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Wallis v. Centennial Insurance Co.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA


June 24, 2010

DALE M. WALLIS, D.V.M., JAMES L. WALLIS, AND HYGIEIA BIOLOGICAL LABORATORIES, INC., A CALIFORNIA CORPORATION, PLAINTIFFS,
v.
CENTENNIAL INSURANCE COMPANY, INC., A NEW YORK CORPORATION, ATLANTIC MUTUAL INSURANCE CO., INC., A NEW YORK CORPORATION, DEFENDANTS.

ORDER RE: MOTION TO ENFORCE SETTLEMENT AGREEMENT

AND RELATED COUNTER-CLAIMS AND THIRD-PARTY COMPLAINT.

Plaintiffs Dale M. Wallis ("Dr. Wallis"), James L. Wallis ("Mr. Wallis"), and Hygieia Biological Laboratories, Inc. ("Hygieia") brought this action against defendants Centennial Insurance Company Inc. and Atlantic Mutual Insurance Co. Inc. (collectively referred to as "Centennial") alleging breach of insurance contract, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty relating to plaintiffs' veterinarian professional liability policy ("Policy").

All proceedings unrelated to the Cumis*fn1 fee dispute have been stayed since the court issued its December 9, 2009 Order granting plaintiff's motion for a stay. (Docket No. 74.) On July 20, 2009, the parties signed an untitled, handprinted document which purported to set forth the terms of a settlement but contained the provision that "this release will be reduced to a formal release to be executed by all parties." The document went on to state, however, that "this agreement is binding upon all signators, whether or not the parties execute a formal agreement."

On January 20, 2010, the court denied a motion by plaintiffs to enforce the terms of the July 20, 2009 handwritten document, as the parties were working on submitting a final global release. (Docket No. 87.) Since the court issued its January 20, 2010 Order, the parties have tried and failed to negotiate a formal settlement and stipulation to dismiss the pleadings.

Centennial now moves the court for an order enforcing the handwritten document and dismissing this action in its entirety.*fn2 (Docket No. 93.)

"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). To be enforceable, a settlement must meet two requirements. First, it must be a completed agreement. Callie, 829 F.2d at 890-91. Second, both parties must have either agreed to the terms of the settlement or authorized their respective counsel to settle the dispute. Harrop v. Western Airlines, Inc., 550 F.2d 1143, 1144-45 (9th Cir. 1977). The July 20, 2009 document meets neither requirement.

First, the court cannot conclude with any degree of certainty that the handwritten July 20, 2009 document was intended to be a completed agreement. The parties clearly anticipated that it would be reduced to a more formal agreement at a later date. It could thus be interpreted as more of an agreement to agree, and the language to the effect that it is binding on all parties could be construed to mean that the agreement to agree was binding on all parties. Second, the parties now dispute what the terms of the agreement were to be. Specifically, they do not agree whether the release was intended to include those claims in this action that the court has sent to arbitration.

This court was neither a party to the so-called settlement agreement nor did this court approve it. The whole concept of a settlement is that it is a voluntary agreement between the parties to resolve a lawsuit on mutually acceptable terms. That concept is defeated when the court imposes terms on one of the parties which that party did not intend to accept. Here, it appears that the parties never had a meeting of the minds. If they cannot agree on what their purported settlement covered then they do not have a settlement agreement.

IT IS THEREFORE ORDERED that Centennial's motion to enforce the settlement agreement be, and the same hereby is, DENIED.


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