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Central Laborers' Pension Fund v. AEH Construction, Inc.

United States District Court, C.D. Illinois, Springfield Division

March 31, 2015

CENTRAL LABORERS' PENSION FUND, CENTRAL LABORERS' SUPPLEMENTAL PENSION FUND, CENTRAL LABORERS' WELFARE FUND, CENTRAL LABORERS' RETIREE WELFARE FUND, CENTRAL LABORERS' ANNUITY FUND, CENTRAL LABORERS' ANNUITY PREMIUM FUND, ILLINOIS LABORERS' AND CONTRACTORS' JOINT APPRENTICESHIP & TRAINING PROGRAM, NORTH CENTRAL ILLINOIS LABORERS' HEALTH & WELFARE FUND, CENTRAL ILLINOIS LABORERS'-EMPLOYERS' COOPERATIVE EDUCATION TRUST, NORTH CENTRAL ILLINOIS LABORERS'-EMPLOYERS' COOPERATIVE EDUCATION TRUST, NORTH CENTRAL ILLINOIS MIDWEST REGIONAL ORGANIZING COMMITTEE, NORTH CENTRAL ILLINOIS MARKET PRESERVATION FUND, LABORERS' OF ILLINOIS VACATION FUND, SOUTHERN AND CENTRAL VACATION FUND, CENTRAL ILLINOIS LEGAL SERVICES FUND, SUBSTANCE ABUSE TESTING FUND, LABORERS' LOCAL 362, and LABORERS' LOCAL 538, Plaintiffs,
v.
AEH CONSTRUCTION, INC., and MID-WEST ILLINOIS CONCRETE CONSTRUCTION, INC., Defendants.

OPINION

SUE E. MYERSCOUGH, District Judge.

This cause is before the Court on the Motion to Enforce Settlement (d/e 23) filed by Plaintiffs. Because the Court finds that the parties did not have a meeting of the minds regarding a material term of the agreement, the Motion is DENIED.

I. JURISDICTION, APPLICABLE LAW, AND LEGAL STANDARD

This Court has jurisdiction over the Motion to Enforce Settlement because the case is still pending before this Court. See Wilson v. Wilson, 46 F.3d 660, 664 (7th Cir. 1995) (holding that a district court has the inherent power to enforce an agreement to settle a case that is pending before the district court). The jurisdictional problems arise when the parties settle, dismiss the case, and then one party tries to return to federal court to enforce the settlement. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 378 (1994) ("Enforcement of the settlement agreement... is more than just a continuation or renewal of the dismissed suit, and hence requires its own basis for jurisdiction"). That is not the case here.

The Court applies Illinois law to the Motion to Enforce Settlement. The Seventh Circuit has expressly held that "the formation, construction, and enforceability of a settlement agreement is governed by local contract law." Carr v. Runyan, 89 F.3d 327, 331 (7th Cir. 1996); see also Lynch, Inc. v. SamataMason, Inc., 279 F.3d 487, 490 (7th Cir. 2002) (noting that while there has been some uncertainty in the past, it is now clear that state law governs a suit to enforce a settlement of a federal suit). Finally, whether to enforce a settlement agreement is within the district court's discretion. Hakim v. Payco-General Am. Credits, Inc., 272 F.3d 932, 935 (7th Cir. 2001) (noting that the Seventh Circuit reviews a district court's decision to enforce a settlement agreement for an abuse of discretion).

II. BACKGROUND

In February 2014, Plaintiffs filed a lawsuit against AEH Construction, Inc. (AEH) and Mid-West Illinois Concrete Construction, Inc. under ERISA for the failure to pay certain contributions on behalf of employees who are members of the union and participants in Plaintiffs' employee benefit funds. See Complaint (d/e 1). In Count I, Plaintiffs allege that AEH owed audit liabilities, delinquent contributions, report form shortages, liquidated damages and audit costs. Count II alleges that Mid-West is liable as the successor company to AEH.

In June 2014, the Court entered an Order of Default Judgment against AEH. See d/e 22. Since then, the case has proceeded solely against Mid-West (hereinafter referred to as Defendant). Plaintiffs are represented by Timothy James Shrake, II and Patrick J. O'Hara (the latter since March 17, 2015). Defendant is represented by Brian A. Peterson.

Plaintiffs have now filed a Motion to Enforce Settlement. See d/e 23. In the motion and memorandum, Plaintiffs assert that the parties reached an oral agreement but Defendant has failed to sign the written Settlement Agreement. Defendant essentially asserts in its memorandum in opposition that the oral agreement was contingent upon the parties reaching a mutually agreeable confidentiality provision. Both parties submitted affidavits and documents to support their respective positions.

On March 17, 2015, Plaintiffs filed a Motion requesting a status hearing. Plaintiffs asserted that, because it was clear that two different versions of the facts were presented, neither counsel could act as counsel in this case because they were now material witnesses in the case. Plaintiffs asked for a status/discovery conference to advance the disposition of the pending issues.

On March 27, 2015, this Court held a status hearing and heard the positions of the parties on both the Motion to Enforce Settlement and disqualification of counsel. This Court concluded that discovery was not required, the Court could decide the Motion on the pleadings submitted, and that disqualification was unnecessary.

III. FACTS PERTAINING TO THE SETTLEMENT NEGOTIATIONS

The Affidavits and documents submitted show there are slight differences between the parties about what occurred in this case. The parties agree that settlement negotiations began in March 2014 and spanned approximately six months, the delay being due in part to the fact that Plaintiffs' Board of Trustees only meets quarterly.

The parties also appear to agree that on September 11, 2014, Defendant offered to settle for a lump sum payment of $22, 000 "with the payment being contingent upon no admission of liability and a mutual full and final release through November 2012 with a confidentiality provision." Shrake Aff. ¶1. Plaintiffs' counsel told Defendant's counsel that the Board of Trustees would have to formally accept the offer. Id . ¶ 2. On September 29, 2014, the Board of Trustees accepted the offer, and the next day, September 30, Plaintiffs' counsel conveyed the acceptance to Defendant's counsel. Id . ¶¶ 3, 4; see also Exhibit 1A, September 30, 2014 email from Shrake to Peterson noting the committee approved the settlement payment "which would include a final release through November 2012 and a confidentiality provision") (d/e 24-2). Defendant asserts that subsequent to receiving the September 30, 2014 correspondence from Plaintiffs' counsel, Defendant's counsel had a conversations with Plaintiffs' counsel in which defense counsel explained that a ...


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