Spurlock v. Pioneer Financial Services, Inc., Civ. A. No. 90-D-840-N.

• Decision Date: 28 October 1992
• Docket Number: Civ. A. No. 90-D-840-N.
• Citation: 808 F. Supp. 782
• Parties: Bobby SPURLOCK, Plaintiff, v. PIONEER FINANCIAL SERVICES, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

808 F. Supp. 782

Bobby SPURLOCK, Plaintiff, v. PIONEER FINANCIAL SERVICES, INC., et al., Defendants.

Civ. A. No. 90-D-840-N.

United States District Court, M.D. Alabama, N.D.

October 28, 1992.

ORDER

De MENT, District Judge.

Now before the court is the recommendation of the Magistrate Judge, entered on July 20, 1992. Respondents filed objections to the Magistrate's Recommendation on July 29, 1992. Upon an independent evaluation of this matter, the court adopts the facts as set out in the Magistrate's recommendation and adopts the Magistrate's reasoning and conclusions as to the plaintiff's fraudulent inducement claim. However, the court declines to adopt the Magistrate's reasoning or conclusion as related to the defendants' motion to enforce the settlement agreement. For the following reasons, the court determines that the defendants' motion to enforce the settlement agreement is due to be granted and the settlement is due to be enforced.

BACKGROUND

On May 22, 1991, Magistrate Judge Coody entered a recommendation that the defendants' motion to enforce the settlement agreement should be denied. In the recommendation, he relied on Rule 47 of the Alabama Rules of Appellate Procedure. The defendants objected to this recommendation.

In an order dated August 28, 1991, District Judge Thompson declined to accept the recommendation. He reasoned that section 34-3-21 of the Alabama Code should govern the enforcement of settlement agreements reached prior to trial. Instead of overruling the recommendation, Judge Thompson referred the matter back to Judge Coody for "further appropriate proceedings" consistent with the order.

On July 20, 1992, Judge Coody issued a second recommendation. Again, he found that Rule 47 of the Alabama Rules of Appellate Procedure was the controlling statute, relying this time upon cases which were handed down by the Alabama Court of Civil Appeals after Judge Thompson's order. Again, the defendants have filed objections to the recommendation.

DISCUSSION

As correctly stated by the Magistrate Judge, because this is a diversity case, Alabama law controls the construction and effect of the settlement agreement. Rule 47 of the Alabama Rules of Appellate Procedure requires that a settlement agreement be in writing and "signed by the party bound thereby."¹ In contrast, section 34-3-21 of the Alabama Code does not require a settlement agreement to be signed by the parties.²

At first the matter appears deceptively simple. Rule 1 of the Alabama Rules of Appellate Procedure states that "these rules govern appeals to the Supreme Court, the Court of Civil Appeals and the Court of Criminal Appeals, and proceedings on petitions for writs or other relief which these judges are empowered to grant." On the other hand, section 34-3-21 states that it governs settlement agreements "in any action or proceeding." Thus it would seem that Rule 47 would govern settlement agreements reached while the matter is on appeal, while section 34-3-21 would govern settlement agreements reached while the case is still at the trial level.

In general, this appears to be the practice. There are several cases in which the Alabama Supreme Court reviewed the finding of a settlement agreement's validity, referring solely to section 34-3-21, without any mention of Rule 47. See, e.g., Beverly v. Chandler, 564 So.2d 922, 923 (Ala.1990); King v. Travelers Ins. Co., 513 So.2d 1023, 1026 (Ala.1987); Reeves v. Orkin Exterminating Co., 457 So.2d 402, 404 (Ala.1984). In at least one case where the settlement agreement was reached while the case was on appeal, the appellate court applied Rule 47 to review the settlement's validity. See, e.g., Bush v. Evans, 598 So.2d 952, 953 (Ala.Civ.App.1992). The one case which mentions both statutes, Phillips v. Knight, 559 So.2d 564, 568 (Ala.1990), does not resolve the arguable conflict between the appellate rule and the statute. In Phillips there was no written agreement, either signed or unsigned, so the oral agreement would have been invalid under either rule.³

The Magistrate Judge cites a recent case, Dunn v. Sims, No. 2910348, 1992 WL 80778, 1992 Ala.Civ.App. LEXIS 191 (Ala. Civ.App. April 24, 1992) (writ of certiorari granted on August 25, 1992) for the proposition that Rule 47 can control cases which are not on appeal. The Dunn court, without referring to section 34-3-21 or referring to any judicial precedent, held a settlement agreement invalid because it had not been signed by both parties.⁴

With the greatest deference to the Alabama Court of Civil Appeals and in particular deference to the learned judge who wrote the opinion in Dunn, the court does not believe that Dunn is a correct statement of Alabama law. While the applicability of the statute and the appellate rule is not settled, given the plain meaning of the appellate rules and of the statute and given the holdings of several cases decided by the state's highest court, it appears that section 34-3-21 controls the making of settlement agreements which are entered into before the case is appealed.⁵ Because the parties complied with the requirements of section 34-3-21, the court finds that the settlement agreement entered into is a valid agreement and is enforceable.

Accordingly, it is CONSIDERED and ORDERED that the defendants' motion be and the same is hereby GRANTED. The parties are DIRECTED to abide by the terms and conditions of the settlement agreement.

1 Appellate Rule 47 reads:

No private agreement or consent between the parties or their attorneys relating to the proceedings in any cause, shall be alleged or suggested by either against the other, unless the same be in writing and signed by the party to be bound thereby; provided, however, that agreements made in open court or at pretrial conferences are binding, whether such agreements are oral or written.

Ala.R.App.P. 47.

2 Section 34-3-21 states that "an attorney has the authority to bind his client, in any action or proceeding, by any agreement in relation...