Amini v. Bank of America Corporation et al

Filing 142

ORDER granting pltf's 131 Motion to enforce settlement agreement; directing clerk to unseal dkts 131, 132 and 140; dismissing case by Judge Robert S. Lasnik.(RS)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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_______________________________________
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FARBOD AMINI,
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Plaintiff,
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v.
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BANK OF AMERICA CORPORATION,
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et al.,
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Defendants.
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_______________________________________)

No. C11-0974RSL
ORDER GRANTING PLAINTIFF’S
MOTION TO ENFORCE
SETTLEMENT AGREEMENT AND
DISMISSING CASE

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This matter comes before the Court on plaintiff’s “Motion for Summary Judgment
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to Confirm and Enforce Settlement Agreement, and to Dismiss Action.” Dkt. # 131.1 Federal

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courts do not have inherent or ancillary jurisdiction over contractual disputes simply because the
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subject of the contract is the settlement of a federal lawsuit. Kokkonen v. Guardian Life Ins.
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Co., 511 U.S. 375, 381-82 (1994). In this case, however, the underlying action – over which the
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Court undoubtedly has jurisdiction – remains pending. The motion to enforce the settlement
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agreement therefore falls within the Court’s inherent powers to control pending litigation. See
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Fed. Sav. and Loan Ins. Corp. v. Ferrante, 364 F.3d 1037, 1039-40 (9th Cir. 2004) (noting that
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ancillary jurisdiction is exercised “to enable a court to function successfully, that is, to manage
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its proceedings, vindicate its authority, and effectuate its decrees.”); Schiff v. City and Cnty. of
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This matter can be decided on the papers submitted. Plaintiff’s request for oral argument is
DENIED.
ORDER GRANTING MOTION TO
ENFORCE SETTLEMENT AGREEMENT

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San Francisco, 2007 WL 2301773 at *8 (N.D. Cal. Aug. 8, 2007) (“[W]here an action has not

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yet been dismissed . . . , courts do have inherent authority to enforce the settlement agreement.”)

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(emphasis in original). The issue, therefore, is whether the parties reached an enforceable

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agreement under Washington law.

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To form a valid and enforceable contract in Washington, the parties must

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objectively manifest their mutual assent to the essential terms. Yakima Cnty. Fire Prot. Dist. No.

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12 v. City of Yakima, 122 Wn.2d 371, 388 (1993). A party manifests assent to an agreement

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when the reasonable meaning of a person’s words and acts, notwithstanding any subjective

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reservations or intent, indicates assent. City of Everett v. Sumstad’s Estate, 95 Wn.2d 853, 854

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(1981). The stated terms must be complete and definite enough for the Court to ascertain their

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meaning and to fix the parties’ contractual liabilities. Keystone Land & Dev. Co. v. Xerox

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Corp., 152 Wn.2d 171, 178 (2004). Parties can be bound by the agreement of their counsel even

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if the parties contemplated signing a more formal writing in the future. Loewi v. Long, 76 Wn.

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480, 484 (1913); Morris v. Maks, 69 Wash. App. 865 (1993).

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Taking the evidence in the light most favorable to defendant, the Court finds that

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counsel for the parties agreed to the following terms through an exchange of emails and

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telephone calls in June 2013:

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! Plaintiff would dismiss his claims with prejudice and release all claims, whether
asserted or unasserted, against Bank of America, the loan investor, and all related
entities.

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! Bank of America would release any claims it has against plaintiff for repayment of the
$504,000 loan and would request that the trustee reconvey the deed of trust for that
indebtedness.

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! Each party would pay its own fees and costs.

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! The settlement would be confidential.

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! The parties would not disparage each other.
ORDER GRANTING MOTION TO
ENFORCE SETTLEMENT AGREEMENT

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! In lieu of returning the original note, Bank of America would indemnify plaintiff in the
event a holder of the note ever sought to enforce it against plaintiff.

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Decl. of Guy W. Beckett (Dkt. # 132 SEALED) at ¶ 8 and Exs. E and F. Bank of America’s

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counsel was tasked with drafting a formal settlement agreement. Decl. of Guy W. Beckett (Dkt.

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# 132 SEALED) at ¶ 8.

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Effective July 1, 2013, Bank of America transferred the servicing rights for the

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underlying promissory note to third-party Nationstar Mortgage. It is not clear whether the

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beneficial interest in the note changed hands. Bank of America continued to work on a draft

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settlement agreement under the assumption that it would be able to “reconcile whatever needs to

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be reconciled with Nationstar.” Decl. of Guy Becket (Dkt. # 132 SEALED), Ex. H. On August

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6, 2013, Bank of America provided an eight page, single-spaced Settlement Agreement for

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plaintiff’s review. Decl. of Guy W. Beckett (Dkt. # 132 SEALED), Ex. K. The attorneys

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exchanged comments and proposed revisions to the draft agreement. Decl. of Guy W. Beckett

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(Dkt. # 132 SEALED) at ¶¶ 16-17 and Ex. M. Plaintiff’s last proposed edits ran the gamut from

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alterations of the terms that had been agreed upon in June (such as the deletion of the

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confidentiality provision) to simply clarifying the agreed upon provisions. Decl. of Guy W.

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Beckett (Dkt. # 132 SEALED), Ex. M. After receiving plaintiff’s comments, defendant

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informed the Court that “all claims against all parties in this action have been resolved.” Dkt.

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# 123. When plaintiff inquired regarding the status of the settlement in September, defendant

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noted a couple of outstanding issues, none of which is relevant here, and stated “[t]his deal will

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get done but [Bank of America] and Nationstar are still ironing out the mechanics.” Decl. of

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Guy W. Beckett (Dkt. # 132 SEALED), Ex. O.

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Having heard nothing from the parties and with the trial date long passed, the

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Deputy Clerk of Court inquired whether a stipulation of dismissal would be filed. Decl. of Guy

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W. Beckett (Dkt. # 132 SEALED) at ¶ 20. In response, Bank of America noted that while it

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remained “committed to implementing the parties’ agreed settlement framework,” “non-party
ORDER GRANTING MOTION TO
ENFORCE SETTLEMENT AGREEMENT

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Nationstar has . . . taken over servicing of the loan,” requiring “material changes” to the loan

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account in order to finalize the settlement. Decl. of Guy W. Beckett (Dkt. # 132 SEALED), Ex.

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P. The nature and import of the necessary changes were not explained. The Court entered an

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order of dismissal, but gave the parties thirty days in which to reopen the case if the settlement

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were not consummated. Dkt. # 124. Because final settlement papers were not signed within the

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thirty days, plaintiff filed an unopposed motion to reopen. Bank of America has apparently been

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unable to reach an agreement with Nationstar regarding how to account for the settlement, and

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the case remains unresolved.

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Defendant opposes enforcement of the six provisions set forth above because

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(a) Bank of America did not agree to the release and hold harmless provision favoring plaintiff

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and (b) Bank of America is unable to finalize the settlement without the cooperation of third-

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party Nationstar Mortgage and has no means of compelling such cooperation. Neither argument

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is persuasive based on the existing record. The evidence, even when taken in the light most

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favorable to defendant, shows that the parties entered into an enforceable settlement agreement

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regarding all six provisions, including the release and hold harmless provision in favor of

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plaintiff. Defendant argues that it did not agree to that term, pointing out that there is no written

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acceptance of the reciprocal release provision in the correspondence between counsel and that

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the provision was not included in the initial draft agreement. Dkt. # 137 at 3. Although the

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email correspondence does not reflect acceptance, plaintiff has provided evidence, in the form of

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a declaration from counsel based on his personal knowledge, that Mr. Lorber confirmed by

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telephone “that the defendants’ settlement proposal included an indemnification provision in the

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event the holder of the $504,000 Note ever sought to recover from Mr. Amini on it.” Decl. of

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Guy W. Beckett (Dkt. # 132 SEALED) at ¶ 8. This declaration was presented with plaintiff’s

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motion, yet defendant did not provide any countervailing evidence regarding the content of the

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June 11, 2013, conversation. Nor does the fact that the first draft of the settlement did not

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contain a release in favor of plaintiff raise an inference that defendant had not agreed to hold
ORDER GRANTING MOTION TO
ENFORCE SETTLEMENT AGREEMENT

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plaintiff harmless. The record shows that the parties had discussed the danger bearer paper

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posed to plaintiff if the note were not returned to him and the measures they could take to

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alleviate the risks. When the initial draft contained only a release in favor of defendant, Mr.

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Beckett promptly added a reciprocal release provision. Mr. Lorber notified the Court that the

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parties had reached a settlement agreement that same day. Later correspondence shows that

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defendant took issue with other edits and comments made by Mr. Beckett, but did not - until this

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motion - contend that the reciprocal releases were outside the parties’ agreement.

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With regards to the complications that have arisen since Bank of America sold or

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otherwise transferred the $504,000 loan to Nationstar, defendant has not identified any theory

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that would make the settlement agreement unenforceable against Bank of America. Defendant

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has not alleged mutual mistake, force majeure, or impracticability, nor has it provided any

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evidence from which such defenses could be inferred. Bank of America contractually bound

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itself to undertake certain actions in exchange for a dismissal of plaintiff’s claims, and its

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performance is not excused because it chose to give another party an interest in the loan. In

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addition, defendant’s repeated refrain that the settlement cannot be consummated unless

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Nationstar cooperates is unsupported. There is no evidence in the record from which one could

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conclude that Bank of America’s ability to perform under the settlement agreement is impaired

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in any way. The promise to release plaintiff from any obligation under the loan can be

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accomplished regardless of who currently holds, much less services, the note: Bank of America

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makes no attempt to explain why it cannot pay the amount due and owing on the note to

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Nationstar, as contemplated by the draft settlement agreement.

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For all of the foregoing reasons, plaintiff’s motion to enforce the six provisions of

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the settlement agreement of June 2013 is GRANTED. The parties shall satisfy any outstanding

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obligations (such as the satisfaction of the debt and submission of a stipulated order of dismissal)

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and may, if mutually desired, formalize the settlement agreement within the next fourteen days.
ORDER GRANTING MOTION TO
ENFORCE SETTLEMENT AGREEMENT

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The Clerk of Court is directed to unseal Dkt. # 131, # 132, and # 140. Although

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the parties had agreed to keep the terms of their settlement confidential, plaintiff was forced to

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seek judicial intervention to enforce the agreement. The Court is not bound by the parties’

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promise of confidentiality, and its resolution of this dispute will not be sealed. To the extent that

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defendant’s response memorandum has not already disclosed the confidential provisions of the

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settlement, public access to the moving and reply papers is necessary to a full understanding of

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the Court’s reasoning and analysis.

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Dated this 22nd day of April, 2014.

A
Robert S. Lasnik

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United States District Judge
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ORDER GRANTING MOTION TO
ENFORCE SETTLEMENT AGREEMENT

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