Opinion
Case No. 14-cv-02913-HRL
10-13-2015
SAM SOHN, Plaintiff, v. WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO ENFORCE SETTLEMENT
Re: Dkt. No. 26
Plaintiff Sam Sohn, currently pro se, sues Wells Fargo Bank, National Association for statutory damages under the Telephone Consumer Protection Act and the Rosenthal Fair Debt Collection Practices Act. She alleges Wells Fargo harassed her with hundreds of illegal phone calls based on the mistaken belief that she was delinquent on her mortgage payments. The parties expressly consented to magistrate jurisdiction.
Wells Fargo moves to enforce a settlement agreement. Sohn opposes. The court read the parties' briefs and researched the governing law. The court has also considered the arguments heard on September 15, 2015. The motion to enforce settlement is granted.
Background
The parties participated in private mediation in February of 2015. Sohn presented a signed document titled "Plaintiff's Settlement Demand" at the end of the mediation. Dkt. No. 28 at 2. The demand gave Wells Fargo seven days to respond. Dkt. No. 28-1 at 2. One of Sohn's lawyers asked six days later by email whether Wells Fargo would accept the settlement, and Wells Fargo's lawyer responded, "We have a deal." Dkt. No. 28 at 3; Dkt. No. 28-2 at 2.
Sohn, meanwhile, had received and reviewed the mediation brief her lawyers had prepared. The brief asserted that, per discovered evidence, Sohn was likely entitled to at least $1,800,000 in statutory damages. Dkt. No. 40 at 37. The brief eventually made Sohn feel, retrospectively, that her lawyers had "deceived and misled" her by "conceal[ing]" facts that might have supported a more favorable settlement. Dkt. No. 40 at 2. Sohn refused to memorialize the settlement terms by signing a more formal document. Dkt. No. 26 at 4. Sohn's relationship with her own lawyers deteriorated and they eventually withdrew from the case. Dkt. No. 24.
Wells Fargo discharged the balance of Sohn's mortgage in accord with the settlement demands. Dkt. No. 27 at 1-2. The settlement, if valid, requires Sohn "to waive any and all claims arising from the facts or law in" this case, Dkt. No. 28-1 at 2, but she has not requested dismissal.
Wells Fargo asks the court to enforce the settlement by dismissing this case. Sohn asserts no valid contract waived her right to continue suing Wells Fargo for any additional damages that might be justified by future discovery in this case, Dkt. No. 40 at 2-3, and she raises several supporting arguments: (1) Wells Fargo was performing a unilateral favor when it discharged her mortgage and so Wells Fargo should receive no credit for forgiving that debt, Dkt. No. 40 at 3, 10; (2) she did not agree to the tax-liability and credit-score consequences of her own settlement offer and so there was no true agreement, Dkt. No. 40 at 4; (3) her lawyers conspired with Wells Fargo to obtain her settlement consent through duress and fraud, Dkt. No. 40 at 4-6; (4) Wells Fargo misled and deceived Sohn when it produced relevant call records one week before mediation, Dkt. No. 40 at 5-6; (5) the portion of the settlement that requires Wells Fargo to pay her lawyers' fees is an enforceable and independent contract, Dkt. No. 40 at 9. Sohn also discusses factual allegations that relate to her case in general, but which do not relate to this motion. Dkt. No. 40 at 8-9.
Discussion
Settlement agreements are contracts interpreted under the laws of the forum state. United Commercial Ins. Serv., Inc. v. Paymaster Corp., 962 F.2d 853, 856 (9th Cir. 1992). A court has inherent power to enforce a valid settlement agreement in a case pending before that court. Dacanay v. Mendoza, 573 F.2d 1075, 1078 (9th Cir. 1978).
A valid contract in California has four elements: (1) parties capable of contracting; (2) consent; (3) a lawful object; and (4) a sufficient cause or consideration. Cal. Civ. Code § 1550. Sohn is capable of contracting because she is not a minor and she is of sound mind. Cal. Civ. Code § 1556. A party may unilaterally rescind a contract when consent was obtained through duress or fraud, but only when the duress or fraud was committed or induced by either another contracting party or someone "jointly interested" with another contracting party. Cal. Civ. Code § 1689; Chan v. Lund, 188 Cal. App. 4th 1159, 1174 (2010). Accordingly, duress or fraud inflicted on a party by that party's own lawyer does not justify rescission unless another contracting party either was "jointly interested" with the lawyer or induced the lawyer's bad acts. Cal. Civ. Code § 1689(b)(1); Chan, supra.
Sohn claims she did not agree to the tax-liability and credit-score consequences of her own offer and therefore she reached no true agreement with Wells Fargo. Dkt. No. 40 at 4. But one of the terms in Sohn's settlement offer specifically contemplated credit score consequences: "[Wells Fargo] will agree to request tradeline deletion from all three major credit agencies, on any and all debts that were reported, relating or arising from [Sohn]'s Line of Credit with Wells Fargo." Dkt. No. 28-1 at 2. And Sohn admitted at the hearing that she was the person who raised the possibility of Wells Fargo discharging her mortgage in exchange for settlement of this case. The court finds Sohn consented to her own settlement offer and that, as an adult of sound mind, she was capable of making that offer. The settlement of this case is a lawful object for a contract, and each party received sufficient consideration under the terms of Sohn's offer. Sohn and Wells Fargo therefore formed a valid settlement contract when Wells Fargo timely accepted Sohn's offer by email.
Sohn relies on a letter from Wells Fargo to argue the discharge of her mortgage was a unilateral favor done by Wells Fargo. The letter stated that any debt owed on Sohn's mortgage would be forgiven and that "[t]here [was] no action" required by Sohn before the mortgage would be extinguished. Dkt. No. 40 at 12. Sohn believes this language shows Wells Fargo did not expect any reciprocal performance in return for the discharge of her mortgage. The court disagrees. The letter simply informed Sohn she would soon receive one of the benefits due to her under the parties' settlement. The letter did not relieve Sohn of her own settlement obligations.
Sohn similarly argues that Wells Fargo must pay the fees of Sohn's former lawyers because, even though the settlement is generally invalid, that specific settlement term is an independent and enforceable contract between Wells Fargo and her former lawyers. True, the settlement does oblige Wells Fargo to "separately" pay $45,000 to Sohn's former lawyers, Dkt. No. 28-1 at 2, but that word does not transform the fees-payment term into a separate and independently enforceable contract. Rather, that word helps to clarify that Wells Fargo should pay the fees of Sohn's former lawyers directly to those lawyers. Dkt. No. 28-1 at 2; see Dkt. No. 40 at 73.
The argument that Wells Fargo misled or deceived Sohn has no factual support. Sohn's brief claims it was deceptive when Wells Fargo produced 2,000 pages of relevant call records one week prior to mediation. Dkt. No. 40 at 5. The undersigned asked Sohn at the hearing to clarify how or why this was deceptive, and Sohn answered only that it was. The undersigned also asked Sohn, repeatedly, what she thought Wells Fargo did wrong. Sohn responded only that she believed the production of 2,000 pages one week prior to mediation was a deceptive act.
The court disagrees. The mediation brief prepared by Sohn's lawyers stated that her lawyers reviewed the newly produced records and that those records appeared to support Sohn's claims. Dkt. No. 40 at 36. Sohn's bargaining strength in the mediation was not prejudiced by the production of these records and it does not tend to show that Wells Fargo misled anyone. Sohn's contrary belief is speculative. Sohn, similarly, speculates that Wells Fargo has deceptively failed to produce relevant records that could easily be produced. Dkt. No. 40 at 5. But one of Sohn's former lawyers explained in a letter that further production was not feasible because Sohn has been unable to remember or look up several of her old cell phone numbers, and records related to an unknown phone number cannot feasibly be produced. Dkt. No. 40 at 40-41. The lawyer also explained in detail that further production, even if it were possible, was unlikely to strengthen Sohn's case, because previous discovery had already shown that an unexpectedly high fraction of the calls made by Wells Fargo did not violate the law. Dkt. No. 41-42. The court sees no reason to suspect Wells Fargo of deceptive discovery practices.
Sohn's final argument—that Wells Fargo conspired with her lawyers to obtain her consent to an unfavorable settlement through duress and fraud—also lacks factual support. Sohn's brief cites an email from one of her lawyers as evidence of the conspiracy, but the email simply states that the lawyer does not understand why Sohn had recently accused him of deceiving her. Dkt. No. 40 at 4, 19. Sohn also cites to a transcript from a hearing on May 12, 2015; she stated during the hearing that her own lawyers were "dishonest in" this case. Dkt. No. 40 at 15-16. She believes that her statement should be taken as true because no one objected to the statement during the hearing. Dkt. No. 40 at 2. Sohn also appears to refer to the letter from her attorney that describes the weaknesses in her case as evidence that her lawyers conspired with Wells Fargo. Dkt. No. 40 at 4. Sohn also quotes an email that admits records were produced to facilitate mediation, and she believes this proves Wells Fargo conspired with her lawyers to wrongfully obtain her settlement consent. Dkt. No. 40 at 4-5. And a letter sent by Sohn to her lawyers on April 7, 2015 stated that she experienced duress during the mediation because she believed her case was worth $2,000,000 and she was upset to hear her lawyers say it was actually worth $200,000. Dkt. No. 40 at 47.
Every citation and quotation relied on by Sohn tends to show, if anything, that Wells Fargo and Sohn's then-lawyers used lawful and honest methods to resolve this case through private mediation. The court sees no reason to believe Wells Fargo or Sohn's former lawyers entered any kind of conspiracy. Sohn's former lawyer did nothing improper or collusive when he explained to her, in detail, why her case had become worth $200,000 instead of $2,000,000. Dkt. No. 40 at 39-42. As mentioned, the undersigned repeatedly asked Sohn at the hearing on this motion what Wells Fargo did that seemed wrong to her, and she stated only that the production of documents one week prior to mediation seemed deceptive—it is neither deceptive nor evidence of any kind of conspiracy. The court sees no evidence that Wells Fargo obtained Sohn's settlement consent through fraud or duress. The court also sees no evidence that Wells Fargo induced Sohn's former lawyers to obtain her settlement consent through fraud or duress. It also seems like Sohn's lawyers had a joint interest not with Wells Fargo, but with Sohn—an email Sohn submitted suggests her lawyers expected to receive more money if they earned her a more valuable settlement. Dkt. No. 40 at 19.
Sohn does, at least, argue economic duress came from a source other than Wells Fargo: she claimed during the hearing that her lawyers threatened in the midst of mediation to withdraw from the case and sue her for their fees if she refused to settle. But economic duress inflicted by a party's own lawyer during mediation, absent any reason to believe a contracting party induced the duress or shared an interest with the lawyer, cannot justify contract rescission under California law. Chan, 188 Cal. App. 4th at 1174; see Cal. Civ. Code § 1689(b)(1). Sohn has, at most, attempted to show that her own lawyers inflicted some degree of economic duress on her, but she has given no reason to suspect that Wells Fargo induced duress or shared an interest with her lawyers. She therefore has no valid reason to unilaterally rescind her settlement agreement with Wells Fargo. The court shall enforce it.
The court addresses one final issue. A letter attached to Sohn's brief implies that Wells Fargo has conditioned the further performance of its settlement obligations on the receipt of a signed W9 form from Sohn. Dkt. No. 40 at 48. Wells Fargo admitted during the hearing on this motion that it intends to require a signed W9 form from Sohn before it continues to perform under the settlement. Wells Fargo also admitted the parties did not discuss any such condition before they settled this case. The court finds the settlement agreement includes no such condition.
Conclusion
Sohn's settlement demand became a valid settlement agreement when Wells Fargo accepted it. Sohn has no justification to unilaterally rescind the settlement agreement. Wells Fargo shall, pursuant to the settlement agreement, pay $45,000 to Sohn's lawyers and make its best efforts to secure tradeline deletion for any and all debts "reported, relating or arising from" Sohn's line of credit with Wells Fargo. Wells Fargo shall not require Sohn to submit a signed W9 form before it performs these obligations. Sohn waived any and all claims "arising from the facts or law in" this case when Wells Fargo accepted her settlement demand. The court shall therefore dismiss this case with a subsequent judgment. The court shall retain jurisdiction for three months to enforce the terms of the settlement agreement.
IT IS SO ORDERED. Dated: 10/13/15
/s/_________
HOWARD R. LLOYD
United States Magistrate Judge