The opinion of the court was delivered by: James B. Zagel United States District Judge
MEMORANDUM OPINION AND ORDER
The Parties have filed cross-motions to compel compliance with their 2008 Settlement Agreement. Pro se Defendants Alan Ross ("Ross") and SAVE ASSOCIATES ("SAVE") (collectively "Defendants") contend that Plaintiffs Balshe LLC ("Balshe") and Simon Law Firm ("Simon") (collectively "Plaintiffs")have failed to comply with terms of the Settlement Agreement. Plaintiffs argue that Defendants have failed to perform on their obligations under the Settlement Agreement. For the following reasons, Defendants' motion to compel compliance with the Settlement Agreement is granted in part and denied in part.
The action underlying the contested Settlement Agreement involved a dispute over the purchase of interest in a patent describing a system of pooling life insurance policies into a trust in order to create a predictable income stream for the trust owners (the "Patent"). In 1997 Ross filed an application for the Patent with the United States Patent and Trademark Office ("USPTO"). Ross assigned a one-half interest in the Patent to an affiliate of the AXA Group, and thereafter, Balshe and Defendants reached an agreement regarding the purchase of Ross's interest in the Patent. The underlying lawsuit was filed when Ross allegedly attempted to sell the Patent to a third party. The contested Settlement Agreement ("Settlement Agreement") was reached on June 26, 2008. The parties to the Settlement were Balshe, Simon, Ross, SAVE, and the Meyer-Chatfield Corporation ("MC"). This court retained jurisdiction to enforce the terms of the Agreement.
As part of the Settlement Agreement the parties agreed to form a new entity "Newco" for the purpose of commercially exploiting the Patent. Newco is now to be known as "Institutional Pooled Benefits LLC" or "IPB." The Settlement Agreement established the rights and obligations of the parties regarding the ongoing ownership, management, and administration of IPB. The Settlement Agreement stated that the form and jurisdiction in which IPB would be organized/created would be mutually agreed upon by Balshe and Meyer, and that the ownership and management of IPB would be in accordance with the Settlement Agreement. Ross and SAVE agreed to execute all necessary documents to assign to IPB right, title and interest held in the Patent. The Settlement Agreement also required that IPB use its best efforts to acquire all right, title, and interest in the Patent.
The parties have been negotiating the terms of the IPB Operating Agreement (the "Operating Agreement"), and numerous drafts have been circulated. Defendants ask that this court order the execution of the December 2009 Draft without the inclusion of certain terms that Ross contends are inconsistent with the terms and conditions of the Settlement Agreement. Defendants further contend that certain provisions referred to in the Operating Agreement, but not contained in the Settlement Agreement, require the approval of all parties to the Settlement Agreement, and without such approval, are invalid. To date, Ross has transferred only a partial interest in the Patent to IPB. The current dispute surrounds the transfer of Ross's remaining interest in the Patent to IPB, and the formation of IPB pursuant to the Settlement Agreement. Because Ross contends that provisions contained in the draft IPB Operating Agreement are inconsistent with terms set forth by the Settlement Agreement, he has refused to transfer his remaining Patent interest to IPB.
As an initial matter, I note that pursuant to the terms of the Settlement Agreement, Ross is obligated to assign the Patent to IPB. Additionally, the validity of the Settlement Agreement is not in dispute. In determining whether certain terms are in compliance with the the Settlement Agreement, I will examine the text of the document and enforce the Settlement Agreement to the extent that it is unambiguous. Hampton v. Ford Motor Co., 561 F.3d 709, 714 (7th Cir. 2009).
Ross and SAVE argue that they have not failed to perform because no entity has been formed to receive the assignment of the Patent. This argument fails. First, Defendants contend that the IPB is not a proper "new" entity because it was not "new" per the terms of the Settlement Agreement. The Settlement Agreement states that "[t]he Parties shall form a new entity for the purposes of exploiting the Patent." IPB, however, was formed on May 22, 2008 prior to the execution of the Settlement Agreement. This argument is unavailing. IPB was formed specifically to be the corporate entity through which Plaintiffs would own and exploit the Patent. Following the execution of the Settlement Agreement, Balshe and MC agreed to use IPB as the entity that would own and commercially exploit the Patent. This is sufficient to meet the conditions set forth in the Settlement Agreement. Furthermore, Defendants' conduct undermines this contention. On September 25, 2008 Defendants assigned one half of the entire Patent interest to the IPB entity. It is undisputed that Plaintiffs and MC paid $500,000 on behalf of IPB to purchase the AXA Patent Interest, and that Defendants exercised the option to purchase the AXA Patent Interest on behalf of IPB. Defendants then assigned one half of its entire interest in the Patent to Plaintiff's IPB entity.
Defendants next contend that the Settlement Agreement requires that all Parties participate in the execution of a final Operating Agreement. This assertion, however, does not comply with a plain reading of the Settlement Agreement. Paragraph 22 of the Settlement Agreement states:
The Parties acknowledge that their respective rights and obligations are intended to be included in future documents to be executed by the Parties, including, without limitation, the documents necessary for the formation of Newco and any documents necessary to effectuate the assignment and recordation of assignment of the Patent with the United States Patent and Trademark Office. The Parties agree to cooperate in good faith to execute any and all necessary documents to effectuate the terms of this Agreement.
This provision does not require that all parties execute current and future documents related to IPB, but provides that all Parties' rights be recognized in the documents necessary to form Newco, now IPB. ...