Dierickx v. Allstate Ins. Co., 92-55723
| Citation | 15 F.3d 1084 |
| Decision Date | 19 January 1994 |
| Docket Number | No. 92-55723,92-55723 |
| Parties | NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. Lucien E. DIERICKX, Plaintiff-Appellant v. ALLSTATE INS. CO. Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Before: FLETCHER and D.W. NELSON, Circuit Judges, and WILL, * District Judge.
Lucien E. Dierickx appeals the district court judgment compelling enforcement of a settlement agreement entered into between Dierickx and Allstate, and denying Dierickx's motion for leave to amend to name additional defendants. Allstate seeks sanctions against Dierickx for bringing a frivolous appeal and for misrepresenting the factual record in materials submitted to this court. We affirm the district court's decision enforcing the settlement, but find sanctions against Dierickx inappropriate.
This action arose out of Allstate's alleged failure to fulfill its obligations under the terms of a landlord's policy covering rental property owned by Dierickx. Dierickx had purchased the property, 2230 Glen Street in Riverside, CA (the "Glen Street property") at a foreclosure sale in 1985. The family against whom the property was foreclosed, the Cordovas, remained on the premises until 1990 as tenants of Dierickx. Dierickx first obtained an Allstate policy for the property in January 1990. In March 1990, Dierickx became involved in a title dispute with the Cordovas. Dierickx defended himself with the aid of his own attorney, ultimately prevailing in the suit in December 1990. When the Cordova family moved out in August 1990, they allegedly left the property with considerable damage, creating additional expenses for Dierickx.
Dierickx sought reimbursement from Allstate for his expenses, but Allstate refused payment, stating that Dierickx's landlord policy did not provide the appropriate coverage. Dierickx then filed suit against Allstate in state court on August 14, 1991, seeking damages for breach of contract, fraud, tortious breach of the covenant of good faith and fair dealing, and declaratory relief. Allstate timely removed the action on grounds of diversity to federal court in the Central District of California.
At the early meeting of counsel, held on November 7, 1991, lawyers for the two parties began to discuss settlement. Dierickx's attorney at the time, David Ackerman, suggested a settlement of approximately $10,000. On November 18, Ackerman informed Allstate that he was no longer authorized to conduct settlement negotiations and that all future negotiations should be conducted with Dierickx in person. On November 19, Dierickx told Allstate's counsel that he would not settle for $10,000 but would be willing to settle for $42,000. The parties subsequently disputed whether the $42,000 figure was to be in exchange for a release of all claims against Allstate or only for release of the contract portion of his claims.
On November 26, Dierickx executed and served a substitution of attorney, substituting himself, in pro per, for Ackerman. On December 5, counsel for Allstate asked Dierickx to revive his November 19 offer, and Dierickx agreed on the condition that the dollar amount be increased to cover the fees of his new lawyer, Arthur Y. Baker, in the amount of $1,530. Dierickx did not state that Baker was representing him in negotiations or that Allstate should direct its settlement offers to Baker. 1 On December 10, Dierickx reached an agreement on the phone with counsel for Allstate. Later the same day, Allstate's counsel sent a letter by fax setting forth terms of a broad release of liability in exchange for $44,530. The terms included relief from liability for "all claims" raised in the pending suit, "all claims" arising from losses sustained at the Glen Street property, and "any claims" arising out of Dierickx's claim that Allstate should indemnify him for defending the 1990 action brought by the Cordovas. Supplemental Excerpt of Record (SER) at 1.
Later that afternoon, Dierickx consulted with Baker. A central topic of discussion was the $1,000 increase in the settlement offer--the settlement figure in Allstate's fax was $44,530 rather than the $43,530 agreed to over the phone. Both Dierickx and Baker concede that Baker at that time expressly advised Dierickx that the $1,000 might have represented new consideration "because they are going to dispose of everything, including bad faith," thus explicitly bringing to Dierickx's attention the broad scope of the release. Excerpt of Record (ER) at 8.
Immediately after he had discussed the matter with Baker, though apparently on his own initiative, Dierickx sent the following reply fax to Allstate:
This is to inform you that the Undersigned hereby accepts to settle as per terms as written and received in today's facsimile from your office. We now have a full agreement; I trust you will faithfully transcribe said terms in the necessary documents to carry this agreement to completion.
CONGRATULATIONS! You have singlehandedly saved a bundle for your client. I guess Allstate will never know how lucky it was to be represented by you. Wisdom is a precious gift and you got it. Again, congratulations and have a merry Christmas.
SER at 3. The following day, Allstate, apparently realizing that it had made a typographical error in its fax of December 10 (inadvertently agreeing to settle for $44,530 instead of $43,530), contacted Dierickx once more. Allstate counsel January M. Chaix spoke with Dierickx on the phone, and Allstate employee Jonathan M. Drucker sent a fax confirming Allstate's understanding that the figure should be reduced by $1,000. Dierickx subsequently informed Allstate that the December 11 fax sent by Drucker was a repudiation of the agreement. On December 13, when Allstate again contacted Dierickx, Dierickx directed Allstate to talk to Baker, who was then out of town. After Baker returned, he advised Allstate on December 18 that the settlement was void because no meeting of the minds had taken place--he argued that Dierickx had never intended to agree to a general release.
On December 30, 1991, roughly three weeks after the exchange of faxes, Baker served a substitution of attorney form on counsel for Allstate. The substitution, purportedly signed on December 6, replaced plaintiff with Baker as attorney of record. On January 3, in the course of his review of records that had been produced by Allstate, Baker discovered the existence of a second Allstate "homeowner's" policy covering the Glen Street property. Although this policy listed the Cordovas as insureds, Dierickx had been paying for it (from the time he purchased the property in 1985) out of an impound account, per his agreement with the mortgage company that was the first trust deed holder for the Glen Street property. Dierickx concedes that he was aware of this policy all along but contends that, prior to Baker's examination of the policy on January 3, he had assumed it merely covered the lender's interest. Neither party has discussed how this policy might have affected Dierickx's rights or how it would be affected by the settlement.
On February 25, 1992, Dierickx filed his motion to amend his complaint to add as defendants the Cordovas (as the insureds of the second policy), and the two Allstate agents in charge of the two policies. Two weeks later, Allstate filed its motion to compel enforcement of the settlement agreement. On April 13, a hearing was held in which the district court denied Dierickx's motion, the judge suggesting at one point that he saw it as a last minute ploy to undermine jurisdiction, and, at another, that it was simply too late to consider such a motion whatever its merits might be. The district court granted Allstate's motion to enforce the settlement agreement, stating "If that's not a done deal, I never saw one." ER at 20. Allstate then prepared a draft order, a copy of which it provided to Dierickx on April 17. The court order disposing of the action was signed by the district court on April 23 and entered on April 27. Dierickx timely filed his appeal, and Allstate subsequently moved for sanctions.
This appeal raises the following issues: 1) whether the district court erred in concluding that the parties reached a complete settlement agreement; 2) whether the district court abused its discretion in ordering enforcement of the settlement agreement, and in denying Dierickx's motion for leave to amend his complaint to name additional parties; 3) whether the district court erred in adopting the proposed order prepared by Allstate; and 4) whether sanctions against Dierickx and his counsel are appropriate under either Fed.R.App.P. 38 or 28 U.S.C. Sec. 1927.
This court reviews for clear error the district court's finding that the parties reached agreement on settlement terms. See Ahern v. Central Pacific Freight Lines, 846 F.2d 47, 48 (9th Cir.1988) (); see also Ah Moo v. A.G. Becker Paribas, Inc., 857 F.2d 615, 621 (9th Cir.1988) (); Collins v. Thompson, 679 F.2d 168, 170 (9th Cir.1982) (same). The enforcement of settlement agreements, moreover, is favored in the law. Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir.1989).
This court relies on basic contract principles in interpreting a settlement agreement. Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir.19...
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