Petition of Mal de Mer Fisheries, Inc., Civ. A. No. 94-10211-PBS.

• Decision Date: 12 April 1995
• Docket Number: Civ. A. No. 94-10211-PBS.
• Parties: In re The Petition of MAL DE MER FISHERIES, INC. for Exoneration from Limitation of Liability, Civil and Maritime.
• Court: U.S. District Court — District of Massachusetts

884 F. Supp. 635

In re The Petition of MAL DE MER FISHERIES, INC. for Exoneration from Limitation of Liability, Civil and Maritime.

Civ. A. No. 94-10211-PBS.

United States District Court, D. Massachusetts.

April 12, 1995.

Michael B. Latti, Latti Associates, Thomas J. Muzyka, Clinton & Muzyka, Boston, MA, for petitioner Mal de Mer Fisheries Inc.

Edward J. White, New Bedford, MA, for claimant Susan DeJesus.

Michael B. Latti, David F. Anderson, Latti Associates, Boston, MA, for claimants Cheryl Costa, Victor Perreira.

MEMORANDUM AND ORDER ON PETITIONER'S MOTION TO ENFORCE SETTLEMENT

SARIS, District Judge.

Petitioner Mal de Mer Fisheries, Inc. moves the Court to enforce a settlement negotiated between claimant Cheryl S. Costa and petitioner Mal de Mer Fisheries, Inc. in the amount of $115,000.00 (Docket No. 75). For the reasons herein stated, the motion is ALLOWED.

Factual Background

The Court treats the following facts as undisputed for purposes of this motion. On January 31, 1994, the F/V SHANNON III sank off the coast of Massachusetts while engaged in a fishing operation. As a result of the sinking two crewmembers, Robert DeJesus and Wayne Costa, were lost and presumed drowned. A third crewmember, Victor Pereira, was the sole survivor of the incident.

On February 2, 1994, the vessel's owner, Mal de Mer Fisheries, Inc., filed a petition for Exoneration from or Limitation of Liability. Cheryl Costa and Susan DeJesus, both represented by attorney Edward White of the law firm of Hunt & White, opposed the petition and filed claims on behalf of the estates of Wayne Costa and Robert DeJesus respectively. Victor Pereira, represented by attorneys Michael B. Latti and David F. Anderson of the law firm of Latti Associates, also filed a claim opposing the petition.

The matter was scheduled to commence a non-jury trial before Senior Circuit Judge Bailey Aldrich on December 19, 1994. On December 13, 1994, however, petitioner's counsel, Thomas J. Muzyka and Robert E. Collins, twice met with attorney White to discuss the possibility of settlement.¹ On December 14, 1994, petitioner's counsel received authority to settle both the Costa and DeJesus death claims for an aggregate amount of $485,000.00 and notified attorney White of the same.² That afternoon claimant Costa met with attorneys White and Hunt to discuss settlement. Her attorneys did not inform her of petitioner's offer at this time.

Claimant Costa, accompanied by her two brother-in-laws, again met with her attorney on December 15, 1994 at approximately 5:00 p.m. At this meeting, attorney White informed Costa that the insurance company offered $115,000.00 to settle her claim, but did not disclose that petitioner's offer was in the aggregate. In fact, Costa claims that attorney White stated that her settlement offer "had nothing to do with the DeJesus settlement." Aff. Costa at 2. However, Costa also states: "At this meeting (5:00 p.m. 12/15/94) Attorney White did inform me that the offer on the DeJesus claim was three times the offer on my claim." Id. at 2. (emphasis added). Costa refused to settle for $115,000.00 at this meeting, but later that evening returned alone to her attorneys' offices to continue discussions.

During this later meeting, Costa contends that attorney White was heavyhanded in pressuring her into consenting to the settlement. Specifically, Costa claims attorney White told her that she had to accept the offer, she could not get a jury trial, she could not get anything more for her claim, and that she could not go to trial. Aff. Costa at 2. After about thirty minutes, Costa told attorney White to "go ahead" with the settlement. Id. That same evening, attorney White contacted petitioner's counsel and apprised counsel that Costa had agreed to settle for $115,000.00.

At a lobby conference on December 19, 1994, counsel reported to the court that the Costa and DeJesus had settled. As a result of the reported settlement, Judge Aldrich continued the matter until March 6, 1995.

Thereafter, attorney White sought to have claimant Costa sign releases but to no avail. However, claimant Susan DeJesus executed a release to obtain the settlement draft. On January 10, 1995, Costa discharged attorney White and hired present counsel.

Petitioner now moves to enforce the settlement agreement with claimant Costa in the amount of $115,000.00. Claiming that a factual dispute exists as to the formation and terms of the alleged settlement agreement, Costa requests an evidentiary hearing on the petitioner's motion to enforce. In the event that the court enforces the settlement agreement, Costa argues that because attorney White unilaterally divided the aggregate settlement offer between the Costa and DeJesus, the court should hold a separate hearing to determine the relative strengths and weaknesses of each claim.

Conclusions of Law

1. Court's Inherent Authority to Enforce Settlement

Prudential concerns favor settlement as a preferred alternative to litigation. Mathewson Corp. v. Allied Marine Industries, Inc., 827 F.2d 850, 853 (1st Cir.1987). Accord United States v. Cannons Eng'g Corp., 899 F.2d 79, 84 (1st Cir.1990) ("it is the policy of the law to encourage settlements"); Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007, 1015 (D.C.Cir.1985) ("settlement agreements are in high judicial favor"). Accordingly, when parties voluntarily enter into a settlement agreement, it cannot be repudiated by either party, and the court will summarily enforce the agreement. Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007, 1015 (D.C.Cir.1985) (diversity action case to enforce settlement agreement).

The court's inherent power of enforcement, however, is limited to cases pending before it. United States v. Hardage, 982 F.2d 1491, 1496 (10th Cir.1993) (trial court may summarily enforce a settlement agreement while the litigation is pending before it); Callie v. Near, 829 F.2d 888, 890 (9th Cir.1987) (same); Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1371 (6th Cir.1976) (same), cert. denied, 429 U.S. 862, 97 S.Ct. 165, 50 L.Ed.2d 140 (1976).

When a complete settlement has been reached and the case dismissed, enforcement of the agreement sounds in contract requiring "its own basis for jurisdiction." Kokkonen v. Guardian Life Ins. Co., ___ U.S. ___, ___ - ___, 114 S.Ct. 1673, 1675-76, 128 L.Ed.2d 391 (1994).³ See also Poliquin v. Garden Way, Inc., 989 F.2d 527, 536 (1st Cir.1993) (Keeton, D.J., dissenting) (mootness of settled controversies); Catullo v. Metzner, 834 F.2d 1075, 1078 (1st Cir.1987) (suit for breach of a settlement agreement is a separate cause of action); Hamilton v. School Committee of Boston, 725 F.Supp. 641, 643 (D.Mass.1989) (discussing court's jurisdiction).

The federal courts have jurisdiction to enforce settlement agreements when necessary "to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees". Kokkonen, ___ U.S. at ___, 114 S.Ct. at 1676 (citations omitted). Here, counsel reported to the court that the claim of the two widows had settled on the day the action was scheduled for a non-jury trial. This necessitated a continuance of the portion of the case involving the claim of the surviving crewman. Thus, the court retains the inherent authority to enforce the settlement to vindicate its authority to manage its own proceedings. See Hadwari v. Keystone Shipping Co., 762 F.Supp. 426, 427 (D.Mass. 1991) (Aldrich, J.) (summarily enforcing settlement agreement against defendant in admiralty case where the court was informed that settlement was reached during trial and the jury was discharged). See also Correia v. DeSimone, 34 Mass.App.Ct. 601, 614 N.E.2d 1014, 1016 (1993) ("The integrity of the judicial process would be ill served if those intimately involved in that process, litigants, attorneys and judges, could not rely on declarations of settlement made in open court.").

2. No Need for Evidentiary Hearing

Even where a court retains jurisdiction over the controversy, summary enforcement is inappropriate and the parties are entitled to an evidentiary hearing if material facts are in dispute concerning the very existence or terms of the agreement. Wilson v. Wilson, 46 F.3d 660, 664 (7th Cir.1995). Accord United States v. Hardage, 982 F.2d 1491, 1496 (10th Cir.1993) (finding trial court abused its discretion by summarily enforcing a settlement agreement where attorney representations of material facts regarding the reaching of a settlement conflicted); Callie v. Near, 829 F.2d 888 (9th Cir.1987) (finding an abuse of discretion by trial court's failure to conduct an evidentiary hearing where intent of the parties and material terms of the agreement were in dispute); Russell v. Puget Sound Tug & Barge Co., 737 F.2d 1510, 1511 (9th Cir.1984) ("Summary enforcement of a settlement agreement `is ill-suited to situations presenting complex factual issues related either to the formation or the consummation of the settlement contract, which only testimonial exploration in a more plenary proceeding is apt to satisfactory resolve.'"); cf. Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1372 (6th Cir.1976).

Likewise, summary enforcement is improper when the authority of an attorney to enter into a settlement agreement on behalf of his client is in dispute. See Petty v. Timken Corp., 849 F.2d 130, 132 (4th Cir. 1988) (upholding summary enforcement of settlement agreement where litigant voluntarily accepted an offer of settlement but later repudiated claiming inadequate counsel); Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386, 391 (5th Cir.1984) (evidentiary hearing necessary to resolve conflicting affidavits as to attorney's authority to settle the dispute); Millner v. Norfolk & Western Railway Co., 643 F.2d 1005, 1009 (4th Cir. 1981) (evidentiary hearing required to determine whether attorney had authority to bind client to settlement agreement).

3. An Attorney's...