Kukla v. National Distillers Products Company

• Decision Date: 02 August 1973
• Docket Number: No. 72-2152.,72-2152.
• Citation: 483 F.2d 619
• Parties: Joseph KUKLA and Donna Kukla, Plaintiffs-Appellees, and Liberty Mutual Insurance Company, Intervenor Plaintiff-Appellant, v. NATIONAL DISTILLERS PRODUCTS COMPANY, Defendant, v. PENN CENTRAL TRANSPORTATION CO., Third-Party Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

483 F.2d 619 (1973)

Joseph KUKLA and Donna Kukla, Plaintiffs-Appellees, and Liberty Mutual Insurance Company, Intervenor Plaintiff-Appellant, v. NATIONAL DISTILLERS PRODUCTS COMPANY, Defendant, v. PENN CENTRAL TRANSPORTATION CO., Third-Party Defendant.

No. 72-2152.

United States Court of Appeals, Sixth Circuit.

Argued April 19, 1973.

Decided August 2, 1973.

Reginald S. Johnson, Detroit, Mich., for Liberty Mutual Ins. Co., intervenor plaintiff-appellant; Johnson, Campbell & Moesta, Detroit, Mich., on brief.

Allan H. Tushman, Detroit, Mich., for plaintiffs-appellees; Levine & Benjamin, Detroit, Mich., on brief.

Before PHILLIPS, Chief Judge, and CELEBREZZE and KENT,^* Circuit Judges.

CELEBREZZE, Circuit Judge.

This is an appeal from the District Court's entry of summary judgment in a diversity suit in which Plaintiffs-Appellees sought to recover for injuries and loss of consortium resulting from an accident which was assertedly caused by the negligence of Defendant, National Distillers. The judgment was entered upon, and incorporated the terms of, a pre-trial settlement which the District Court found to have been agreed to by all of the parties. Intervenor-Appellant, Liberty Mutual, asserts on appeal, as it did before the District Court, that it had never agreed to the terms of the settlement as adopted by the Court.

Plaintiff Kukla was injured in the course of his employment as a warehouseman for Detroit Delivery, Inc., when he was unloading a box car containing cases of whiskey and a row of cases toppled upon him. Kukla filed the present suit against National Distillers claiming that the latter's negligence in loading the box car was the proximate cause of his injuries. As the workmen's compensation insurance carrier for Kukla's employer, Liberty Mutual intervened, seeking indemnification from National Distillers for benefits it had paid to Kukla, and further seeking to redeem any future claims which Kukla might present as a result of the accident. National Distillers in turn joined Penn Central Transportation Co. as a third-party defendant.

The relevant docket entries reflect at least nine-pretrial conferences in this case. The next to the last of these conferences, which was held on May 9, 1972, was attended by the District Judge, counsel for each of the parties, Kukla and Mr. McIntyre, the workmen's compensation supervisor for Liberty Mutual. All parties understood that a settlement had been agreed upon pending approval by the home offices of Liberty Mutual and National Distillers. The Judge, however, was not informed of the terms of the agreement, which were arrived at outside of his presence.

That same afternoon McIntyre informed Liberty Mutual's attorney, Mr. Zack, that the home office had approved the settlement, and Zack in turn advised Kukla's attorney of the same. Two days later Kukla's attorney reached a final agreement with National Distiller's home office and advised the Court that a final settlement had been achieved.

Thereafter the proposed release, stipulation, redemption agreement, and order of dismissal were prepared. The redemption agreement, which was prepared with the approval of Liberty Mutual's attorney, Zack, called for payment by Liberty Mutual to Kukla of $35,000, in redemption of all future liability of Liberty Mutual arising out of the accident. When approached several weeks later by Kukla's attorney respecting execution of the above forms, McIntyre asserted that neither he nor Liberty Mutual's home office had ever agreed to the $35,000 redemption, and that they would not approve the same.

Kukla's attorney thereupon filed with the Court a motion for the entry of judgment incorporating the terms of the purported settlement agreement which called for, inter alia, the $35,000 redemption payment by Liberty Mutual. This motion was accompanied by an affidavit by Kukla's attorney asserting that all persons present at the pre-trial conference, including McIntyre and Zack, had understood that the settlement called for the $35,000 redemption payment by Liberty Mutual. In response, Liberty Mutual filed an affidavit of McIntyre wherein he asserted that the settlement which was agreed to at the pre-trial conference and which Liberty Mutual's office approved called for a redemption of all future workmen's compensation liability at no cost to Liberty Mutual.

At a hearing on the above motion, counsel for the Plaintiffs and counsel for Liberty Mutual stated that they had understood the settlement agreement to include a $35,000 redemption payment by Liberty Mutual. Upon these statements of counsel and the affidavits of Plaintiffs' counsel and McIntyre, the District Court issued a written opinion finding that Plaintiffs-Appellees were entitled to summary judgment pursuant to Rule 56, F.R.C.P., and entered a final judgment incorporating the terms of the asserted pre-trial settlement agreement, including the $35,000 redemption payment by Liberty Mutual. In a subsequent order denying Appellant's motion for reconsideration, the District Court cited both Rule 56 and Rule 16 in support of its entry of judgment. We vacate the judgment and remand the case for an evidentiary hearing.

We initially note that the authority for a District Court's entry of final judgment incorporating the terms of a pre-trial settlement agreement rests under neither Rule 56 nor Rule 16. See All States Investors, Inc. v. Bankers Bond Co., 343 F.2d 618, 625 (6th Cir.), cert. denied, 382 U.S. 830, 86 S.Ct. 69, 15 L.Ed.2d 74 (1965); Cia Anon Venezolana De Navegacion v. Harris, 374 F. 2d 33 (5th Cir. 1967). Rather, such a judgment "is in the nature of a judgment by consent," All States Investors, Inc. v. Bankers Bond Co., supra, 343 F. 2d at 625, authorized under what has been consistently recognized as the trial court's "inherent power to summarily enforce settlement agreements entered into by parties litigant in a pending case." Cia Anon Venezolana De Navegacion v. Harris, supra, 374 F.2d at 36. See also Massachusetts Casualty Insurance Co. v. Forman, 469 F.2d 259, 260 (5th Cir. 1972); Autera v. Robinson, 136 U.S.App.D.C. 216, 419 F.2d 1197, 1200 (1969); Kelly v. Greer, 365 F.2d 669, 671 (3d Cir. 1966), cert. denied, 385 U.S. 1035, 87 S.Ct. 772, 17 L.Ed.2d 682 (1967); Cummins Diesel Michigan, Inc. v. The Falcon, 305 F.2d 721, 723 (7th Cir. 1962).

The power of a trial court to enter a judgment enforcing a settlement agreement has its basis in the policy favoring the settlement of disputes and the avoidance of costly and time-consuming litigation. See Massachusetts Casualty Insurance Co. v. Forman, supra, 469 F.2d at 261; D. H. Overmyer Co. v. Loflin, 440 F.2d 1213, 1215 (5th Cir.), cert. denied, 404 U.S. 851, 92 S.Ct. 87, 30 L.Ed.2d 90 (1971); Autera v. Robinson, supra, 419 F.2d at 1199. To effectuate this policy, the power of a trial court to enforce a settlement agreement has been upheld even where the agreement has not been arrived at in the presence of the court nor reduced to writing. See Green v. John H. Lewis & Co., 436 F.2d 389, 390 (3d Cir. 1970); Good v. Pennsylvania R. R. Co., 384...