Ahern v. Central Pacific Freight Lines, s. 86-4293

• Decision Date: 06 May 1988
• Docket Number: 86-3567 and 86-3667,Nos. 86-4293,s. 86-4293
• Citation: 846 F.2d 47
• Parties: Robert E. AHERN, et al., Plaintiffs-Appellees, v. CENTRAL PACIFIC FREIGHT LINES, Plaintiff-Appellant, v. Roy GAUSSOIN, et al., Defendants-Appellees. CENTRAL PACIFIC FREIGHT LINES, Plaintiff-Appellant, v. Touche ROSS; Nicholas K. Fisher, Defendants-Appellees. Robert E. AHERN; John M. Barta; Robert L. Barta; Richard M. Barta; and Robert R. Barta, Plaintiffs-Appellees, v. CENTRAL PACIFIC FREIGHT LINES, Plaintiff-Appellant, v. Roy GAUSSOIN, et al., Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 47

846 F.2d 47

Robert E. AHERN, et al., Plaintiffs-Appellees, v. CENTRAL PACIFIC FREIGHT LINES, Plaintiff-Appellant, v. Roy GAUSSOIN, et al., Defendants-Appellees.

CENTRAL PACIFIC FREIGHT LINES, Plaintiff-Appellant, v. Touche ROSS; Nicholas K. Fisher, Defendants-Appellees.

Robert E. AHERN; John M. Barta; Robert L. Barta; Richard

M. Barta; and Robert R. Barta, Plaintiffs-Appellees, v. CENTRAL PACIFIC FREIGHT LINES, Plaintiff-Appellant, v. Roy GAUSSOIN, et al., Defendants.

Nos. 86-4293, 86-3567 and 86-3667.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 2, 1987.

Decided May 6, 1988.

Henry Kane, Beaverton, Or., for plaintiff-appellant Central Pacific Freight Lines.

Bruce M. Hall, Portland, Or., for plaintiffs-appellees Robert E. Ahern, et al.

James H. Clarke, Portland, Or., for defendants-appellees Roy Gaussoin, et al.

Appeal from the United States District Court for the District of Oregon.

Before ANDERSON, FARRIS and BRUNETTI, Circuit Judges.

BRUNETTI, Circuit Judge:

These are consolidated appeals by Central Pacific Freight Lines from orders in securities cases brought by 64 owners of subordinated notes issued by Tradex, Inc. The 64 holders of the subordinated variable rate notes brought actions in the United States District Court for the District of Oregon alleging securities and RICO violations under federal and state law and common law claims.

Central Pacific Freight Lines was a trucking business solely owned by Diana Schlegel. On May 17, 1985, a global settlement was reached. Chief Judge Owen Panner testified and District Judge Edward Leavy found that Schlegel assented and agreed to the settlement. In that settlement, defendants paid $2.7 million which was 101% of the face amount of the notes. Sixty-three plaintiffs executed general releases and were paid their proportional shares of the settlement fund. On July 19, 1985 the action was dismissed.

Schlegel, however, did not perform the settlement. She instead filed a series of post-judgment motions in the name of Central Pacific Freight Lines demanding that the judgment be set aside. Schlegel contended that (1) the note was not hers, but belonged to the corporation which had filed Chapter 11 bankruptcy proceedings in December, 1984; (2) she was not authorized by the bankruptcy court or by the creditors to settle the claim; and (3) her former counsel did not have authorization to settle.

The district court held an extensive evidentiary hearing on the Schlegel motion, hearing testimony and receiving in evidence written exhibits. Based on that record, the court denied the motion to set aside judgment of dismissal.

This court must affirm the district court's denial of the motion to set aside judgment unless the district court abused its discretion in ruling that sufficient grounds for setting aside the judgment were not shown. Rodriguez v. Southern Pacific Transp. Co., 587 F.2d 980, 981 (9th Cir.1978). The district court's finding that Schlegel assented to the settlement and intended to be bound by it must be affirmed unless it is clearly erroneous. See Worthy v. McKesson, 756 F.2d 1370, 1372 (8th Cir.1985).

The Ninth Circuit is firmly "committed to the rule that the law favors and encourages compromise settlements." United States v. McInnes, 556 F.2d 436, 441 (9th Cir.1977). "[T]here is an overriding public interest in settling and quieting litigation." Id. (citations omitted). "It is well recognized that settlement agreements are judicially favored as a matter of sound public policy. Settlement agreements conserve judicial time and limit expensive litigation." Speed Shore Corp. v. Denda, 605 F.2d 469, 473 (9th Cir.1979).

"Assent to the terms of a settlement agreement can be implied from the circumstances, and conduct inconsistent with a refusal of the terms raises a presumption of assent upon which others may rely." Wong v. Bailey, 752 F.2d 619, 621 (11th Cir.1985).

On May 16 and 17, 1985 Judge Panner conducted the settlement conference. Schlegel was present at the plaintiffs' meeting convened on the afternoon of May 17. Soon after the litigation began the plaintiffs formed a steering committee consisting of five persons, one of which was Schlegel. The purpose of the steering committee was to keep the plaintiffs apprised of the course of the litigation and, in Schlegel's words, to serve as "liaison" between the plaintiffs and their attorney. The group voted to negotiate as a single entity and to settle their claims for the face amount of the notes they held plus interest and attorney's fees. Judge Panner addressed the group and explained that a settlement would be dispositive of all the plaintiffs' claims. When Judge Panner left the room, the steering committee offered a resolution that plaintiffs settle their claims for approximately $2.5 million. A call for votes yielded a show of three-fourths of the plaintiffs present voting in favor. Evidence showed that Schlegel raised her hand with the others, though Schlegel denies doing so. Schlegel did not, by word or gesture, express opposition to...