Van Winkle v. Belleview Valley Land Co. (In re Van Winkle), 13-11743 t7
| Decision Date | 03 November 2021 |
| Docket Number | 13-11743 t7,Adv. 20-1022 t |
| Parties | In re: FRED DALE VAN WINKLE, Debtor. v. BELLEVIEW VALLEY LAND CO., JOHN H. WILLIAMS, and ELLEN B. WILLIAMS, Defendants. BRIAN VAN WINKLE and TAMMY SPRAGUE, Co-personal representatives, Plaintiffs, |
| Court | United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of New Mexico |
After a long day of mediation, the parties to this adversary proceeding resolved their disputes and signed a settlement agreement. They filed a joint motion to approve the settlement. In an unexpected turn of events, the only objection to the joint motion was filed by Brian Van Winkle one of plaintiff's co-representatives. Mr. Van Winkle attended the mediation with his co-representative (his sister Tammy Sprague) and their counsel. He agreed to the settlement and signed the settlement agreement. Nevertheless, in his objection Mr. Van Winkle asks the Court to rescind the agreement. The Court held a hearing on the matter, at which the parties asked the Court to rule based on the papers and the case history. Being sufficiently advised, the Court concludes that Van Winkle's objection/request for rescission is not well taken.
A. Facts.[1]
For the limited purpose of ruling on the Motion, the Court finds:
This dispute started in 2008, when Fred Van Winkle ("F. Van Winkle") sued John and Ellen Williams over certain real property he owned in Otero County, New Mexico. The Williamses counterclaimed. In 2010 the state court entered a substantial money judgment against F. Van Winkle on the counterclaim. The Williamses filed judgment liens in the two New Mexico counties where F. Van Winkle owned real estate and began foreclosing the judgment liens. In 2011 Van Winkle filed a chapter 13 bankruptcy case. The case was dismissed in 2013 without a discharge, followed almost immediately by this chapter 7 case.
F. Van Winkle died on April 28, 2014. In 2015 his probate estate filed an adversary proceeding against the Williamses alleging violations of the discharge injunction and a Court order. The complaint spawned substantial litigation including a mandamus action, two final judgments, and two appeals to the Tenth Circuit Bankruptcy Appellate Panel. The proceeding was closed in 2019.
The current adversary proceeding involves the Williamses' successful attempt to obtain about $72, 000 from a state court registry, which had been deposited by the probate estate to redeem property the Williamses had foreclosed (the "Redemption Funds").[2] The probate estate, represented by Brian Van Winkle ("Van Winkle") and Tammy Sprague ("Sprague") as co-personal representatives, sued the Williamses, alleging that taking the Redemption Funds violated the discharge injunction. The Williamses denied any violation, asserted that they were the rightful owners of the Redemption Funds, and moved for summary judgment.
The Court denied the Williamses' summary judgment motion and gave notice pursuant to Rule 56(f) that it was considering granting summary judgment in favor of Plaintiffs instead.
Determining the rightful owner of the Redemption Funds (and hence whether there was a discharge injunction violation) required answering the following question: under New Mexico law, when does title pass to funds placed in the court registry to redeem foreclosed property? The question arose here only because the Williamses brought a second foreclosure action on the property at issue before the redemption prompted by their first foreclosure action had been completed. Normally, a redemption is completed before there is further litigation about the subject property.
After the Court ruled on the Williamses' summary judgment motion, they filed a response to the Court's Rule 56(f) notice, a motion to dismiss, and a second motion for summary judgment. Plaintiffs filed an omnibus response and the Williamses replied. While the Williamses' motions were pending, Plaintiffs' counsel, Joel Gaffney, was suspended from the practice of law.[3]Plaintiffs' new counsel, Ronald Holmes, entered his appearance on June 11, 2021.
At a June 14, 2021, status conference, the Court raised the issue of mediation. In light of the history of this case and the unusual issue raised by Plaintiff's complaint, the Court noted that any final judgment likely would be appealed. Considering that the parties had been fighting for 13 years and that the Williamses were facing health problems, the Court encouraged the parties to pursue a settlement. They ultimately agreed that mediation was a good idea. The parties hired Paul Fish, a respected local attorney and mediator, to facilitate.
The mediation took place August 24, 2021. Both sides attended with their counsel. After a full day the parties settled all disputes in this adversary proceeding and in pending state court litigation. The agreement, signed by the parties, their counsel, and Mr. Fish, contains the following terms:
The settlement agreement also provides:
This agreement is subject to the approval of the Bankruptcy Court for Van Winkle. All parties represent that they will support such approval. It shall be final when the Order of the Bankruptcy Court approving it is final and non-appealable. At that time, the parties shall expeditiously fulfill the provisions thereof.
The parties filed a joint motion to approve the settlement on August 30, 2021. Van Winkle filed the only objection. Sprague did not object. The deadline to object has passed.
In his objection, Van Winkle argues that the settlement agreement should rescinded on grounds of mutual mistake and unconscionability. He asserts that "My attorney incorrectly viewed my position from the district court's perspective, rather than the bankruptcy court's." Van Winkle asserted that the settlement agreement was "based in reliance on a misrepresentation and on false law." He stated that "I felt like I had been duped by everyone involved in this mediation," and that "Strong-arming and misinformation were used by the entire cast to have me believe the state of the law was something other than what it was."
B. State Law Governing Settlement Agreements.
Settlement agreements are contracts. Walters v. Wal-Mart Stores, Inc., 703 F.3d 1167, 1172 (10th Cir. 2013); Herrera v. Herrera, 974 P.2d 675, 678 (N.M. App. 1999). Issues regarding the validity of contracts are governed by the contract law of the state in which the agreement was made. Walters, 703 F.3d at 1172; 15A C.J.S. Compromise & Settlement § 33 (); Flemma v. Halliburton Energy Servs., Inc., 303 P.3d 814, 819 (N.M. 2013) ("As a general proposition of law, it is settled that the validity of a contract must be determined by the law of the state in which it was made."). Van Winkle's objection is thus governed by New Mexico contract law.
"It is the policy of the law and of the State of New Mexico to favor settlement agreements." Navajo Tribe of Indians v. Hanosh Chevrolet-Buick, Inc., 749 P.2d 90, 92 (N.M. 1988); Montano v. NM Real Estate Appraiser's Bd., 200 P.3d 544, 547 (N.M. App. 2008) (). A settlement agreement "will not be set aside just because it later proves to have been unwise or unfortunate for one party to enter into the agreement." Id. "Instead, [New Mexico appellate courts consistently hold] that in negotiating a settlement contract, the parties are bound by its provisions and must accept both the burdens and benefits of the contract." Id. A court will relieve a party from its contractual obligations under a settlement agreement based only on "well-defined equitable exceptions such as unconscionability, mistake, fraud or illegality." Builders Contract Interiors, Inc. v. Hi-Lo Indus. Inc., 134 P.3d 795, 798 (N.M. App. 2006); Montano, 200 P.3d at 547. C. Mutual Mistake.
"A contract or settlement, which equity will reform or rescind because of a mutual mistake, must fail to express the agreement actually entered into, or fail to express what was really intended by the parties." Smith v. Loos, 431 P.2d 72, 76 (N.M. App. 1967); see Twin Forks Ranch, Inc. v. Brooks, 120 N.M. 832, 835 (Ct. App. 1995) ("A mutual mistake occurs when the parties have reached an agreement, but the writing either does not express what was really intended, or has achieved what neither party intended[.]") (citations omitted).[4]
Van Winkle did not present any evidence of a mutual mistake. He does not point to any provision of the settlement agreement that fails to express the parties' intent or actual agreement. The Williamses strongly disagree that the settlement agreement reflects or is based on any mistakes. Rather, they believe the agreement accurately memorializes the deal struck by the parties. Nothing in the record is to the contrary. The Court concludes that there is no basis for setting aside the settlement agreement because of a mutual mistake.
D. Unilateral Mistake.
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