Customers Bank v. Raffie Aryeh (2013)

MEMORANDUM OF DECISION RE MOTION FOR ORDER # 129

The plaintiff has brought a foreclosure action seeking satisfaction of a debt due from the defendant.   The matter was scheduled for trial on September 24, 2013.   As the trial date approached, the parties had multiple telephone conversations relative to various settlement proposals.   Ultimately, on September 19, 2013, the plaintiff filed a motion for continuance (# 128) on the basis that the matter had been settled but that time was needed to exchange documents and raise funds to facilitate the settlement.   The purported settlement was not consummated and on September 23, 2013, the defendant filed a motion for order (# 129) to enforce the settlement agreement that he claims was reached between the parties.   The plaintiff disputes that a settlement had been reached.   Oral argument on defendant's motion was held on October 22, 2013.

LEGAL STANDARD

“A trial court has the inherent power to enforce summarily a settlement agreement as a matter of law when the terms of the agreement are clear and unambiguous ․ [and] when the parties do not dispute the terms of the agreement.”  (Citations omitted.)  Audubon Parking Associates Ltd. Partnership v. Barclay & Stubbs, Inc., 225 Conn. 804, 811–12, 626 A.2d 729 (1993).   The “test of disputation ․ must be applied to the parties at the time they entered into the alleged settlement.”  DAP Financial Management Co. v. Mor–Fam Electric, Inc., 59 Conn.App. 92, 97, 755 A.2d 925 (2000).   Whether the parties in fact concluded a settlement agreement is determined by the “intention of the parties manifested by their words and acts.”  Hess v. Dumouchel Paper Co., 154 Conn. 343, 347, 225 A.2d 797 (1966).  “In determining whether to enforce a settlement agreement, the intention of the parties is controlling and is the key consideration.”   DAP Financial Management, Inc. v. Mor–Fam Electric, Inc., Superior Court, judicial district of New Haven, Docket No. CV–96–0383305–S (September 4, 1998, Silbert, J.).

“Agreements that end lawsuits are contracts, sometimes enforceable in a subsequent suit, but in many situations enforceable by entry of a judgment in the original suit.   A court's authority to enforce a settlement by entry of judgment in the underlying action is especially clear where the settlement is reported to the court during the course of a trial or other significant courtroom proceedings ․ Due regard for the proper use of judicial resources requires that a trial judge proceed with entry of a settlement judgment after affording the parties an opportunity to be heard as to the precise content and wording of the judgment, rather than resume the trial and precipitate an additional lawsuit for breach of a settlement agreement.   This authority should normally be exercised whenever settlements are announced in the midst of a trial.”  (Citations omitted;  internal quotation marks omitted.)  Audubon Parking Associates Ltd. Partnership v. Barclay & Stubbs, supra, 225 Conn. 811–12.

FACTS

Based on the credible testimony and exhibits presented to the court, the following facts are found.   Following a series of telephone discussions between their respective counsel, the parties discussed a settlement that called for the defendant to pay $10,000 to purchase the promissory note held by the plaintiff.   The specific terms were set forth in a September 18, 2013 e-mail from plaintiff's counsel, Richard Feldman, to defendant's counsel Tim Miltenberger.   It read as follows:  “Customers [plaintiff] advises that they will accept [$]10,000 to transfer the Aryeh obligation and withdraw the suit subject to review of his proposed bankruptcy petition, delivery of other financial information (if requested), a general release and payment from a third party which is not subject to preference claims.   Please confirm that the funds are still available.”   Defendant's exhibit A. The next day, September 19, 2013, after discussion with his counsel, the defendant agreed to the terms.   Based on that exchange of information, the plaintiff that same day filed with the court a motion for continuance (# 129) giving as its reason that the “[m]atter has been settled but time will be needed to raise settlement funds and exchange documents to facilitate the settlement.”   Defendant's exhibit B. The defendant consented to the continuance.   As a result, both parties ceased all efforts to prepare for trial.

The following day, September 20, 2013, plaintiff's counsel sent another e-mail to defendant's counsel stating:  “Any settlement must get FDIC approval.   We will submit it to them but it may take a few weeks.   I have requested a continuance of the trial.” ¹  Defendant's exhibit C. As noted above, the defendant had already consented to the continuance before the receipt of this e-mail.   Only forty-five minutes after his prior representation that it “may take a few weeks” to get a response from the FDIC, plaintiff's counsel sent another e-mail stating:  “The bank advises that the 10k is still acceptable but it cannot get FDIC approval to sell the note.   Can we simply settle the case?”   Defendant's exhibit D. To which the defendant's counsel responded within minutes:  “We had a deal.   I got my client's approval and the money based on a sale of the note.   What happened?”  Id. Although the plaintiff had acquired the loan through the FDIC, the FDIC was neither a party to the action nor was it a holder of the note.   Notably, no documentation or other competent evidence was presented at trial to verify the representations of plaintiff's counsel that the FDIC had refused, or was required, to approve the sale of the note.   Following the chain of e-mails, the parties' counsel spoke by phone wherein plaintiff's counsel reiterated the need for FDIC approval and that it had been refused.

In accordance with the terms of the September 18, 2013 e-mail which called in part for the plaintiff's review of defendant's proposed bankruptcy petition, the defendant had made arrangements to meet with his counsel on September 19, 2013 to work toward the completion of the petition and forward it to the plaintiff for review.   Defendant's exhibit E. The purpose in doing so was to provide assurance to the plaintiff that the defendant had no other available funds or assets to use toward contribution of the debt owed to the plaintiff.   However, before finishing work on the petition, the plaintiff wrote that the FDIC would not approve the transfer of the note and the defendant therefore ceased work on it.   Thereafter, the defendant filed the motion presently before the court.   Other facts will be recited as necessary.

ANALYSIS

The court finds by a preponderance of the evidence that the September 18, 2013 e-mail set forth in defendant's exhibit A from plaintiff's counsel to defendant's counsel constituted a settlement agreement between the parties.   It does not appear that there was any dispute between them as to the terms of the agreement at the time the settlement proposal was made by the plaintiff's counsel and accepted by the defendant.   The plaintiff's counsel, Richard Feldman, credibly testified at the hearing that he had the authority to offer the settlement proposal as set out in that e-mail.   There was nothing in it conditioning the agreement on the approval of the FDIC. Moreover, he also understood that at the time he wrote the e-mail that the approval of the FDIC would be required.   Despite this knowledge, he did not make that part of the proposal nor was it something that the defendant could have inferred from the language of the e-mail.   As noted above, the FDIC is not a party to the action nor is it a holder of the note.   The plaintiff's e-mails of September 20, 2013 set out in defendant's exhibits C and D make clear that the issue of FDIC approval was unilaterally raised by the plaintiff almost two full days after the initial proposal on September 18th which had been accepted that same day by the defendant.

The plaintiff then went further by indicating such an approval would take weeks to obtain.   Yet, less than an hour after providing this information to the defendant, the plaintiff reported that it had heard from the FDIC and that no approval was given.   However, no competent written evidence of the request to the FDIC, or response from it, was ever offered into evidence by the plaintiff to support its contention.

Additional evidence supporting the defendant's contention that a settlement had been agreed upon by the parties is highlighted by the language set forth in the plaintiff's motion for continuance of the day before, September 19th, in which the plaintiff asked for a continuance because the “[m]atter has been settled but time will be needed to raise settlement funds and exchange documents to facilitate the settlement.”  (Emphasis added.)   Defendant's exhibit B. There is no mention of FDIC approval as a condition of the settlement.   As Judge Silbert noted in a similar factual scenario:  “The fact that this agreement was reached not during trial but just prior to trial, is a difference without a distinction.   The agreement was clear and unambiguous and was the basis for the plaintiff's having informed the court that the case would not be tried and would be withdrawn.”   DAP Financial Management, Inc. v. Mor–Fam Electric, Inc., Superior Court, judicial district of New Haven, Docket No. CV–96–0383305–S, supra.

The plaintiff also contends that the language within the e-mail that the exchange of money and the transfer of the note was “subject to review” of the defendant's proposed bankruptcy petition is clear evidence that there was no final settlement agreement between the parties.   This argument is unavailing.   The evidence establishes that the defendant was prepared to finalize the preparation of the bankruptcy petition for the plaintiff's review but ceased his effort upon being told that the plaintiff was insisting on FDIC approval and that it had not been granted.   In effect, the defendant was being told by the plaintiff that there was no point in proceeding further.   The plaintiff is correct that the agreement called for the review of the proposed bankruptcy petition and the submission of the petition by the defendant remains a component of the agreement.   The fact that the review remains to be done does not eviscerate the agreement or call into question what the terms were at the time the settlement was reached.   The defendant must still submit the petition for the plaintiff's review.   This however, should not be viewed as a back door through which the plaintiff may scuttle the agreement.   The testimony made clear that the purpose of the submission of the petition was for the plaintiff to verify that the defendant had no other liquid assets which were available to contribute toward payment.   Provided the review meets that criterion, as well as the other requirements set forth in the September 18, 2013 e-mail, the transaction should be completed.   Failure of the defendant to meet that criterion would allow the plaintiff the right to withdraw from the commitment to make the transfer.

CONCLUSION

The motion seeking an order to enforce the settlement agreement is granted as the parties intended to enter into an agreement to settle their dispute on September 18, 2013 as evidenced through their words and acts.   As such the parties are directed to immediately comply with the terms of the agreement.

BY THE COURT

Shaban, J.

FOOTNOTES

FN1. The FDIC is the Federal Deposit Insurance Corporation..  FN1. The FDIC is the Federal Deposit Insurance Corporation.

Shaban, Dan, J.