burnaman v. Heaton, 240 S.W.2d 288, 291 (Tex. 1951). “[A] party has the right to revoke his
consent at any time before the rendition of judgment.” Quintero v. Jim Walter Homes, Inc., 654
S.W.2d 442, 444 (Tex. 1983). As noted, judgment is rendered with respect to a Rule 11 settlement
agreement when the trial court “officially announces its decision in open court or by written
memorandum filed with the clerk.” Leal, 892 S.W.2d at 857 (citation omitted). A judgment rendered
Memorandum Opinion and Order – Page 19
after one of the parties revokes its consent is void. Id.; Samples Exterminators, 640 S.W.2d at 87475.
“Although a court cannot render a valid agreed judgment absent consent at the time it is
rendered, this does not preclude the court, after proper notice and hearing, from enforcing a
settlement agreement complying with Rule 11 even though one side no longer consents to the
settlement.” Padilla, 907 S.W.2d at 461. As explained by the Texas Supreme Court in Padilla,
“[t]he judgment in the latter case is not an agreed judgment, but rather is a judgment enforcing a
binding contract.” Id.
Under Texas law, the enforceability of a settlement agreement is a question of law for the
court unless there is ambiguity or surrounding facts and circumstances demonstrate the existence of
a factual issue regarding the agreement. McCalla v. Baker’s Campground, Inc., 416 S.W.3d 416,
418 (Tex. 2013); General Metal Fabricating Corp. v. Stergiou, 438 S.W.3d 737, 744 (Tex.
App.—Corpus Christi 2014, no pet.) (“The issue of whether a Rule 11 settlement agreement fails
for lack of essential terms is a question of law to be determined by the court, unless there is
ambiguity or unless surrounding facts and circumstances demonstrate a factual issue as to an
agreement.”) (citation omitted). “A [federal] trial court has the power to summarily enforce a
settlement agreement entered into by litigants while the litigation is pending before it,” as long as
material facts regarding the existence of an agreement to settle are not in dispute. Massachusetts
Cas. Ins. Co. v. Forman, 469 F.2d 259, 260 (5th Cir. 1972) (per curiam) (citation omitted). Thus,
when material facts concerning the existence of a settlement agreement are in dispute, a district court
cannot enter an order without a plenary hearing. Borden, 698 F. Supp. at 123 n.1 (citing Lee, 631
F.2d at 1177).
Memorandum Opinion and Order – Page 20
A settlement agreement is “legally binding if its terms are sufficiently definite to enable a
court to understand the parties’ obligations.” Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22
S.W.3d 831, 846 (Tex. 2000). Likewise, settlement agreements to enter into future contracts are
enforceable if they contain all material or essential terms, and no terms of the proposed agreement
are left for future negotiations. McCalla, 416 S.W.3d at 418; Fort Worth Indep. Sch. Dist., 22
S.W.3d at 846 (citations and footnote omitted). The issue of whether a settlement agreement contains
all material terms is “determined on a case-by-case basis.” McCalla, 416 S.W.3d at 418 (citing T.O.
Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992)).
A settlement agreement is a contract, subject to the applicable rules of contract construction
and interpretation. Alford v. Kuhlman Elec. Corp., 716 F.3d 909, 912 (5th Cir. 2013) (citing Guidry
v. Halliburton Geophysical Servs., Inc., 976 F.2d 938, 940 (5th Cir. 1992)).Whether a contract is
ambiguous under Texas law “is a question of law that must be decided by examining the contract
as a whole in light of the circumstances present when the contract was entered.” Columbia Gas
Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996); Coker v. Coker, 650
S.W.2d 391, 394 (Tex. 1983). Lack of clarity does not create an ambiguity, and “[n]ot every
difference in the interpretation of a contract . . . amounts to an ambiguity.” Forbau v. Aetna Life Ins.
Co., 876 S.W.2d 132, 134 (Tex. 1994); Universal Health Servs., Inc. v. Renaissance Women’s Grp.,
P.A., 121 S.W.3d 742, 746 (Tex. 2003). Rather, an ambiguity arises when an agreement is
susceptible to more than one reasonable meaning after application of established rules of
construction. DeWitt Cnty. Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).
The “primary concern when interpreting a contract is to ascertain and give effect to the intent
of the parties as it is expressed in the contract.” Seagull Energy E & P, Inc. v. Eland Energy, Inc.,
Memorandum Opinion and Order – Page 21
207 S.W.3d 342, 345 (Tex. 2006). To achieve this objective, the court examines “the entire writing
in an effort to harmonize and give effect to all the contract’s provisions so that none will be rendered
meaningless.” Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). No single
provision taken alone should be given controlling effect; “rather, all the provisions must be
considered with reference to the whole instrument.” Coker, 650 S.W.2d at 393. If a contract is
worded in such a manner that it can be given a certain or definite legal meaning, it is not ambiguous,
and it is construed as a matter of law according to the plain meaning of its express wording and
enforced as written. DeWitt Cnty. Elec. Coop., Inc., 1 S.W.3d at 100; Coker, 650 S.W.2d at 393.
An agreed judgment is interpreted in the same manner as a contract. Gulf Ins. Co. v. Burns
Motors, Inc., 22 S.W.3d 417, 422 (Tex. 2000). An agreed judgment, however, is a final judgment
on the merits and operates to end all controversy between the parties. St. Raphael Med. Clinic, Inc.
v. Mint Medical Physician, 244 S.W.3d 436, 439 (Tex. App.—Houston [1st Dist.] 2007, no pet.).
Consequently, an agreed judgment that “is founded upon a settlement agreement reached by the
parties must be in strict or literal compliance with that agreement.” Vickrey, 532 S.W.2d at 292
(citation omitted).
Here, Plaintiffs and Defendants do not contend that the MSA is unenforceable as written,
although Defendants initially contended that there was no meeting of the minds as to the terms of
an agreed judgment.5 They instead request that the court enforce the MSA as written and simply
dispute whether their respective proposed versions of the agreed judgment are consistent with the
5
This contention by Defendants, which was included in their original response to Plaintiffs’ Motion, was
superseded by the arguments in their amended response.
Memorandum Opinion and Order – Page 22
MSA and whether the execution of an agreed judgment and other documents is necessary to finalize
the parties’ mediated settlement.
1.
The MSA is Enforceable as Written Without the Execution of Other
Documents or Formal Documentation.
Although Plaintiffs express concern that Defendants have delayed or refused to execute
“formal documentation” to avoid or delay performance under the MSA, the court concludes that the
the MSA is enforceable as written. The documentation requirements for Rule 11 have been satisfied,
as the MSA is in writing, is signed by all parties to the agreement, and was filed together with
Plaintiffs’ Motion. The MSA does not indicate that any other terms remain open for future
negotiation; nor does it state that the parties’ performance under the agreement or enforcement of
the agreement is contingent upon the execution of additional formal documents. Instead, the MSA
expressly states that it is a “valid and enforceable agreement” and “intended to be a full and final
settlement agreement containing all material terms even though the parties may prepare a more
formal settlement document, release language and dismissal papers.” Pls.’ App. 2 (Doc. 102)
(emphasis added).
Additionally, the material terms of the parties’ agreement are set forth in sufficient detail for
the court to determine the parties’ obligations. Specifically, paragraph three of the MSA states that,
in consideration for Defendants’ agreement to pay a total Settlement Payment of $850,000, to be paid
in monthly installments of $50,000, the parties to the agreement “fully and completely[,] mutually
release” all claims asserted or that could have been asserted in this action by them, except for
Defendants’ payment obligation under the MSA. Id. at 4. The next paragraph of the MSA states that
the Settlement Payment is “[s]ecured by an Agreed Judgment in favor of Ken Alston and Alex
Memorandum Opinion and Order – Page 23
Wang” against Defendants, jointly and severally, in the amount of $850,000, less any payments made
by Defendants toward this amount, and that interest on the judgment will accrue at the state
judgment rate. Id. at 3. The MSA further provides that, in the event of default, Defendants will be
given a maximum of two notices of default and seven calendar days to cure any default, and if the
default goes uncured, “Plaintiffs may present Agreed Judgment for entry.”
Because the MSA contains the total amount of the Settlement Payment owed by Defendants
and the terms of the payments to be made by Defendants, and includes a complete and mutual release
of all claims asserted or that could have been asserted by the parties in this action, exclusive of
Defendants’ payment obligations, the court concludes that the MSA contains all material terms and
is enforceable as written, without the need for additional formal documentation. Further, the MSA
makes clear that, in the event of an uncured default by Defendants of their payment obligations,
Plaintiffs are entitled to present an agreed judgment, which according to the MSA, is security for
such payments; and the agreed judgment will be “in favor of Alston and Wang” in the total amount
of $850,000, less any amounts paid, and interest on the judgment will accrue at the state judgment
rate. Id. at 3.
That the parties may have contemplated executing more formal documentation of their
settlement agreement, agreed upon releases, agreed judgment, or other dismissal papers does not
make their agreement any less enforceable. See Padilla, 907 S.W.2d 454, 460-61 (Tex. 1995)
(concluding that agreement was complete where terms included agreement to pay in exchange for
settlement); Disney v. Gollan, 233 S.W.3d 591, 595 (Tex. App.—Dallas 2007, no pet.) (concluding
that essential terms for a settlement agreement are the amount of compensation and the liability to
be released); CherCo Props., Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 266 (Tex.
Memorandum Opinion and Order – Page 24
App.—Fort Worth 1999, no pet.) (holding a settlement agreement that includes the terms of payment
and releases contained all material terms); Ronin v. Lerner, 7 S.W.3d 883, 888 (Tex. App.—Houston
[1st Dist.] 1999, no pet.) (concluding that settlement agreement involving the settlement of a lawsuit
and sale of real property was enforceable, as it contained all material terms, including a general
release, a description of the real property to be sold, the timeline for closing the real property sale,
the identities of the transferor and transferee of the real property, and the price of the real property,
and did not leave open any terms for future negotiation).
Accordingly, this is not a situation in which essential terms of a settlement agreement were
left open for future negotiation. Moreover, the MSA does not indicate that its enforcement, the
parties’ mutual releases, or the parties’ performance under the MSA are contingent upon the
execution of additional formal documents; nor does the MSA state that the parties’ mutual releases
of claims are contingent upon Defendants’ future performance of their payment obligations under
the MSA. Thus, even if the parties contemplated preparing and executing formal documentation,
the MSA is enforceable as written without the need to execute additional documents. Further, except
for a couple of minor inconsistencies in the MSA that are discussed below that do not affect its
validity or enforceability, the court concludes that the language of the MSA is not ambiguous, as it
can be given a certain or definite meaning as a matter of law, notwithstanding the parties’
disagreement regarding its meaning. See El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389
S.W.3d 802, 806 (Tex. 2012). The court must, therefore, enforce it as written without considering
parol evidence. See David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450-51 (Tex. 2008) (per
curiam).
Memorandum Opinion and Order – Page 25
2.
Defendants’ Failure to Execute Formal Settlement Documents is Not a
Breach of the MSA.
The court disagrees with Plaintiffs’ contention that Defendants were required under the MSA
to execute formal settlement documents and breached the MSA by failing to execute such
documentation. Other than an agreed judgment, Plaintiffs do not specify in their Motions which
settlement documents they believe Defendants were required but failed to execute. Instead, they cite
to pages 118 through 125, and 174 through 204 of their appendix.
a.
Agreed Motion to Extend Administrative Closure and Dismissal
of this Case
Pages 118 through 125 consist of an unexecuted “Joint Agreed Motion to Extend
Administrative Closure and Advisory to the Court Regarding Settlement” and a proposed agreed
order granting the joint motion. In this motion, the parties notify the court of their settlement and
request that the court extend the administrative closure of the case and their May 10, 2016 deadline
to file a joint stipulation or motion to dismiss this action to October 31, 2017, which is a little more
than two months after Defendants’ last payment under the MSA would be due. The motion further
requests that the court retain jurisdiction until “such time as Motions are filed dismissing all claims
and all parties and/or a final judgment i[s] entered, and if same becomes necessary, to enforce any
final judgment or to grant other relief.” Pls.’ App. 119.
The MSA does not require the parties to notify the court of their settlement. Moreover, the
mediator had already notified the court that the parties had settled, which is why the court set a
deadline for the parties to file a joint stipulation, notice of dismissal, or agreed motion to dismiss this
case. Likewise, the MSA does not require the parties to execute an agreed joint motion to extend
the administrative closure and delay dismissal of this case; rather the MSA merely states: “Parties
Memorandum Opinion and Order – Page 26
to request administrative closure of case within 3 days after final Settlement Agreement executed.”
Pls.’ App. 3. Even assuming as Plaintiffs contend that this language in the MSA required
Defendants to execute an agreed motion to administratively close the case, this issue was mooted
by the court’s administrative closure of the case after being notified that the case had settled.
Additionally, the court vacated the May 10, 2016 deadline to file a stipulation of dismissal or agreed
motion to dismiss pending resolution of Plaintiffs’ motions to enforce the mediated settlement,
which mooted any issue regarding the extension of the administrative closure or delay in dismissing
this case, at least for the time being until the court ruled on Plaintiffs’ motions. Order (Doc. 139).
Further, this provision in the MSA makes the request to administratively close the case contingent
on the execution of a “final Settlement Agreement” by the parties, which has not yet occurred and
is not required by the MSA, as it states only that the parties “may prepare a more formal settlement
document.” Pls.’ App. 2 (emphasis added).
Regardless of any agreement by the parties, the court would not agree to delay the dismissal
of this case for more than a year until some time after Defendants’ last payment deadline under the
MSA because, as herein explained, it is not necessary to effectuate the parties’ settlement and
dismissal of the claims asserted in this case pursuant to the MSA, as the MSA does not condition
the release or settlement of the claims asserted by the parties on Defendants’ performance of its
payment obligations under the MSA. Moreover, extending the administrative closure and delaying
the dismissal of this case is not necessary for purposes of enforcing the parties’ settlement, which
can be done, if necessary, after dismissal of this action either by this court, if it retains jurisdiction
to enforce the parties’ settlement, or another court with jurisdiction.
Memorandum Opinion and Order – Page 27
Finally, the MSA does not include an agreement by the parties for the court to retain
jurisdiction and, as the court explains below, any request for it to retain jurisdiction to enforce the
parties’ settlement or any judgment entered in this case is premature, as no order of dismissal or
judgment has been entered in the case to date. Accordingly, Defendants did not breach their
obligations under the MSA by failing to execute this motion and proposed order.
b.
Compromise Settlement Agreement with Mutual Releases
In support of their Motions, Plaintiffs provided copies of two unexecuted formal versions of
the MSA titled Compromise Settlement with Mutual Releases and request that the court require
Defendants to execute the version included in pages 194 through 204 of Plaintiffs’ appendix. The
most notable differences between the two versions are that the version that Plaintiffs seeks to have
Defendants execute would only require Defendants to dismiss without prejudice their claims as a
result of the settlement, whereas the other version requires both parties to dismiss without prejudice
their claims as a result of the settlement, although the parties mutually released all claims against
each other under the MSA, except for Defendants’ payment obligation. The version that Plaintiffs
seek to have Defendants execute also includes an additional paragraph that requires the parties to
execute, as necessary, additional documents to further the purpose of the Compromise Settlement
with Mutual Releases. The version advocated by Plaintiffs also states that Defendants “shall execute
and deliver to Plaintiffs’ counsel” an agreed judgment “[c]ontemporaneously” with the Compromise
Settlement with Mutual Releases, although the MSA does not include a deadline or specifically
require Defendants to execute an agreed judgment prior to an uncured default. See Pls.’ App. 196.
The other version merely states that Defendants “will execute and deliver to Plaintiffs’ counsel” an
agreed judgment without setting forth a deadline, although the MSA does not include a deadline or
Memorandum Opinion and Order – Page 28
specifically require Defendants to execute an agreed judgment prior to an uncured default. See id.
at 23.
In any event, as noted above, the MSA does not require the parties to execute a formal
version of the MSA or settlement document. It states only that the parties “may prepare a more
formal settlement document, release language and dismissal papers,” even though their settlement
as set forth in the MSA “is intended to be a full and final settlement containing all material terms”
and “otherwise valid and enforceable.” Pls.’ App. 2 (emphasis added). Accordingly, the court
concludes that Defendants did not breach their obligations under the MSA by failing to execute the
Compromise Settlement with Mutual Releases advocated by Plaintiffs or any formal version of the
MSA.
c.
Agreed Judgment and Motions to Dismiss
Pages 174 through 193 of Plaintiffs’ appendix include a red-lined version of an unexecuted
Agreed Motion to Dismiss Counterclaims Without Prejudice and a corresponding agreed order
granting the motion. Also included are two copies of an Agreed Motion to Dismiss With Prejudice
counterclaims asserted by Defendants in this action and corresponding agreed orders granting the
motions. Plaintiffs contend that Defendants were required under the MSA to execute the motions
to dismiss with and without prejudice their counterclaims. Plaintiffs further assert that the MSA
requires Defendants to execute an agreed judgment contemporaneously with the other formal
settlement documents. Plaintiffs, therefore, request that the court require Defendants to execute one
of red-lined versions of the “Agreed Judgment” included in pages 233 through 242 of their appendix.
Regarding dismissal, the second page of the MSA states, “Butani’s counsel will prepare
release and dismissal papers and send them to opposing counsel by Nov. 16, 2015.” Pls.’ App. 2.
Memorandum Opinion and Order – Page 29
This portion of the MSA does not specify what is meant by “dismissal papers.” Later in the MSA,
more specific language is included in paragraph twelve that states, “Defendants to file Dismissal of
Counterclaims Without Prejudice within 3 business days of for[mal] signed final settlement
documents.” Id. at 4. This provision in the MSA makes the filing by Defendants of a notice or
motion to dismiss without prejudice their counterclaims contingent on the parties’ execution of
“for[mal] signed settlement documents,” which has not yet occurred and is not required under the
MSA. See id. at 2.
Regarding the dismissal with prejudice of Defendants’ counterclaims and agreed judgment,
the MSA states in paragraph six that “[i]n the event of uncured default, Plaintiffs may present
Agreed Judgment for entry and Defendants’ Notice of Dismissal of Counterclaims with Prejudice.”
Id. at 3. Although the MSA states that Defendants’ payment obligations are secured by an agreed
judgment in favor of Alston and Wang and contemplates that Plaintiffs “may” present an agreed
judgment and a notice of dismissal with prejudice of Defendants’ counterclaims, no date or deadline
for executing these documents is provided. Because presentation of these documents for entry is
contingent on an uncured default by Defendants, the court concludes that the MSA does not
unambiguously require, as Plaintiffs contend, Defendants to execute an agreed judgment or an agreed
motion to dismiss their counterclaims with prejudice at this time to effect the settlement.6 At most,
6
Plaintiffs assume that, because the MSA states that an agreed judgment would secure Defendants’ payment
obligations with respect to the “Settlement Payment,” it was necessarily contemplated by the parties that an agreed
judgment would be executed contemporaneously with other formal settlement documentation and prior to any default
by Defendants. This assumption, however, is not supported by the plain language of the MSA. Plaintiffs cite to
paragraphs four and six of the MSA, but these paragraphs state only that Defendants’ payment obligations under the
MSA are secured by an agreed judgment, and Plaintiffs may present an agreed judgment for entry if an uncured default
by Defendants occurs. There is no language in the MSA that requires the parties to prepare or execute an agreed
judgment by a specific date or prior to an uncured default by Defendants, although the parties could have included
language to this effect in the MSA. See, e.g., Young v. JP Morgan Chase Bank, N.A., No. 03-15-00261-CV-2016, WL
4091294, at *1 (Tex. App.— July 28, 2016, pet. ref’d) (“In April 2014, the parties entered into a settlement agreement
in which Young agreed to sell or obtain a third party take-out refinance of the debt secured by the Security Instrument
Memorandum Opinion and Order – Page 30
the MSA contemplates that such documents will be executed by the parties after an uncured default
occurs. Further, as herein explained, the MSA contemplates only that the parties will execute an
agreed judgment that comports with the language in the MSA, which is far less expansive than the
version of the agreed judgment proposed by Plaintiffs.
The court also notes that the two copies of the Agreed Motion to Dismiss With Prejudice
included in Plaintiffs’ appendix require Defendants to pay attorney’s fees and costs incurred by
Plaintiffs in defending against Defendants’ counterclaims, which is contrary to the parties’ agreement
in the MSA that: (1) they would bear their own attorney’s fees and costs; and (2) any judgment in
favor of Alston and Wang against Defendants as a result of Defendants’ uncured default in failing
to make payment obligations would be limited to the Settlement Payment of $850,000, less amounts
paid by Defendants, plus postjudgment interest at the state judgment rate. If Plaintiffs wanted to
recover attorney’s fees and costs previously incurred in defending against Defendants’ counterclaims
in the event Defendants defaulted on their payment obligations under the MSA, they could have
negotiated and included language to this effect in the MSA and reserved in their release of claims
a claim for attorney’s fees and costs in addition to their claim for Defendants’ payment obligations.
In addition, it is unclear how the parties expected to dismiss with prejudice claims that had
already been previously dismissed without prejudice. Unless the claims were subsequently
reasserted after being dismissed without prejudice, there would be nothing for the parties or the court
‘on or before August 1, 2014.’ . . . Young also agreed that, if he failed to make the required payment by August 1, 2014,
that he would sign and return an agreed judgment for foreclosure ‘no later than August 8, 2014.’ [After,] Young failed
to sell or obtain a third-party take-out refinance by August 1, 2014, [and] Young failed to sign the agreed judgment for
foreclosure, JPMC amended its petition to add a claim for breach of the settlement agreement and sought specific
performance of the agreement.”). Moreover, the court disagrees with Plaintiffs’ contention that the parties’ agreement
to secure Defendants’ payment obligations by an agreed judgment, without more, is necessarily indicative of the parties’
intent to prepare or execute an agreed judgment contemporaneously with other formal settlement documentation as
opposed to some later point in time, especially when such formal documentation is not required by the MSA. See id.
Memorandum Opinion and Order – Page 31
to dismiss with prejudice. In any event, the parties’ mutual releases of claims in the MSA indicates
an intent by the parties, at a minimum, to dismiss without prejudice their respective claims in this
action without the need for further action by them, other than entry of an order dismissing this action
and the parties’ claims in accordance with their settlement, as required by Rule 11. See Lefevre, 191
F.3d at 598.
For all of these reasons, the court concludes that Defendants did not breach their obligations
under the MSA by failing or refusing to execute an agreed judgment and dismissal papers, including
the versions of these documents advocated by Plaintiffs. Accordingly, Plaintiffs’ objection that the
court should require Defendants to execute formal settlement documents is overruled.
3.
Plaintiffs Have Not Established an Uncured Default by Defendants.
What started out as a motion to enforce the MSA to require Defendants to execute formal
settlement documents evolved into a dispute that also included the issue of whether Defendants had
anticipatorily breached the MSA by expressing intent not to make payments or actually breached as
the result of an uncured default. Plaintiffs’ unsupported and conclusory assertions and hearsay
evidence are insufficient to establish that Defendants anticipatorily breached or actually failed to
comply with their payment obligations under the MSA, or that they failed to cure the alleged default
after appropriate notice by Plaintiffs. Moreover, the MSA limits entry of an agreed judgment against
Defendants to an uncured default with respect to payment obligations, not an anticipatory breach of
Defendants’ payment obligations or other obligations under the MSA. Accordingly, Plaintiffs are
not entitled to entry of a judgment against Defendants, agreed or otherwise, based on their contention
that Defendants breached the MSA by failing to comply with their payment obligations.
Memorandum Opinion and Order – Page 32
4.
Plaintiffs’ Proposed Agreed Judgment is Inconsistent with the MSA.
For the reasons already explained, execution of and entry of any agreed judgment is
premature, as Plaintiffs have not established by competent evidence that Defendants failed to comply
with their payment obligations, that Plaintiffs provided the requisite notice of default and opportunity
to cure under the MSA, and that Defendants failed to cure any default. Moreover, as noted,
Plaintiffs’ proposed agreed judgment is far more expansive than, and in some respects inconsistent
with, what the parties agreed to in the MSA. Regarding an agreed judgment, the MSA merely states
that: (1) Defendants’ Settlement Payment of $850,000 is secured by an agreed judgment in favor of
Alston and Wang in the total amount of $850,000, less any amounts paid by Defendants toward the
total amount, plus interest at the state judgment rate; (2) jointly and severally against Defendants;
and (3) in the event of an uncured default of Defendants’ payment obligations, Plaintiffs may present
an agreed judgment for entry. Plaintiffs’ proposed agreed judgment, on the other hand, includes an
interest rate of “(56.00%) [sic] per annum” and contains language that would require Defendants to
admit to defaulting on their payment obligations and failing to cure after notice by Plaintiffs before
any event of uncured default actually occurs. Consequently, Plaintiffs’ proposed agreed judgment
alleviates them from having to prove an uncured breach of the settlement agreement by Defendants,
although this is not contemplated by the MSA.
Plaintiffs maintain that they are not seeking to have Defendants sign an agreed judgment that
would be a judgment on all causes of action asserted in this case, and that their proposed agreed
judgment simply lists all claims asserted by the parties without making any specific finding as to any
claim; however, the inclusion of all claims asserted by the parties in this case in an agreed judgment,
and together with a statement that the judgment “disposes of all remaining claims [in this case],”
Memorandum Opinion and Order – Page 33
Pls.’ App. 237, clearly implies that the judgment is in Plaintiffs’ favor against Defendants on all
claims asserted by the parties in this case, even though all claims by the parties, except for
Defendants’ payment obligations, were previously released under the MSA, and the MSA indicates
only that an agreed judgment was to secure Defendants’ payment obligations under the MSA and
nothing more.
Thus, as written, Plaintiffs’ proposed agreed judgment converts their full, final, and
unconditional release of claims in the MSA into a release by Plaintiffs that is contingent upon
Defendants satisfying their payment obligations. It also converts the agreed judgment in the MSA
that secures only Defendants’ payment obligations into an agreed judgment on all claims asserted
in this case in the event of an uncured default by Defendants. There is no language in the MSA,
however, that indicates the parties’ intent to make Plaintiffs’ release of their claims subject to or
contingent upon Defendants’ future performance of their payment obligations under the MSA.
Likewise, the MSA does not state that Plaintiffs would be entitled to a judgment on all of the claims
in this case, including those previously released, if Defendants fail to satisfy their payment
obligations.
If, as Plaintiffs contend that, it is not their intent to seek a judgment on all claims asserted in
this case in the event Defendants default on their payment obligations under the MSA, there is no
need to include or list in an agreed judgment all claims previously asserted by the parties in this case
that were released as part of their settlement. While Plaintiffs assert that they are not seeking a
judgment on all previously released claims, it is clear from their objections to Defendants’ proposed
language that they are in fact seeking an agreed judgment that would extend to claims other than
those for breach of Defendants’ payment obligations out of concern that they will not be able to
Memorandum Opinion and Order – Page 34
collect on the judgment if Defendants default and seek bankruptcy protection to avoid their payment
obligations:
Hackney asks the Court to add language to the MSA and require the Agreed
Judgment to be entered only on the contract claims, and to exclude the other claims
that were asserted in the lawsuit. Hackney’s request would require this Court to
materially change the terms of the parties’ agreement and weaken the judgment given
as security for breach.
Pls.’ Reply 6-7 (Doc. 158) (emphasis added). Again, Plaintiffs do not explain why an agreed
judgment given to secure Defendants’ payment obligations or breach of those obligations under the
MSA would entitle them to an agreed judgment against Defendant for claims other than Defendants’
breach of their payment obligations. All other claims asserted by the parties in this case were
released under the MSA as part of the parties’ settlement such that these claims, at a minimum,
should be dismissed without prejudice pursuant to the parties’ release and settlement because, as
explained, Plaintiffs’ release of their claims was not made subject to or contingent upon Defendants’
future performance of their payment obligations under the MSA, although the parties could have
negotiated and included such language in the MSA. As drafted, the plain language of the MSA
makes the parties’ full, final, and mutual release of all claims effective on the date the MSA was
executed because the release of claims is not unambiguously tied to or contingent upon the
occurrence of any future event.
As a result, there should be no need to further delay entry of an order or judgment dismissing
the released claims and this action without prejudice, until after Defendants’ performance is
complete under the MSA. In the event Defendants default, Plaintiffs may enforce the settlement
agreement to obtain a judgment against Defendants for any amounts owed under the MSA, and, if
the claims released by Plaintiffs are dismissed without prejudice, they may be asserted again at a later
Memorandum Opinion and Order – Page 35
point. Even if the parties are unable to reach agreement regarding the terms of a formal agreed
judgment, the MSA makes clear that the parties agreed that Defendants’ payment obligations are
secured by an agreed judgment in Alston and Wang’s favor, and the MSA includes the material
terms of any such agreed judgment. Thus, even if Defendants do not execute an agreed judgment
that comports with the limited language in the MSA as set forth above, a court with jurisdiction will
still be able to enforce the settlement agreement as written and enter a judgment in accordance with
the MSA upon proof of the agreement and Defendants’ default.
On the other hand, the court does not have authority under Texas law to enter an agreed
judgment to which Defendants do not consent or to which they have withdrawn their consent.
Padilla, 907 S.W.2d at 461. Thus, even if the court determined that Plaintiffs’ proposed agreed
judgment was consistent with the MSA, it could not force Defendants to execute the document or
enter Plaintiffs’ proposed agreed judgment absent Defendants’ consent, and any such judgment
would be void. Leal, 892 S.W.2d at 857; Samples Exterminators, 640 S.W.2d at 874-75.
Accordingly, Plaintiffs’ objection that Defendants should be ordered to execute their version of the
agreed judgment is overruled, and Hackney’s objection in this regard is sustained.
VII.
Plaintiffs’ Objections Regarding Retention of Jurisdiction
Plaintiffs object to the extent that the magistrate judge did not address their request for the
court to retain jurisdiction “over this matter to ensure compliance with the [MSA] and for purposes
of enforcement of the judgment.” Pls.’ Obj. 4 (Doc. 142). Plaintiffs further assert that Hackney did
not respond to this objection and maintain that the court “should retain jurisdiction over its judgment
for the reasons set forth in their Motion to Enforce” because [f]ederal courts may continue to
exercise jurisdiction over their judgments if so provided in the judgment.” Pls.’ Reply 8 (Doc. 158Memorandum Opinion and Order – Page 36
1). Contrary to Plaintiffs’ assertion, Hackney responded to this objection by contending that
Plaintiffs’ request for the court to retain jurisdiction to ensure compliance with the MSA is
premature because no judgment has been entered, and Plaintiffs have not followed the proper
procedure of pleading and proof to enforce the settlement agreement.
Once a federal action has been dismissed, enforcement of a settlement generally requires a
separate basis for subject matter jurisdiction independent of the underlying suit unless the court
retained jurisdiction to enforce the settlement agreement. Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 381-82 (1994). In this regard, the Court in Kokkonen explained:
If the parties wish to provide for the [district] court’s enforcement of a
dismissal-producing settlement agreement, they can seek to do so. When the
dismissal is [by court order] pursuant to Federal Rule of Civil Procedure 41(a)(2),
which specifies that the action “shall not be dismissed at the plaintiff’s instance save
upon order of the court and upon such terms and conditions as the court deems
proper,” the parties’ compliance with the terms of the settlement contract (or the
court’s “retention of jurisdiction” over the settlement contract) may, in the court’s
discretion, be one of the terms set forth in the order. . . . [W]hen . . . the dismissal is
[by a stipulation signed by all parties] pursuant to Rule 41(a)(1)(ii) (which does not
by its terms empower a district court to attach conditions to the parties’ stipulation
of dismissal) . . . the court is authorized to embody the settlement contract in its
dismissal order (or, what has the same effect, retain jurisdiction over the settlement
contract) if the parties agree. Absent such action, however, enforcement of the
settlement agreement is for state courts, unless there is some independent basis for
federal jurisdiction.
Id.
Here, the MSA does not mention retention of jurisdiction by the court upon dismissal of this
action, and the parties have yet to submit a joint stipulation or notice of dismissal of this action or
agreed motion to dismiss the action that contains a request for the court to retain jurisdiction for
purposes of enforcing the MSA. If the parties intended to delay dismissal of this action and entry
of judgment until after Defendants either performed their payment obligations or defaulted under the
Memorandum Opinion and Order – Page 37
MSA, there would be no reason for the court to retain jurisdiction, as the case would not be
dismissed.
The court notes, however, that it has no intention of holding this case in abeyance pending
Defendants’ performance under the MSA, which is spread out over a period of approximately 20
months until fall October of 2017. While the court originally gave the parties six months to file a
joint stipulation or notice of dismissal or agreed motion to dismiss this action in light of the parties’
settlement of this action, which is much longer than the court normally gives parties after a case has
settled, it never indicated that it was willing to delay dismissal of this action for almost two years
pending Defendants’ performance under the MSA. Given the parties’ settlement and release of all
claims in this case that were asserted or could have been asserted, except for Defendants’ payment
obligations under the MSA, and because the MSA does not condition the settlement of the claims
asserted by the parties in this case on Defendants’ performance of its payment obligations under the
MSA, the court sees no utility in further delaying the dismissal of this case. If the parties request the
court to retain jurisdiction to enforce their settlement agreement after dismissal of this case, they may
request the court to do so when they file a joint stipulation or notice of dismissal or agreed motion
to dismiss this action. Until such time, the court agrees with Hackney that Plaintiffs’ request in this
regard is premature. Accordingly, Plaintiffs’ objection to the Report with respect to retention of
jurisdiction is overruled, and Hackney’s objection is sustained to the extent that the court agrees that
retention of jurisdiction is premature.
VIII. Plaintiffs’ Objections Regarding Attorney’s Fees and Sanctions
As noted, the magistrate judge recommended that the court deny Plaintiffs’ request for
“attorneys’ fees and/or sanctions for Defendants’ breaches of confidentiality, purposeful delays, and
Memorandum Opinion and Order – Page 38
expressed intent not to comply with their payment obligations” because it was raised for the first
time in Plaintiffs’ reply brief, and Plaintiffs failed to set forth any legal authority to support the
request. Report 7. Plaintiffs object, contending that they raised the issue in their Supplemental
Motion. Alternatively, or in addition, Plaintiffs request to submit evidence in support of their request
for attorney’s fees. Hackney responds that Plaintiffs have not set forth any legal authority that
supports their request for attorney’s fees and sanctions, and he is aware of none. Plaintiffs contend
that the court has inherent authority to award sanctions for the wrongful conduct by Defendants
alleged in their Motions, and the court “may award attorney’s fees for Defendants’ failure to comply
with the mediated settlement agreement pursuant to Section 38.001, Texas Civil Practice &
Remedies Code.” Pls.’ Obj. 3 (Doc. 142). In their reply in support of their objections, Plaintiffs
continue to maintain that “the Court should allow [them] to put on evidence of their attorney’s fees,”
but they “withdraw their pending request for sanctions and/or attorney’s fee, without prejudice to reurging same.” Pls.’ Reply 8 (Doc. 158-1). Plaintiffs assert that, “[w]hile [they] believe that their
current request was properly made, [they] acknowledge the Magistrate Judge’s ruling and will make
a formal request for attorney’s fees and costs by separate motion pursuant to FED. R. CIV. P.
54(d)(2)(A).” Id.
Because of Plaintiffs’ conflicting statements regarding their request to submit evidence and
the withdrawal of their request for sanctions and attorney’s fees, the court addresses the objection
out of an abundance of caution. Plaintiffs cite no legal authority, and the court is not aware of any
that would authorize it to sanction Defendants for the conduct alleged in Plaintiffs’ Motions and
discussed in this order. Although Plaintiffs characterize Defendants’ conduct as “willful and
intentional breaches” of the confidentiality provision in the MSA, “purposeful delays” in executing
Memorandum Opinion and Order – Page 39
formal settlement documentation, and “expressed intent to not comply with their payment
obligations,” Pls.’ Reply 9 (Doc. 137), garden-variety breaches of contract such as this, would not
warrant the imposition of sanctions even if substantiated.
Under Texas law, attorney’s fees are recoverable under the Texas Civil Practice & Remedies
Code section 38.001 when a party prevails on a breach of contract claim. Palavan v. McCulley, 498
S.W.3d 134, 143 (Tex. App.—Houston [1st Dist.] 2016, no pet.). “Typically, for breach of contract
claims, this requires obtaining actual damages”; however, a party can also be a prevailing party by
obtaining specific performance of a contract. Id. Thus, attorney’s fees are recoverable under section
38.001 when a party obtains an award of specific performance, for example, to enforce a settlement
agreement that ends ongoing litigation or requires performance of a “material contract right in a Rule
11 agreement.” Id.; Boyaki v. John M. O’Quinn & Assocs., PLLC, No. 01-12-00984-CV, 2014 WL
4855021, at *14 (Tex. App.—Houston [1st Dist.] Sept. 30, 2014, pet. denied) (mem. op.).
Failure of Defendants to make requisite payments under the MSA would be considered a
material breach, as it goes to the heart of the parties’ settlement agreement to mutually release any
and all claims asserted or that could have been asserted in this action, other than Defendants’
payment obligations under the MSA, in exchange for Defendants’ Settlement Payment. Plaintiffs’
unsupported assertions and hearsay evidence, however, are insufficient to establish that Defendants
breached the MSA by failing to make payment obligations after the requisite notices of default.
Plaintiffs’ evidence that Defendants breached the “Mutual standard confidentiality” provision
in the MSA is similarly deficient. Moreover, Plaintiffs do not contend that they suffered any actual
damages as a result of the alleged breach of the confidentiality provision, and they do not request that
the court enforce Defendants’ compliance with the confidentiality provision
Memorandum Opinion and Order – Page 40
by specific
performance. Regardless, there is also no indication that the parties considered the “Mutual standard
confidentiality” provision to be a material contract right or that specific performance of this
provision would end the litigation.
Further, for the reasons already explained, the failure to execute formal settlement documents
does not justify an award of specific performance because the MSA does not unambiguously require
the execution of such documentation to finalize the parties’ settlement agreement, and the execution
of such documentation is not a material contract right under the MSA. Even if a legal basis existed
to justify an award of attorney’s fees as a result of Plaintiffs’ motions to enforce the MSA, as
correctly noted by the magistrate judge, no evidence was submitted in support of Plaintiffs’ request
for attorney’s fees. Accordingly, Plaintiffs are not entitled to attorney’s fees or sanctions and their
objection in this regard is overruled. As the court has determined that Plaintiffs are not entitled to
recover attorney’s fees, it denies the request in their objections to submit evidence of fees incurred.
IX.
Conclusion
For the reasons stated, the accepts as herein modified the findings and conclusions of the
magistrate judge. Specifically, the court rejects the magistrate judge’s findings and conclusions
regarding an agreed judgment; accepts the magistrate judge’s findings and conclusions that Plaintiffs
have not established an uncured default by Defendants; and accepts the magistrate judge’s findings
and conclusions regarding Plaintiffs’ request for attorney’s fees and sanctions. The court overrules
Plaintiffs’ objections, sustains Hackney’s objections, to the extent that the court concludes that
Plaintiffs are not entitled to the relief sought, and denies Plaintiffs’ Motions (Docs. 100, 115).
Additionally, Plaintiffs’ request in their objections to submit evidence in support of their request for
attorney’s fees is denied.
Memorandum Opinion and Order – Page 41
Further, as the parties have released and settled all claims in this case, except for Defendants’
new payment obligations under the MSA, the court sees no reason to further delay the resolution of
this action. The parties are, therefore, directed to file by May 1, 2017, a joint stipulation or notice
of dismissal of this action or an agreed motion to dismiss this action that is signed by all parties or
their counsel of record. The joint stipulation or notice of dismissal or agreed motion to dismiss this
action need not contain detailed information regarding the terms of the parties’ settlement. It needs
only state that all remaining parties have agreed to the dismissal of this action pursuant to their
settlement agreement. If the parties present an agreed motion for the court’s consideration that does
not specify whether the parties’ claims or this action will be dismissed with or without prejudice,
dismissal of the action will be without prejudice. See Fed. R. Civ. P. 41(a)(2). Given the contentious
nature of this litigation in which virtually every motion, including procedural motions, have been
opposed and unnecessarily litigated, the court sees no utility in further delaying this deadline in light
of the parties’ mediated settlement. As the parties are aware by the length of this opinion and the
acrimonious nature of this action, the court has consumed an inordinate amount of scarce judicial
resources on this matter. The court will not continue down this path to nowhere. Accordingly, no
further extensions of this deadline will be granted and failure of the parties to file a joint stipulation
or notice of dismissal or agreed motion to dismiss as directed will result in the imposition of
sanctions against the offending party or parties, their attorneys, or both, as the court deems
appropriate.
Memorandum Opinion and Order – Page 42
It is so ordered this 31st day of March, 2017.
_________________________________
Sam A. Lindsay
United States District Judge
Memorandum Opinion and Order – Page 43
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