United States District Court, N.D. California
FINAS D. BAREFIELD JR., Plaintiff,
DARDEN RESTAURANTS INC., Defendant.
ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT AND MOTION TO ISSUE SANCTIONS AND AWARD ATTORNEYS' FEES AND COSTS
CHARLES R. BREYER, District Judge.
Before the Court are Defendant Darden Restaurants, Inc.'s (1) Motion to Enforce Settlement Agreement or, in the alternative, Dismiss ("Mot. 1") (dkt. 27) and (2) Motion to Issue Sanctions and Award Attorneys' Fees and Costs ("Mot. 2") (dkt. 28).
As set forth below, the Court GRANTS both Motions.
On August 18, 2014, pro se plaintiff Finas Barefield filed a civil suit against Defendant, alleging discrimination and infliction of emotional distress. See Compl. (dkt. 1). During a mandatory settlement conference on April 10, 2015, Defendant and Barefield agreed to settle the case for $5, 000. Lee Decl. Ex. B (dkt. 27-2) at 3. The parties also agreed that the confidential settlement agreement would include a liquidated damages clause of $1, 000 and stipulation that Barefield would defend and indemnify Defendant against any claims that might be filed by his relatives. Id. Barefield stated in open court that he understood the terms of the settlement and agreed to be bound by them. Id. At the settlement conference on April 10, 2015, Magistrate Judge Maria-Elena James issued an Order stating that the case "settled in full." Civ. Minute Order ("James Order") (dkt. 23). The Order instructed Defendant to prepare settlement documents and transmit them to Barefield for signature. Id. Defendant was to distribute settlement funds within two weeks upon the execution of the settlement documents. Id. After learning that the parties settled, this Court dismissed the case without prejudice on April 13, 2015. Order of Dismissal (dkt. 24).
On May 4, 2015, Defendant e-mailed Barefield a final settlement agreement for his signature. Lee Decl. Ex. D (dkt 27-2). The message stated: "Please sign and pdf or mail [the attached agreement] back to our office. Once we receive, then we can begin processing your check." Id. The attached document contained the agreed-upon terms, including the $5, 000 settlement amount. Id. On May 6, 2015, Barefield e-mailed Defendant his W-9 and a signed copy of an altered version of the settlement agreement that changed the agreed upon $5, 000 amount to $125, 000. Lee Decl. Ex. E (dkt. 27-2). Barefield's message did not call attention to this change. Id. In response, Defendant e-mailed Barefield on May 7, 2015, attaching another copy of the final settlement agreement for signature and informing Barefield that his modification was fraudulent. Lee Decl. Ex. F (dkt. 27-2). Defendant warned that "[if] we do not have your signature on this version by May 15, we will seek court intervention, and bring this fraud to the Court's attention and seek sanctions." Id.
On May 12, 2015, Defendant received a service of process notice that Barefield had filed his modified version of the settlement agreement with a United States Bankruptcy Court in Florida. Lee Decl. Ex. G (dkt. 27-2). Defendant responded by sending Barefield a second e-mail on May 13, 2015. Lee Decl. Ex. H (dkt. 27-2). Defendant's e-mail notified Barefield that "[t]here are no pending Bankruptcy proceedings, and this is further evidence of your fraud...." Id. The message also warned that Barefield could face consequences for his conduct, including sanctions and dismissal. Id.
Defendant was not able to contact Barefield, who did not filed a response in opposition to either motion before the Court, and did not appear at the motion hearing. Barefield last communicated with Defendant in an e-mail to Darden Restaurants, Inc. on May 10, 2015, asking why he has not been paid $125, 000. Lee Supp. Decl. Ex. A (dkt. 30-1).
II. LEGAL STANDARD
A. Motion to Enforce a Settlement
"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); see also In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994). For the Court to enforce a settlement agreement, two requirements must be met. First, the settlement must constitute a complete agreement. Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir. 1994) (citing Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987)). Second, both parties must have agreed to the terms of the settlement or authorized their respective counsel to settle. Harrop v. W. Airlines, Inc., 550 F.2d 1143, 1144-45 (9th Cir. 1977).
A settlement agreement is a contract. United Commercial Ins. Serv., Inc. v. The Paymaster Corp., 962 F.2d 853, 856 (9th Cir. 1992). Therefore, "[t]he construction and enforcement of settlement agreements are governed by principles of local law which apply to interpretation of contracts generally." Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989). Accordingly, the Court applies California contract law.
B. Dismissal for Fraud on the Court
The Court has the inherent power to dismiss an action if a party "has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice." Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983). However, dismissal for fraud on the court is limited to "extreme circumstances" ...