Opinion
No. 1:18-cv-01603-JMS-DML
08-13-2019
ERIC B. SCHNURER, et al. Plaintiffs, v. DAVID F. LYNN, et al. Defendants.
ORDER
Pending before the Court is Plaintiffs' Motion to Enforce Settlement Agreement, and for Entry of Final Judgment and Other Relief. [Filing No. 80.] The parties to this ERISA matter reached a settlement agreement following a settlement conference with the Magistrate Judge. [See Filing No. 73; Filing No. 78; Filing No. 80-1; Filing No. 81.] That agreement allows for Plaintiffs to file an executed agreed judgment in the event Defendants default on their obligations set forth in an accompanying promissory note. Defendants defaulted, and Plaintiffs filed the agreed judgment. In addition, Plaintiffs filed their Motion to Enforce and a new proposed final judgment. Despite the title of their Motion, several of Plaintiffs' requests seek not to enforce the settlement agreement, but to either amend or litigate it. For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Plaintiffs' Motion.
I.
BACKGROUND
Eric Schnurer brought this lawsuit against Karen Kinder, David Lynn, and Sequoia Consulting Group, Inc. ("Sequoia") in February 2018 in the Eastern District of Pennsylvania. [Filing No. 1.] At the parties' request, the matter was transferred to this Court on May 15, 2018. [Filing No. 13.] Mr. Schnurer filed an Amended Complaint on July 24, 2018, joining as plaintiffs Daniela Sharfstein, Jennifer Wall, and Stephanie Walsh. [Filing No. 40.] The Magistrate Judge held a successful settlement conference with the parties on November 30, 2018 and directed Plaintiffs to "file a motion to dismiss or close this cause and submit an order for the Court's signature" within thirty days. [Filing No. 73.] The parties received numerous extensions to comply with this directive before Plaintiffs finally filed the instant Motion to Enforce on May 22, 2019. [Filing No. 80.]
Plaintiffs filed several documents in support of their Motion. The first is the settlement agreement itself. That document provides in relevant part:
Image materials not available for display. [Filing No. 81-1 at 3-6.] The agreement also contains mutual releases which are void as to the nonbreaching party in event of a breach. [Filing No. 81-1 at 6-8.]
Pursuant to paragraph 3 of the settlement agreement, Plaintiffs filed an executed Agreed Judgment on May 22, 2019. [Filing No. 80-4.] That document provides in part as follows:
Image materials not available for display. [Filing No. 80-4 at 2.] In addition to the settlement agreement and Agreed Judgment, plaintiffs filed the executed promissory note, [Filing No. 80-3], and a new proposed entry and final judgment, [Filing No. 80-5].
Plaintiffs' Motion to Enforce is now fully briefed and ripe for consideration.
II.
DISCUSSION
The parties all agree that Sequoia and Mr. Lynn have not complied with their payment obligations under the promissory note and settlement agreement. They differ, however, on the actions the Court should take in response.
The Court would have been better served had Plaintiffs supported their assertions of nonpayment with documents of evidentiary value, such as affidavits or sworn declarations. However, because Defendants concede that they are in default, the Court finds it unnecessary to prolong matters by requiring Plaintiffs to file new sworn submissions.
Plaintiffs initially argue that the Court should enter judgment, jointly and severally, in favor of Mr. Schnurer and against each defendant in the amount of $1,100,000; should not enter the second paragraph of the agreed judgment; should order an accounting of each plaintiff's 401(k) account; should release Mr. Schnurer "from any obligation to pay any amounts from the profits or revenues of Public Works to any Defendant"; should release Mr. Schnurer "from any non-compete obligation to any Defendant"; and should order the payment of attorneys fees. [Filing No. 80 at 5-6.]
In response, Defendants argue that Ms. Kinder undertook no obligations under the settlement agreement and that there is no basis for a judgment against her. [Filing No. 87 at 1-2.] Otherwise, Defendants provide various explanations for why they have not been able to make the required payments and 401(k) accounting. [Filing No. 87 at 2-3.] Defendants conclude by asking for a sixty-day stay of this matter to allow time to fulfill their payment obligations. [Filing No. 87 at 3.]
In reply, Plaintiffs do not mention Ms. Kinder, effectively conceding that they are not entitled to judgment against her. [Filing No. 88.] They reiterate, however, that they are entitled to the monetary judgment and 401(k) accounting. [Filing No. 88 at 2-3.]
"A settlement agreement . . . is enforced just like any other contract," Lynch, Inc. v. SamataMason, Inc., 279 F.3d 487, 489 (7th Cir. 2002), and thus the Court applies state contract law in resolving "[i]ssues regarding the formation, construction, and enforcement" of such an agreement, Sims-Madison v. Inland Paperboard & Packaging, Inc., 379 F.3d 445, 448 (7th Cir. 2004). The Court retains discretion in enforcing and resolving disputes over a settlement agreement. Id.
Here, Plaintiffs claim wide-ranging relief as a result of Sequoia's and Mr. Lynn's admitted breaches. Most of what they request is easily resolved. The settlement agreement expressly provides for entry of the agreed judgment in Mr. Schnurer's favor in the amount of $1,100,000 against Sequoia and Mr. Lynn, and Defendants have provided no argument for why judgment should not be entered immediately consistent with the settlement agreement. Further, the settlement agreement expressly provided that "[a] full accounting [of the 401(k)] deposits and [p]lan amounts and balances shall be provided by Sequoia to counsel for the Plaintiffs." [Filing No. 81-1 at 6.] Again, Defendants provide no reason why this requirement should not be enforced as against Sequoia.
But elsewhere Plaintiffs overreach and request relief that could not reasonably be considered an effort to "enforce" the settlement agreement. First, Ms. Kinder was not obligated to perform any obligations under the settlement agreement, so there is no basis for a monetary or injunctive judgment against her. Plaintiffs appear to recognize as much by omitting any discussion of her from their reply brief.
Second, Mr. Schnurer asks for relief "from any obligation to pay any amounts from the profits or revenues of Public Works to any Defendant" and "from any non-compete obligation to any Defendant." Perhaps the breaches by Sequoia or Mr. Lynn may entitle Mr. Schnurer to some additional relief beyond enforcement of their obligations under the settlement agreement, but he has not explained why this may be so. Rather, it appears that Mr. Schnurer may be anticipating that the parties may have future disputes over the settlement agreement. The time and place to resolve such disputes is in a separate lawsuit. Cf., e.g., Harrington v. Berryhill, 906 F.3d 561, 568-69 (7th Cir. 2018) (declining to exercise ancillary jurisdiction to wade into complex Administrative Procedure Act issues on appeal of social security disability fee award); Lynch, Inc., 279 F.3d at 489-90 (noting that after dismissal of lawsuit based upon settlement agreement "the court had no jurisdiction to do anything further" such that any further efforts to enforce settlement agreement would require separate lawsuit "under the law of contracts"). In the absence of any reason why such relief is appropriate or necessary, the Court will not essentially edit or add to the settlement agreement as part of this case.
Third, Plaintiffs request as follows: "The releases of the Defendants by the Plaintiffs set forth in paragraph 8 of the Settlement Agreement should be null and void based on the Defendants' defaults. Similarly, paragraph 2 of the Agreed Judgment should not be entered." [Filing No. 80 at 4.] The first sentence does not require any action on the part of the Court. There is presently no dispute about the settlement agreement and its release provisions, and Defendants have not contested that they have defaulted. Any further disputes over the releases belong in a separate lawsuit if and when they may arise.
As for the request that the Court not enter paragraph 2 of the Agreed Judgment, again Plaintiffs fail to explain why the Court should do any such thing. As written, however, paragraph 2 is internally inconsistent, confusing, and lacking in proper finality. First, it states that the claims against Defendants "are hereby dismissed with prejudice." [Filing No. 80-4 at 2.] But paragraph 1 provides for judgment in Plaintiffs' favor against Sequoia and Mr. Lynn, and that judgment is inconsistent with a dismissal with prejudice. See Philadelphia Indem. Ins. Co. v. Chicago Tr. Co., 2019 WL 3244504, at *1 (7th Cir. 2019) (publication pending) ("[T]he judgment reads: 'Case is dismissed.' This means that Philadelphia loses (contradicting the judge's opinion) . . . ."). The only claims being dismissed are those against Ms. Kinder and the claims of the plaintiffs other than Mr. Schnurer, except as to the 401(k) accounting. Additionally, there is no reason the judgment should specify possible grounds for modification. "Finality is the necessary and sufficient condition" for a judgment, Downey v. State Farm Fire & Cas. Co., 266 F.3d 675, 682 (7th Cir. 2001), and this is not a case where continued judicial oversight would be appropriate or necessary. Therefore, the Court's final judgment will capture the spirit of paragraph 2, which clearly intended to indicate that the litigation is resolved, and remedy the deficiencies identified above. Plaintiffs have provided no explanation for why any other amendments might be appropriate.
Finally, Plaintiffs seek to petition the Court for attorney's fees before judgment is entered. But Rule 58 provides that "[o]rdinarily, the entry of judgment may not be delayed, nor the time for appeal extended, in order to tax costs or award fees." Fed. R. Civ. P. 58; see Pierce v. Visteon Corp., 791 F.3d 782 (7th Cir. 2015) ("The district judge resolved the merits on June 25, 2013, and Fed. R. Civ. P. 58(b)(2) provides that a court 'must promptly enter" a judgment."); Dunn v. Truck World, Inc., 929 F.2d 311 (7th Cir. 1991) ("[T]he merits and awards of fees are always distinct for purposes of finality . . . .") (emphasis in original)). Rather, the Court will enter judgment forthwith, and Plaintiffs may file any motion for attorney's fees pursuant to the schedule set forth in Rule 54(d)(2).
III.
CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiffs' Motion to Enforce. [80] Given Sequoia's and Mr. Lynn's defaults, Mr. Schnurer is entitled to judgment in the amount of $1,100,000 against those Defendants. Plaintiffs are also entitled to an accounting of their 401(k) plans pursuant to the settlement agreement, but they have failed to justify any of the additional relief they request. Furthermore, there is no basis for any judgment against Ms. Kinder, so Plaintiffs' claims against her will be dismissed.
Additionally pending is Plaintiffs' Motion to Seal Exhibit 80-1. [Filing No. 82.] The Magistrate Judge denied the Motion and then stayed her ruling pending a June 12, 2019 status conference. [Filing No. 84.] That status conference has come and gone, and the Court agrees with the Magistrate Judge that there is no basis for maintaining Filing No. 80-1 (the settlement agreement) under seal. The Court therefore DENIES Plaintiffs' Motion to Seal [82] and directs the Clerk to unseal Filing No. 80-1.
Final judgment consistent with this entry shall now issue.
Date: 8/13/2019
/s/_________
Hon. Jane Magnus-Stinson, Chief Judge
United States District Court
Southern District of Indiana Distribution via ECF only to all counsel of record