Wilson v. Wilson

• Decision Date: 01 February 1995
• Docket Number: No. 94-1985,94-1985
• Citation: 46 F.3d 660
• Parties: William P. WILSON, Plaintiff-Appellee, v. John G. WILSON, Thomas S. Wilson, and FSW, Incorporated, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 660

46 F.3d 660

William P. WILSON, Plaintiff-Appellee, v. John G. WILSON, Thomas S. Wilson, and FSW, Incorporated Defendants-Appellants.

No. 94-1985.

United States Court of Appeals Seventh Circuit.

Argued Oct. 25, 1994.

Decided Feb. 1, 1995.

Steven Popuch (argued), Thomas N. Swift, James J. Casey, Popuch & Associates, Chicago, IL, for plaintiff-appellee.

John L. Huff, Michael J. Gilmartin, Huff & Gaines, Cristofer E. Lord (argued), Chicago, IL, for defendants-appellants.

Before GOODWIN, ^* RIPPLE, and MANION, Circuit Judges.

MANION, Circuit Judge.

The plaintiff, William P. Wilson ("Bill"), brought suit against the defendants, alleging that the defendants, as trustees, had breached their duty to use reasonable care in managing various trusts of which Bill was a beneficiary. The parties appeared at a pretrial conference where the district court concluded on the record that the parties had reached an oral agreement to settle the underlying lawsuit. Following unsuccessful attempts to reduce this agreement to writing, Bill filed a motion to enforce the oral settlement agreement, which the district court granted. The defendants challenge the district court's decision to enforce the settlement agreement on the grounds that the parties had never entered into a legally binding agreement to settle the underlying lawsuit. We reject this contention and affirm the decision of the district court.

I.

Francis S. Wilson, Jr., set up various trusts for the benefit of his wife, Kathryn W. Wilson, and his five children, including Bill Wilson. The trustees of these trusts included Bill's brothers, John G. Wilson ("Jack"), Thomas Wilson ("Tom"), and Francis S. Wilson, III ("Tug"), and Bill's cousin, David Wilson.

On December 29, 1989, Bill filed his initial complaint against Jack, Tug, and David Wilson, along with Philip E. Rollhaus, Jr., and Melvin L. Katten, alleging that these defendants, as trustees and/or former trustees, had breached their fiduciary duties in the management of the various trusts. Bill eventually settled his claims against Tug. Following this, Bill filed his amended complaint, asserting the same and additional claims, and adding Tom Wilson and F.S.W., Inc. (an investment management business in which Jack Wilson was an officer, shareholder and director) as additional defendants.

On September 4, 1992, counsel for both parties appeared before the district judge for a pretrial conference where they attempted to work out a settlement of Bill's claims. Jack and Bill Wilson were also present. The judge started off the conference by stating that the parties had reached a settlement agreement. At that point, neither Jack nor Bill, nor either party's counsel, contested that statement. The court then proceeded to lay out on the record the terms of that agreement: Defendants Jack, Tom and F.S.W., Inc. would transfer to Bill a combination of cash and property totalling $1.2 million. Specifically, Jack, Tom and F.S.W., Inc. were to pay over to Bill $500,000 in cash within 28 days of the hearing. In addition, both Jack and Tom were to transfer to Bill their combined interest in a real estate partnership, estimated to be worth approximately $700,000. The parties agreed that the court would appoint an independent appraiser to appraise the value of the partnership interest. If the appraised value of the partnership interest fell between $600,000 and $800,000, then no further consideration would be transferred to Bill. If, on the other hand, the appraised value came in either below $600,000 or above $800,000, then the court stated, without objection from either party, that it would determine what additional assets were to be transferred to Bill, so that he would receive exactly $1.2 million. In exchange for these promises, Bill would forever be barred from bringing all claims against the defendants for any acts that gave rise to his suit. There was some quibbling between counsel over whether this latter objective of the agreement--Bill's promise not to sue--would be best served by adopting mutual releases or mutual covenants not to sue. However, the district court observed that as long as the parties agreed that there could not be any actions between the parties, then this objective would be part of the parties' settlement agreement, and it would be up to the parties' attorneys to demonstrate later to the court which legal form could best achieve that objective. Neither the attorneys nor the parties present raised any objection to this statement by the district court.

Following further discussions the court stated it was leaving it up to the parties' attorneys to reduce the specifics of their agreement to a written document. The court anticipated that some disputes would arise in drafting the specifics of the settlement agreement. However, the court unequivocally stated--again, without objection--that "[a]s far as I'm concerned, there is an agreement and nothing has to be signed." Indeed, when asked by Bill Wilson's attorney whether the parties could keep the trial date until a written agreement was signed by the parties, the district court rejected this request and repeated its earlier conclusion that the parties had nailed down an agreement.

Over the next three months, the parties argued back and forth about the specifics of their agreement without ever producing a mutually agreeable document. On December 8, 1992, Bill filed a motion with the district court seeking enforcement of the agreement he claimed was reached by the parties at the September 4th hearing. This motion was continued. Following additional negotiations between the parties, Bill, on February 19, 1993, filed a supplement to his earlier motion to enforce in which he reiterated his contention that the parties had entered into a binding settlement agreement at the September 4th hearing. On February 23, 1993, defendants filed a response in which they joined Bill's motion and acknowledged that the partied had entered into a settlement agreement on September 4, 1992. Defendants' main purpose in filing their response was simply to ensure that the settlement agreement entered into between the parties was not narrowed to exclude certain defendants from the agreement thus leaving them open to future suits.

Based on the parties' representations, the court, on January 7, 1994, directed Bill's attorney to prepare and submit a judgment order enforcing the parties' agreement. Defendants apparently began entertaining doubts about the settlement, for on January 11, 1994, defendants' counsel filed an emergency motion to strike Bill's motion to enforce the parties' settlement agreement. In their motion, defendants' principal contention was that since the parties had never reached a "meeting of the minds" over whether Bill and the defendants would exchange mutual releases or mutual covenants not to sue, there was never an intent to be bound and therefore no agreement to enforce. Therefore, defendants requested the court to conduct an evidentiary hearing on the issue of whether the parties had entered into an agreement. In the alternative, defendants claimed that subsequent correspondences from Bill's attorney indicated that Bill had repudiated any agreement reached by the parties.

That same day the parties appeared before the court on defendants' emergency motion. The court expressed its initial disagreement with the defendants' position, noting that everyone present at the September 4th hearing had agreed with the court's conclusion on the record that day that the parties had reached a settlement agreement. Nevertheless, the court told the defendants that it would review the transcripts of the September 4th hearing in determining whether the parties had reached an agreement.

On January 21, 1994, the district court entered an order in which it concluded that the parties had reached a settlement agreement on September 4, 1992. Accordingly, the court entered judgment of $1.2 million in favor of Bill and against Jack, Tom and F.S.W., Inc. The court further ordered that Bill would be barred from bringing any other claims against the defendants that had accrued on or before September 4, 1992. Finally, the court dismissed all of Bill's remaining claims against Jack, Tom and F.S.W., Inc. with prejudice and directed an entry of judgment pursuant to Fed.R.Civ.P. 54(b). The defendants sought reconsideration of this order, which the district court denied. We have jurisdiction over this appeal. 28 U.S.C. Sec. 1291.

II.

The central issue presented by the defendants is whether the district court incorrectly concluded that the parties had reached an oral settlement agreement at the September 4, 1992 hearing. Initially, we must ascertain the appropriate standard of review. Defendants assure us that the answer to this is found in a footnote contained in this court's decision in Laserage Technology Corp. v. Laserage Laboratories, Inc., 972 F.2d 799 (7th Cir.1992). According to defendants, Laserage set forth two standards of review that are available when reviewing a district court's decision to enforce a settlement agreement. The first, a clearly erroneous standard, applies where the district court has accompanied its decision with explicit findings. The second, the de novo standard, applies in all other cases. Because the district court did not make findings regarding the existence of a settlement agreement, the defendants, as the parties challenging the judgment below, urge us to employ a de novo standard in reviewing the district court's decision.

However, a closer examination of Laserage indicates that the opinion contains no clear guidance on this matter. At one point in the footnote, the court intimates that a deferential review is appropriate, citing to our previous decision in Merritt v. Faulkner, 823 F.2d 1150 (7th Cir.1987) (per curiam ). Yet Merritt presents little foundation for this proposition. The relevant portion of Merritt states, without citation to...