Mungin v. Calmar Steamship Corporation, Civ. A. No. 71-288.

• Decision Date: 04 May 1972
• Docket Number: Civ. A. No. 71-288.
• Citation: 342 F. Supp. 484
• Parties: Emma E. MUNGIN, Administratrix of the Estate of Elijah Mungin, Deceased, et al., v. CALMAR STEAMSHIP CORPORATION, v. ITO CORPORATION OF BALTIMORE (Formerly Jarka Corporation of Baltimore).
• Court: U.S. District Court — District of Maryland

342 F. Supp. 484

Emma E. MUNGIN, Administratrix of the Estate of Elijah Mungin, Deceased, et al., v. CALMAR STEAMSHIP CORPORATION, v. ITO CORPORATION OF BALTIMORE (Formerly Jarka Corporation of Baltimore).

Civ. A. No. 71-288.

United States District Court, D. Maryland.

May 4, 1972.

Bernard J. Sevel and Raymond J. Cardillo, Baltimore, Md., for plaintiffs.

William R. Dorsey, III, Baltimore, Md., for defendant.

NORTHROP, Chief Judge.

Plaintiff, Emma E. Mungin, filed suit in her capacities as personal representative and as widow of deceased against defendant, Calmar Steamship Corp., seeking recovery for the wrongful death of her husband, Elijah Mungin.¹ Defendant in turn impleaded ITO Corporation of Baltimore as third party defendant. Trial was scheduled to begin on March 27, 1972. However, sometime prior to that date, settlement negotiations were entered into by counsel for the plaintiff and the third party defendant, with the approval of defendant's counsel. The negotiating counsel eventually reached agreement on a figure that they would recommend to their respective clients. Plaintiff's counsel forwarded the results of these discussions to his client, who, thereupon, gave him express authority to settle her claims at the suggested figure. Counsel for third party defendant likewise forwarded his suggestion to the insurer of ITO Corporation of Baltimore, and, on Friday, March 24, 1972, he was advised by a Baltimore representative of the insurer that he had express authority to settle both of plaintiff's claims for the earlier suggested figure. This acceptance of the plaintiff's offer was then communicated to plaintiff's counsel, who notified his client of the settlement, ceased preparation for trial, and informed his witnesses that they would no longer be needed. On Monday, March 27, 1972, counsel for ITO was informed by a representative of the insurer that the authorization to conclude settlement had been erroneously transmitted to him on the Friday past. Upon being informed of the insurer's decision to refuse to proceed with settlement, plaintiff filed a Motion to Enforce Settlement.

It is well established that this Court has inherent power to summarily enforce settlement agreements entered into in an action pending before it. E. g., Autera v. Robinson, 136 U.S.App.D.C. 216, 419 F.2d 1197 (1969); Kelly v. Greer, 365 F.2d 669 (3rd Cir. 1966); Beirne v. Fitch Sanitarium, Inc., 167 F. Supp. 652 (S.D.N.Y.1958); McKenzie v. Boorhem, 117 F.Supp. 433 (W.D.Ark. 1954). And it is established by the pleadings that settlement was in fact concluded between the parties' counsel, each having express authority from his client to do so. Therefore, the only question is whether the internal mistake on the part of the insurer of third party defendant is sufficient to vitiate this agreement.

As a general principle, the settlement of disputes is favored by the courts, Williams v. First National Bank, 216 U.S. 582, 30 S.Ct. 441, 54 L.Ed. 625 (1910); consequently, "one who attacks a settlement must bear the burden of showing that the contract he has made is tainted with invalidity, either by fraud practiced upon him or by a mutual mistake under which both parties acted." Callen v. Pennsylvania R. Co., 332 U. S. 625, 630, 68 S.Ct. 296, 298, 92 L.Ed. 242 (1948); General Discount Corp. v. Schram, 47 F.Supp. 845 (E.D.Mich. 1942).

Defendant, in attempting to carry this burden, asserts that general equitable principles, as illustrated by Rule 60(b) of the Federal Rules of Civil Procedure, compel this Court to vacate this agreement.

There is no contention made here that the error which induced the insurer of the third party defendant to conclude settlement was anything but unilateral. This Court acknowledges the existence of general principles of contract law which allow rescission of a contract entered into as a result of a party's unilateral mistake where the opposing party may easily be placed in statu quo. However, the Court also acknowledges the existence of two other principles which, taken in conjunction, bar the relief sought here. The first is, as noted above, that a settlement agreement enjoys great favor with the courts; consequently, it is only in the most extraordinary circumstances that such a pact will be vacated, for the general principle is that "a settlement agreement . . . voluntarily entered into cannot be repudiated by either party and will be summarily enforced by the Court." Cummins Diesel Michigan, Inc. v. The Falcon, 305 F.2d 721 (7th Cir. 1962). Secondly, we do not feel that the contract principle referred to above should extend to the protection of conduct that is so obviously without any excuse as is the present action by the insurer of ITO. Defendant offers no explanation for the insurer's actions, and the Court can only conclude that the agents of the company were simply grossly careless in the management of its affairs. There was no misunderstanding between the counsel for the parties, and plaintiff's counsel cannot be charged with knowledge of error on the part of the third party defendant's insurer since the acceptance was for the precise sum that had earlier been agreed upon by counsel. And it must be pointed out that the settlement that was reached was the result of arm's length negotiations between counsel; each party had knowledge of all relevant facts or, more importantly, had the opportunity to learn every fact necessary to his respective determinations as to whether settlement would benefit his position.

Under ...