Opinion
PROCEEDINGS (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO ENFORCE SETTLEMENT AGREEMENT AND FOR ORDER RE: ENTRY OF JUDGMENT [Docket No. 55]
THE HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE.
This matter is before the Court on Plaintiff Terry Kung's Motion to Enforce Settlement Agreement And For Order Re: Entry of Judgment (" Motion"), filed on June 24, 2015. Defendants Wyndham W. Chow (" Chow") and Mellowtek, Inc. (" Mellowtek") (collectively, " Defendants") filed an opposition to the Motion (" Opp'n") on July 14, 2015. Plaintiff filed an amended reply (" Am. Reply") on July 20, 2015. The Court found this matter suitable for disposition without oral argument and vacated the hearing scheduled for August 3, 2015. See Fed.R.Civ.P. 78(b). For the following reasons, the Court GRANTS the Motion with respect to Defendant Chow and DENIES the Motion with respect to Defendant Mellowtek, Inc.
Pursuant to the Court's July 9, 2015 Order, Defendants were required to file their opposition brief no later than July 13, 2015. The Court notes that the filing was untimely, but will nonetheless consider the Opposition.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Terry Kung (" Plaintiff") and Defendant Wyndham W. Chow (" Chow") were married from August 8, 2008 until the parties separated on January 10, 2014. (Compl. ¶ 8, ECF No. 1.) On January 13, 2014, Defendant Chow filed a Petition for Dissolution of Marriage in the Superior Court of the State of California, County of Los Angeles. (Compl. ¶ 9.) Defendant Chow is the sole and principal shareholder of Defendant Mellowtek, Inc. (" Mellowtek"). (Compl. ¶ 5; see also Declaration of Wyndham W. Chow in Supp. of Opp'n to Mot. to Enforce Settlement (" Chow Decl.").)
On September 3, 2014, Plaintiff commenced the instant suit. In her Second Amended Complaint (" SAC"), filed on October 22, 2014, Plaintiff claims Defendant violated: (1) the Computer Fraud and Abuse Act (" CFAA"), 18 U.S.C. § § 1030, et seq.; (2) the Stored Communications Act, 18 U.S.C. § § 2701 et seq.; and (3) the California Data Access and Fraud Act (" CDAF Act"), Penal Code § 502. (ECF No. 18.) On January 26, 2015, this Court ordered the parties to participate in the Court's Alternative Dispute Resolution Program. (Scheduling Conference, ECF No. 25.) On March 16, 2015, the parties entered a mediated settlement agreement (" Settlement Agreement"), signed by both parties and their counsel. (Mediation Report, ECF No. 48.) The Settlement Agreement provides that Defendant Chow pay a total sum of $53,888.18 (" Settlement Sum") to Plaintiff in exchange for a dismissal of this underlying action with prejudice. ( See Declaration of Konrad L. Trope (" Trope Decl."), Ex. 1; Declaration of Martin R. Berman (" Berman Decl."), Ex. 1.)
Pursuant to paragraph 4 of the Settlement Agreement, the drafted mediated agreement constituted the operative settlement document pending the parties' possible execution a formal settlement agreement. ( See Trope Decl. Ex. 11; Berman Decl., Ex. 11)
The Court notes that the Settlement Agreement does not dictate that the stipulated amount of $53,8888.18 is to be paid in one lump payment, or any kind of payment plan, nor does it specify any other mechanism or protocol by which Defendant is to pay the Settlement Sum.
On March 20, 2015, Defendants sent Plaintiff a draft formal settlement agreement, which allegedly presented new terms and conditions that were never discussed, and thus were not contained in the Settlement Agreement executed on March 16, 2015. (Berman Decl. ¶ 5.) In the underlying Motion, Plaintiff claims that Defendant Chow's offer to pay the Settlement Sum in six monthly installments by check every month was " never discussed nor contemplated at the mediation, " and further that " the payment plan being proposed called for too many payments over too long a period of time." ( See Berman Decl. ¶ ¶ 6, 7.) A Notice of Settlement was filed by Plaintiff on March 21, 2015. (Notice of Settlement, ECF No. 49.)
On March 25, 2015, Plaintiff provided Defendant a " redlined draft" with comments and revisions, and rejected Defendant's proposed installment payment plan. (Chow Decl. ¶ 4.) Plaintiff requested a shorter payment plan to be submitted for her consideration, but never received a response from Defendant Chow. ( See Berman Decl. ¶ 7; see also Am. Reply 3, ECF No. 61.) On April 2, 2015, Plaintiff's counsel allegedly received an email from Defendants, " clearly indicating that an impasse had occurred so far as creating a formal mutual settlement agreement (" FMSA")." On April 6, 2015, Mr. Syverson (Defendants' counsel) and Mr. Trope (Plaintiff's counsel) met and conferred in person at Mr. Syverson's offices in compliance with the Local Rules 7-3. (Trope Decl. ¶ 18; see also Ex. 4 1.)
The Court has not been provided with the April 2 email that counsel refers to.
On April 6, 2015, having met and conferred, Plaintiff's counsel filed a Pretrial Status Report, requesting that the Pretrial Conference set for April 13, 2015 be postponed to April 20, 2015, in order to allow the parties to complete their negotiations, focusing solely on how and when Defendant Chow was to pay the Settlement Sum. ( See Status Report of Pretrial, ECF No. 50.) On April 8, 2015, the Court ordered that the Pre-Trial Conference be continued from April 13, 2015 to April 20, 2015. (Order Re. Joint Pre-Trial Status Report and Joint Stipulation for Continuance of Pre-trial Conference, ECF No. 52.) On April 15, 2015, the parties agreed that Defendant Chow would be allowed to take out an equity line of credit against the family residence in an amount not to exceed $150,000, subject to there being a stipulated court order and escrow instructions specifying how the proceeds would be disbursed. (Trope Decl. ¶ 24; Berman Decl. ¶ 15, Ex. 6.) As part of this agreement, Defendant Chow was responsible for the repayment of such loan, and any fees or costs charged by the lender, including but not limited to appraisals, loan origination fees, closing costs, etc. (" Loan Fees"), subject to Plaintiff's consent. Defendant Chow was also to pay court ordered attorneys' fees to Trope & Trope in the pending family law action (" Family Action Fees"). ( See Trope Decl. ¶ 24; Berman Decl. ¶ 15; Chow Decl. ¶ 5.)
Because the Pre-Trial Status Report was missing a copy of the Settlement Agreement, Plaintiff filed a Notice of Errata on April 7, 2015. (See Notice of Errata, ECF No. 51.)
Plaintiff's attorneys refer to an email sent by Defendants' counsel on April 15, 2015, agreeing to " [Plaintiff's] certain terms and conditions" regarding the equity credit line. However, no such email is before the Court.
On April 16, 2015, in conformity with the Settlement Agreement, the parties filed a Joint Stipulation to Dismiss Case With Prejudice pursuant to Federal Rule of Civil Procedure, Rule 41(a)(1)(A)(ii) (" Rule 41"). (Joint Stipulation to Dismiss Case, ECF No. 53.) On April 17, 2015, the Court ordered the instant action to be dismissed with prejudice, and retained jurisdiction to enforce the settlement agreement " until performance in full of the terms of the settlement has occurred." (Order Re. Stipulated Dismissal and Retention of Jurisdiction to Enforce Settlement, ECF No. 54.)
On May 4, 2015, Plaintiff's attorney, Mr. Berman, after receiving a cryptic email from Defendants' counsel inquired as to the status of Defendant Chow's efforts to fulfill his payment obligations and secure the agreed upon line of credit. (Berman Decl., Ex. 6.) In a May 7, 2015 email, Defendant's counsel, Mr. Syverson, requested Plaintiff's counsel join him on a conference call with his client in compliance with the " meet and confer" requirements of Local Rule 7-3. (Trope Decl. ¶ 28; Berman Decl. ¶ ¶ 18-19.). A telephonic follow up " meet and confer" was set up for May 8, 2015. (Trope Decl. ¶ 29; Berman Decl. ¶ ¶ 17.) During the call, Defendant Chow expressed his desire to resolve this instant action as well as remaining issues in the family law matter relating to the distribution of the marital estate. (Trope Decl. ¶ 31; Berman Decl. ¶ 21.)
On May 11, 2015, Plaintiff provided Defendants with a settlement proposal for all issues outstanding in both this action and the family law matter. (Trope Decl. ¶ 31; Berman Decl. ¶ 21.) On May 15, 2015, Mr. Syverson emailed Mr. Trope, informing him that the settlement proposal was rejected. (Trope Decl. ¶ 32.)
The Court has not been provided with Plaintiff's settlement proposal or the final proposed settlement sum that Plaintiff would accept from Defendant Chow to settle the instant civil case and the family law case pending in Los Angeles Superior Court. ( See Am. Reply 4.)
The Court notes that Plaintiff included several emails in her motion filing, but not this one.
By May 21, 2015, Defendant Chow took on a direct role interacting with Plaintiff's attorneys in attempting to reach a settlement and to avoid incurring additional fees. (Chow Decl. ¶ 6.) Seeking to complete financing based on the equity of the house, Defendant alleges he contacted a lender and sent Plaintiff's attorneys a copy of a screen shot, which he received from the lender, outlining the terms of a refinancing that the lender believed appropriate. (Chow Decl. ¶ 6.) The screenshot showed that the refinancing would pay off the existing mortgage, incur substantial origination costs, and result in a payout that would enable Defendant Chow to pay off the settlement in this underlying action. (Chow Decl. ¶ 6.) Additionally, $141,238 in other personal debt would be rolled into the new mortgage. (Chow Decl. ¶ 6.) On June 1, 2015, Plaintiff rejected Defendant's May 21, 2015 refinancing plan proposal. (Chow Decl. ¶ 6; Ex. A, ECF No. 60-1.)
Plaintiff contends that the proposal provided Defendant Chow " with a disproportionate share of the proceeds for his own personal use, by stripping out much of the equity from the family principal residence." (Am. Reply 5.) To date, no mutually satisfying arrangement between the parties could be reached. (Chow Decl. ¶ 6.) On June 24, 2015, Plaintiff filed the instant Motion to enforce settlement against Defendants. Plaintiff maintains that Defendant Chow made four different payment proposals between March 16, 2015 and April 16, 2015, and that she, by and through counsel, agreed in principal or explicitly agreed to these four payment proposals but that Defendant Chow never followed through on any of his own payment proposals. (Am. Reply 4.) Specifically, Plaintiff claims that Defendant Chow's May 21, 2015 and July 9, 2015 proposals involve issues which were never part of this instant action and Settlement Agreement and should be kept distinct and separate from final resolution of this action pending in this Court. (Am. Reply 4.) In his Opposition, Defendant Chow maintains that Plaintiff has frustrated his efforts to seek financing and extract the necessary amount from the equity of the family home. (Opp'n 1.)
The Court presumes that Plaintiff is referring to Defendant's proposals of financing terms received by lenders from HSBC and Wells Fargo on July 7, 2015. ( Compare Am. Reply 5 with Opp'n ¶ 9.)
II. DISCUSSION
A. Legal Standard for Motion to Enforce Settlement
a. Subject Matter Jurisdiction
" It is well settled that a district court has the equitable power to enforce summarily an agreement to settle a case pending before it." Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987); accord In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994). In instances of a dismissed suit, " [e]nforcement of [a] settlement agreement, however . . . is more than just a continuation or renewal of the dismissed suit, and hence requires its own basis for jurisdiction." Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 378, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). By incorporating terms " such as a provision 'retaining jurisdiction' over the settlement agreement" in the order of dismissal, " ancillary jurisdiction to enforce the agreement would therefore exist." Id. at 381.
Here, at the time of dismissal the Court specifically " retain[ed] jurisdiction in this matter to enforce the terms of the Settlement Agreement until performance in full of the Settlement Agreement has occurred." (Order Re: Stipulated Dismissal and Retention of Jurisdiction to Enforce Settlement Agreement, ECF No. 54) A breach of the Settlement Agreement would be a violation of the court's order, thereby creating ancillary jurisdiction to enforce the agreement. See Kokkonen, 511 U.S. 375, at 381, 114 S.Ct. 1673, 128 L.Ed.2d 391. Accordingly, the Court has proper jurisdiction.
b. Settlement Agreement
California has a strong policy in favor of enforcing settlement agreements. Osumi v. Sutton, 151 Cal.App.4th 1355, 1357, 60 Cal.Rptr.3d 693 (2007). To that end, the inherent authority of district courts to enforce valid settlement agreements in pending actions has long been recognized. See MetroNet Servs. Corp. v. U.S. West Comms., 329 F.3d 986, 1013-14 (9th Cir. 2003) (cert. granted and judgment vacated on other grounds by Qwest Corp. v. MetroNet Servs. Corp., 540 U.S. 1147, 124 S.Ct. 1144, 157 L.Ed.2d 1040 (2004); see also In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994). It is well established that when the parties execute a complete, written mediated agreement, it is enforceable in the same manner as any other written contract, and courts may admit all relevant evidence, as they would in any other contract enforcement proceeding. See also C.D. Cal. General Order No. 11-10. Consequently, the fact that a more formal agreement may be contemplated does not alter the validity of an agreement whose terms meet the requisite definiteness. Blix Street Records, Inc. v. Cassidy, 191 Cal.App.4th 39, 48-49, 119 Cal.Rptr.3d 574 (2010).
A settlement agreement must meet two general requirements to be enforceable. First, it must be a complete agreement. Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir.1994). Second, the parties must have either agreed to its terms, or authorized their respective counsel to effectuate settlement. Harrop v. W. Airlines, Inc., 550 F.2d 1143, 1144-45 (9th Cir.1977). As long as a complete agreement or " meeting of the minds" has been reached as to the essential terms of the settlement, it is enforceable. Cf. Callie v. Near, 829 F.2d 888, 890 (9th Cir.1987) (" [T]he district court may enforce only complete settlement agreements."). To that end, California law permits parties to bind themselves to a contract even if they anticipate that certain aspects of the deal be reduced to a further writing thereafter. Facebook, Inc. v. Pac. Nw. Software, Inc., 640 F.3d 1034, 1038 (9th Cir. 2011).
In California, parties " seek to enforce a settlement agreement by . . . prosecuting an action for breach of contract." Harris v. Rudin, Richman & Appel, 74 Cal.App.4th 299, 306, 87 Cal.Rptr.2d 822 (1999). If a contract is validly formed, " a breach [is] defined as an unjustified or unexcused failure to perform all or any part of what is promised in a contract." Sackett v. Spindler, 248 Cal.App.2d 220, 227, 56 Cal.Rptr. 435 (1967). As such, every instance of noncompliance with a contract's terms constitutes a breach. See Superior Motels, Inc. v. Rinn Motor Hotels, Inc., 195 Cal.App.3d 1032, 1051, 241 Cal.Rptr. 487 (1987). To state a cause of action for breach of a settlement agreement, a party must plead: (1) the existence of the contract; (2) performance by the alleging party or excuse for nonperformance; (3) breach by the opposing party; and (4) damages. First Comm'n Mortg. Co. v. Reece, 89 Cal.App.4th 731, 745, 108 Cal.Rptr.2d 23 (2001).
B. Analysis
a. Existence of a Contract
The facts encountered by the Ninth Circuit in Facebook are particularly instructive here. There, the parties negotiated and signed a handwritten settlement agreement, which specified that the deal reached was both binding and subject to enforcement. When the settlement fell apart during negotiations over the form of the final agreement, Facebook filed a motion to enforce. The district court enforced the settlement and that decision was upheld on appeal. As the Ninth Circuit noted, as long as the terms a settlement agreement are sufficiently definite for a court to determine the parameters of the agreement, to determine whether a breach has occurred and to order remedies as a result of that breach, the agreement is binding, even if the parties " understood that some material aspects of the deal would be papered later." Id. at 1038.
In the instant action, as in Facebook, the parties reached an agreement that was sufficiently definite to enable a court to give it meaning and contained the essential terms of their settlement, which the parties intended to be binding, even if some " form and documentation" were to be determined later. Id. Indeed, neither Defendants nor Plaintiff contest that a valid settlement was reached as to the settlement of the divorce proceedings, and that the parties knowingly, voluntarily and willingly executed the mediated settlement agreement. The Settlement Agreement is signed by the parties, their counsel as well as the mediator, and thus is complete and authorized. ( See Settlement Agreement 2.) Despite this, Plaintiff alleges that an " impasse had occurred so far as creating a formal settlement agreement" with respect to financing the Settlement Sum. (Trope Decl. ¶ 15.)
b. Performance of the Contract
On March 21, 2015, Plaintiff agreed to dismiss to the entire action with prejudice, provided that Defendant Chow tendered the Settlement Sum of $53,888.18 in exchange as called for in the March 16, 2015 Settlement Agreement. Here, it is undisputed that Plaintiff performed her part of the agreement.
c. Breach of the Contract
According to Plaintiff, Defendant Chow " has neither tendered the entire Settlement Sum nor has he tendered any portion thereof as required by the Settlement Agreement, " and further Plaintiff has not been contacted by any lender concerning her consent to the home equity line. ( See Mot. 14-15.) Plaintiff contends that Defendant Chow has not been fulfilling his obligations and thus breached the Settlement Agreement. Defendant maintains that he made a series of payment proposals, but Plaintiff frustrated his attempts to create a payment protocol. However, more than four months have passed since the parties signed the Settlement Agreement. Plaintiff has made numerous efforts to accommodate and facilitate Defendant Chow's payment of the Settlement Sum, and Defendant so far has not made any payments. ( See generally Berman Decl., Trope Decl.) Accordingly, the Court finds that Defendant Chow has breached the Settlement Agreement. However, as Defendant Mellowtek was not a party to the March 16, 2015 Settlement Agreement, the motion is DENIED with respect to Defendant Mellowtek.
d. Damages
" A district court has the power to award damages against a party for not complying with a settlement agreement, including awarding attorneys' fees . . . [and] enjoining particular conduct." Family Mortg. Corp. No. 15 v. Greiner, No. CV 03-01380, 2006 WL 1473043, at *1 (N.D. Cal. May 26, 2006) (citing TNT Mktg., Inc. v. Agresti, 796 F.2d 276, 278 (9th Cir. 1986)); Keeling v. Sheet Metal Workers Int'l Ass'n., 937 F.2d 408, 410 (9th Cir. 1991) (when subject matter jurisdiction exists, " district courts retain inherent power to enforce settlement agreements, including award of specific performance or damages upon breach."). Here, Plaintiff has not alleged any additional monetary damages, but requested specific performance and that the Court enforce the Settlement Agreement executed by the parties on March 16, 2015, and enter judgment against Defendants in the amount of $53,888.18. The Court agrees that a judgment in the amount of $53.888.18 is appropriate in this case and GRANTS Plaintiff's Motion as to Defendant Chow.
Plaintiff's Proposed Order also asks for attorney's fees. However, the Motion itself does not request attorney's fees or provide authority addressing whether they are warranted when enforcing a settlement agreement, so the Court does not award attorney's fees here.
III. RULING
For the reasons stated above, the Court GRANTS Plaintiff's Motion to Enforce Settlement with respect to Defendant Chow and DENIES Plaintiff's Motion with respect to Defendant Mellowtek. Judgment will issue separately.
IT IS SO ORDERED.
PROCEEDINGS (in chambers): JUDGMENT ON PLAINTIFF'S MOTION TO ENFORCE SETTLEMENT AGREEMENT [Docket No. 55]
This matter came before the Court on Plaintiff Terry Kung's Motion to Enforce Settlement Agreement And For Order Re: Entry of Judgment (" Motion"), filed on June 24, 2015. The Court issued an Order granting judgment in favor of Plaintiff. In view of the Court's order, and good cause having been shown, it is hereby ORDERED and ADJUDGED that judgment is entered in favor of Plaintiff Terry Kung and against Defendant Wyndham W. Chow in the amount of Fifty Three Thousand, Eight Hundred Eighty-Eight Dollars & 18/100 ($53,888.18).
IT IS SO ADJUDGED.