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HomeMy WebLinkAbout2006-6136 Civil VINCENT MARK POLINKA : IN THE COURT OF COMMON PLEAS OF and TERRI L. POLINKA, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs : : CIVIL ACTION – LAW vs. : NO. 06-6136 CIVIL : UNITED MEDICAL BANK, FSB, : DEUTSCHE BANK NATIONAL : TRUST COMPANY, as Trustee, : and BANK OF NEW YORK, as : Successor Trustee to J.P. Morgan : Chase, : Defendants : JURY TRIAL DEMANDED IN RE: MOTION TO ENFORCE SETTLEMENT BEFORE HESS, J. OPINION AND ORDER Vincent Polinka and Terri Polinka (“Plaintiffs”) brought suit against United Medical Bank, FSB (“United Medical”), Homecomings Financial USA Corp. (“Homecomings”), and Residential Funding USA Corp. (“Residential”) as a result of alleged misrepresentations by UMB which induced Plaintiffs to refinance their first and second mortgages under detrimental terms. Plaintiffs received their discharge from Chapter 7 bankruptcy on December 17, 2007, and shortly after, Plaintiffs entered separate settlement negotiations with United Medical and Homecomings. Plaintiffs executed a written settlement agreement with Homecomings whereby the mortgages at issue were modified. Communication between Plaintiffs and United Medical reached the point of an agreement in principle of a settlement for $7,500. Other material terms had yet to be negotiated and would be included in a settlement agreement to be drafted by United Medical. Several days following Plaintiffs’ agreement to the settlement amount, United Medical learned that Homecomings NO. 06-6136 CIVIL sought a $30,000 contribution from United Medical toward the cost of its own settlement with Plaintiffs and would not release United Medical without that payment. Currently, there are no cross-claims between United Medical and Homecomings in this case. As a result, United Medical withdrew from its own settlement discussions with Plaintiffs, leading to Plaintiffs’ Motion to Enforce Settlement, directed at United Medical. DISCUSSION There is a strong judicial preference favoring the voluntary settlement of lawsuits, for obvious reasons such as judicial economy. See, e.g., Rothman v. Fillette, 503 Pa. 259, 266, 469 A.2d 543, 546 (1983). The enforceability of settlement agreements is evaluated under principles of contract law. See, e.g., Ragnar Benson, Inc. v. Hempfield Tw. Mun. Auth., 916 A.2d 1183, 1188 (Pa.Super. 2007). Both oral settlements and written agreements are valid and enforceable forms of settlement agreements. See, e.g., Sociedad Comercializadora y De Servicios Unifrutti Traders Limitada v. Quizada, 434 Pa.Super. 48, 56, 641 A.2d 1193, 1197 (1993). Because principles of contract law govern the enforceability of settlement agreements, the minds of the parties must meet upon all of the material terms, as well as the subject matter, of the agreement in order for a purported settlement agreement to be enforceable. See, e.g., Porreco v. Maleno Developers, Inc., 761 A.2d 629, 632-33 (Pa.Cmwlth. 2000). Courts will enforce settlement agreements if all material terms are agreed upon. See, e.g., Century Inn, Inc. v. Century Inn Realty, 358 Pa.Super. 53, 58, 516 A.2d 765, 766, 767 (1986). Additionally, a valid bilateral contract may exist even though the promise of one party to perform is qualified by a condition other than the other party’s performance. Main Line Theatres, Inc. v. Paramount Film Distrib. Corp., 298 F.2d 801, 804 (3d Cir. 1961) (holding that 2 NO. 06-6136 CIVIL an agreement of parties to settle upon defendants’ promise to pay $10,000, conditioned upon success of pending negotiation for settlement of eight companion suit, was a valid settlement agreement). See also R(S)C §§ 224-230. A condition cannot, ESTATEMENT ECOND ONTRACTS however, make the overall promise illusory or allow one party to avoid performance at will. Main Line Theatres, Inc., 298 F.2d at 804, citing R,C§ 79. ESTATEMENT ONTRACTS Plaintiffs point the court to the Superior Court’s decision in Mastroni-Mucker v. Allstate Insurance Company, 2009 PA Super 101 (2009). In Mastroni-Mucker, the court addressed the issue of whether the plaintiffs’ post-trial motion to enforce settlement against defendants was properly denied by the trial court. On June 8, 2007, a jury was selected and the trial began. Mastroni-Mucker at ¶ 2. At the conclusion of proceedings on June 14, Ricketti, the attorney for the defendant roofing company offered the plaintiffs $45,000 to settle the case. Mastroni- Mucker at ¶ 3. The next day, after the plaintiffs rejected this offer, the defendants presented their closing arguments, and the court recessed for lunch prior to the plaintiffs’ rebuttal argument. Id. During the lunch break, Ricketti offered the plaintiffs $60,000 to settle. Id. The plaintiffs’ attorney informed Ricketti that her clients had accepted the $60,000 settlement offer. Id. Prior to the jury’s return for rebuttal arguments and instruction by the court, the parties informed the court of a settlement agreement in principle. Id. Because the settlement was not final in the judgment of the trial judge, the judge next charged the jury, which deliberated for an hour. Mastroni-Mucker at ¶¶ 3-4. Ricketti then claimed that his clients had withdrawn the settlement offer upon hearing news of the verdict. Mastroni-Mucker at ¶ 4. After the plaintiffs’ attorney unsuccessfully argued that the settlement offer was accepted before it was purportedly withdrawn, the court directed the verdict to be read. Mastroni-Mucker at ¶¶ 4-5. Following the 3 NO. 06-6136 CIVIL verdict, which favored the defendants, the plaintiffs’ post-trial motion to enforce the purported settlement agreement was denied. Mastroni-Mucker at ¶ 5. The Superior Court ultimately reversed the trial court’s denial of the plaintiff’s motion to enforce settlement. In addressing the issue of whether a valid settlement agreement existed despite the absence of a written memorial of any agreement, the court first pointed to the fact that a settlement agreement was placed on the record in open court by attorneys for all of the parties. Mastroni-Mucker at ¶ 13. The scope of the settlement agreement on the record was also clearly articulated, encompassing a general release of the defendant roofing company and the individual owners of that company, as well as an indemnification and defense in the release for any future claims. Mastroni-Mucker at ¶ 14. The discussions of the settlement agreement on the record never contained anything to indicate that a dispute to any material terms of the settlement agreement existed, and therefore, it should have been enforced by the trial court. Id. Plaintiffs also direct the court’s attention to Birdy v. Maharam, 81 Pa. D. & C.4th 95 (Allegheny Co. 2006). In Birdy, the court addressed the issue of the reasonableness of the time between the making and acceptance of a settlement offer. The defendants’ claims adjuster gave the plaintiffs’ attorney their “best and final offer.” Birdy at 97. The plaintiffs’ attorney then spoke to his clients, who decided to accept the offer. Id. The next morning, the plaintiffs’ attorney called defendants’ claims adjuster to accept the offer on behalf of his clients. Id. In response, the claims adjuster asked if the plaintiffs had filed a writ of summons, and after being told that they had not, he informed the plaintiffs’ attorney that the offer was withdrawn. Id. The plaintiffs then filed a motion to enforce settlement, which the court granted, saying that the 4 NO. 06-6136 CIVIL undisputed facts would not permit a jury to find that the plaintiffs were unreasonable in accepting the defendants’ final offer within 24 hours of its making. Birdy at 98. Both Mastroni-Mucker and Birdy are distinguishable from the matter sub judice. Mastroni-Mucker dealt with facts that are far more clear-cut than in the instant case. Here, for example, there were never any settlement discussions on the record in open court, which would certainly weigh heavily in favor of enforcement. See, e.g., United States v. Sforza, 326 F.3d 107, 115-16 (2d Cir. 2003); Wilson v. Wilson, 46 F.3d 660, 666 (7th Cir. 1995). Additionally – and more importantly – the parties never agreed upon the essential terms of a settlement agreement; the only term to which agreement was reached was the amount of money to be exchanged. Essential terms remained unresolved; chief among these was addressing the outstanding possibility of litigation between United Medical and Homecomings. It was reasonable to anticipate that further negotiations to address the outstanding terms of the settlement agreement would be necessary. We agree with the defendant, United Medical, that there was not a sufficient meeting of the minds in this case to warrant the enforcement of a purported settlement. ORDER th AND NOW, this 13 day of July, 2009, the motion of the plaintiffs to enforce settlement is DENIED. BY THE COURT, _______________________________ Kevin A. Hess, J. 5 NO. 06-6136 CIVIL Joseph K. Goldberg, Esquire For the Plaintiffs David Banks, Esquire For Defendant United Medical Bank Joseph F. Riga, Esquire For Defendants Deutsche Bank and Bank of New York :rlm 6 VINCENT MARK POLINKA : IN THE COURT OF COMMON PLEAS OF and TERRI L. POLINKA, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiffs : : CIVIL ACTION – LAW vs. : NO. 06-6136 CIVIL : UNITED MEDICAL BANK, FSB, : DEUTSCHE BANK NATIONAL : TRUST COMPANY, as Trustee, : and BANK OF NEW YORK, as : Successor Trustee to J.P. Morgan : Chase, : Defendants : JURY TRIAL DEMANDED IN RE: MOTION TO ENFORCE SETTLEMENT BEFORE HESS, J. ORDER th AND NOW, this 13 day of July, 2009, the motion of the plaintiffs to enforce settlement is DENIED. BY THE COURT, _______________________________ Kevin A. Hess, J. Joseph K. Goldberg, Esquire For the Plaintiffs David Banks, Esquire For Defendant United Medical Bank Joseph F. Riga, Esquire For Defendants Deutsche Bank and Bank of New York :rlm