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McMillion v. Rash Curtis & Associates

United States District Court, N.D. California

April 18, 2017

McMillion et al, Plaintiffs,
v.
Rash Curtis & Associates, Defendant.

          ORDER DENYING MOTION TO ENFORCE SETTLEMENT AGREEMENT DKT. NO. 33

          Yvonne Gonzalez Rogers, United States District Court Judge

         Plaintiffs Sandra McMillion, Jessica Adekoya, and Ignacio Perez bring this case against defendant Rash Curtis & Associates (“Rash Curtis”) as a putative class-action seeking injunctive relief and statutory damages. Plaintiffs allege that Rash Curtis, a debt collection agency, violated the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. ("TCPA"), Fair Debt Collection Practices Act, 15 U.S.C. 1692, et seq. ("FDCPA") and California's Rosenthal Fair Debt Collection Practices Act, Civil Code 1788 et seq. ("Rosenthal Act") by repeatedly calling plaintiffs' cellular phones using an auto-dialer and/or artificial or pre-recorded voice. (Dkt. No. 1 (Class Action Complaint) ¶¶ 1-2, 58-74).

         Defendant has filed this motion to enforce a purported settlement agreement with plaintiffs. (Dkt. No. 33).

         Having carefully considered the papers submitted on this motion, and for the reasons set forth below, the Court Orders as follows: The Court Denies defendant's motion to enforce settlement.[1]

         I. Background

         Between December 12, 2016 and January 26, 2017, counsel for Rash Curtis and counsel for plaintiffs exchanged e-mails discussing a potential settlement agreement. (Dkt. No. 33-1 (Declaration of Mark E. Ellis) at ¶¶ 2-11, Exhibits A - J). After several rounds of back-and-forth negotiation on the settlement amount, plaintiffs' counsel e-mailed defense counsel on January 3, 2017, indicating that “the deal remains $60k with monthly payments. Please confer with your client and let me know if we have a deal.” (Id. at ¶ 11, Exhibit J). Defense counsel responded on January 13: “we have a deal on the 60k with payment. I'll prepare an agreement.” (Id. at ¶ 21, Exhibit K). On January 26, defense counsel e-mailed plaintiffs' counsel the purported settlement agreement, which he referred to as a “draft settlement agreement.” (Id. at ¶¶ 13-14, Exhibits L-M). In this same e-mail, defense counsel asked plaintiffs' counsel to “please let me know if it is approved.” (Id. at ¶ 13, Exhibit L). Plaintiff's counsel subsequently rejected the settlement and proposed a new settlement amount of $375, 000. (Id. at ¶¶ 2-11, Exhibit N).

         II. Analysis

         A. Plaintiffs' Federal Law Claims Under the TCPA and FDCPA

          With respect to plaintiffs' federal law claims, a “district court only has the power to enforce complete settlement agreements.” Callie v. Near, 829 F.2d 888, 891 (9th Cir. 1987) (emphasis in original). A complete settlement agreement requires: (1) “intent of the parties to bind themselves” and (2) “agreement on its material terms.” Id.

         With regard to the first prong, “[w]hether the parties intended only to be bound upon the execution of a written, signed agreement is a factual issue.” Id. at 890-91. It is not appropriate for a district court to determine whether parties intended to be bound to a settlement agreement, at least absent an evidentiary hearing. Id. at 891. Further, defendant's own e-mails suggest that it did not intend to be bound absent a signed, written settlement agreement. (See Ellis Decl. at ¶ 13, Exh. L (“[a]ttached is a draft settlement agreement please let me know if it is approved and I will have it executed.”)).

         With regard to the second prong, a complete settlement agreement requires agreement on material terms. Callie, 829 F.2d at 891. Although materiality is a fact-specific inquiry, federal courts have noted “[t]here is no doubt that release provisions are generally thought to be material terms of any settlement agreement.” Inamed Corp. v. Kuzmak, 275 F.Supp.2d 1100, 1125 (C.D. Cal. 2002), aff'd, 64 F.App'x 241 (Fed. Cir. 2003); Doi v. Halekulani Corp., 276 F.3d 1131, 1138 (9th Cir.2002) (referencing release as among the material terms of a settlement agreement).

         Here, while the emails reflect agreement on the amount to be paid, the record lacks evidence of agreement on at least three material terms. First, the record lacks any showing that the parties negotiated or discussed a provision for mutual release of claims. The nature of the release was particularly important here, as plaintiffs' lawsuit arises from allegations that the defendant improperly called them in an attempt to collect debts they allegedly did not owe. The purported settlement agreement does not appear to release plaintiffs from defendant's debt claims.

         Second, one of defendant's e-mails indicates that it specifically sought a waiver of plaintiffs' rights under California Civil Code Section 1542. (Ellis Decl. at ¶ 1, Exh A) (“RCA requests a release of all known and unknown claims including a Civil Code 1542 waiver.”). Indeed, the draft settlement agreement circulated by the defendant includes such a waiver. (Id. at ¶ 15, Exh M). A Section 1542 waiver is unquestionably material to the purported settlement agreement, especially given the defendant's early insistence on such a waiver. Yet there exists nothing in the record to show that plaintiffs agreed to waive their Section 1542 rights.

         Third, defendant also sought assurance from plaintiffs' counsel that they would not file another similar suit. Again, ...


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