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Kaminski v. Wiens

United States District Court, N.D. Illinois, Eastern Division

September 8, 2016




         The plaintiff has filed a motion asking the court to reinstate this case and enter the judgments the parties agreed to as a part of the settlement they entered into as part of final judgment the court entered May 1, 2012.[1] The parties' dispute arose out of a $1.1 million loan the plaintiff made to defendant, Transnet Capital Corporation, and which defendant, Thomas Wiens, guaranteed. As it turned out, as the defendants admitted in their answer to the Complaint, only a single interest payment was ever made, and the entirety of the principal was outstanding well over a decade after the note matured. [Dkt. #12, ¶21]. I conducted a settlement conference with the parties beginning in October of 2011 and continuing, off and on, through May 2012, when a settlement was ultimately finalized. [Dkt. #59, #61, #64, ##66-76]. Under the terms of the settlement agreement the parties reached, defendants were required to make, by October 13, 2013, interim payments totaling $175, 000 ($100, 000 by December 13, 2011, $50, 000 by October 13, 2012, and $25, 000 by October 13, 2013), and a final payment of $925, 000 on or before July 31, 2015.

         I dismissed the case without prejudice and at the parties' express request, retained jurisdiction to enforce the terms of the settlement agreement and, if necessary, enter the appropriate judgments. See Jones v. Ass'n of Flight Attendants CWA, 778 F.3d 571, 573 (7th Cir. 2015)(noting that a court may retain jurisdiction to enforce a settlement where it has dismissed a case without prejudice). The parties agreed that, in the event of any default:

the Trust may reinstate the Lawsuit pursuant to the district court's retention of jurisdiction, file and record the Judgments, and pursue collection of the amount provided for in the Judgments through any lawful means.

         [Dkt. ## 76, 77]. As part of the parties' settlement agreement, the defendants provided signed originals of the final judgments they agreed would be entered upon any default. The Agreed Final Judgments are to be entered in the amount of (a) $1, 450, 000.00 plus simple interest at the rate of 10% per annum on the sum of (i) $350, 000 plus (ii) the unpaid balance of the Principal Amount outstanding from time to time after January 1, 2010, minus the $175, 000 paid by Defendants under the Settlement Agreement. [Dkt. #77-1, #77-2]. As of August 1, 2016, the total amount of the Agreed Final Judgments is equal to $2, 157, 260.27, plus per diem interest of $349.32 for each day after August 1, 2016.

         There is no dispute that the defendants defaulted on their obligations under the settlement agreement. While they made the required interim payments on or about the dates they were due, they have not made the final payment of $925, 000, despite that amount now being more than a full year past due (not to mention the repayment of principal under the original loan now being almost 16 years late). Accordingly, there appears to be no reason not to reinstate this case and enter the judgments to which the defendants agreed.

         But, despite their agreement to this consequence as a result of their default under the terms of their settlement agreement, the defendants submit that, to follow through on that agreement's terms and enter the judgments against them would somehow “frustrate the entire purpose of the Settlement Agreement” because defendant Thomas Wiens tried, in good faith, to comply with the terms of the settlement agreement but simply did not have the liquid assets necessary to pay the judgment amounts they agreed to. [Dkt. ##81 at 1, 83-1, at 1-2]. Instead, Mr. Wiens thinks the better route is to scrap the terms of the settlement agreement and have another mediation. Otherwise, he says, the result will simply be non-performance on his part. [Dkt. #83-1, at 2]. If Mr. Wien is correct, the enforceability of settlement agreements is largely at an end.

         The importance of settlements in the federal court system cannot be overestimated. See generally Marek v. Chesny, 473 U.S. 1 (1985); United States v. Dawson, 425 F.3d 389 (7th Cir. 2005)(Posner, J.)(“[M]ost cases ... are settled rather than tried . . . .”).[2] They save the parties and the taxpayers untold expenses should litigation proceed. As such, the federal policy of enforcing settlement agreements is vitally important, Baseload Energy, Inc. v. Roberts, 619 F.3d 1357 (Fed. Cir. 2010), and cannot be undone because a party had a change of heart.

         The terms of a settlement agreement are interpreted and enforced just as any contract would be, In re Motorola Sec. Litig., 644 F.3d 511, 517 (7th Cir. 2011), and cannot be undone because one of the parties seeks to avoid the consequences of the settlement agreement to which he knowingly chose to enter. Taylor v. Gordon Flesch Co. Inc., 793 F.2d 858, 863 (7th Cir.1986).[3]

         In Illinois we follow the objective theory of intent. Sgouros v. TransUnion Corp., 817 F.3d 1029, 1034 (7th Cir. 2016); Newkirk v. Vill. of Steger, 536 F.3d 771, 774 (7th Cir. 2008). “‘Secret hopes and wishes count for nothing. The status of a document as a contract depends on what the parties express to each other and to the world, not on what they keep to themselves.'” Id. (quoting Skycom Corp. v. Telstar Corp., 813 F.2d 810, 814-15 (7th Cir.1987)). Here, the defendants' present wishes are that the express terms of the settlement agreement be ignored, and that they be given a third chance to make good - or at least try to - on a loan obligation they defaulted on a decade and a half ago. But, the terms that the parties agreed to are straightforward, and the objections that the defendants now raise to following through on those agreed terms are either unfounded, undeveloped, or put out of view the terms of the parties' agreed to settlement agreement, which, in Illinois as elsewhere, cannot be judicially rewritten because one of the settling parties desires it.[4]

         The defendants' seven paragraph response brief cites not a single case and points to no provisions of the parties' settlement agreement that support their position. The Seventh Circuit has said, time and time again, that the kinds of undeveloped and skeletal contentions like those in the defendants' response brief are deemed waived. St. John v. Cach, LLC, 822 F.3d 388, 392 (7th Cir. 2016); Hernandez v. Cook Cty. Sheriff's Office, 634 F.3d 906, 913 (7th Cir. 2011); Mahaffey v. Ramos, 588 F.3d 1142, 1146 (7th Cir.2009);United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991).

         Mr. Wiens may be right that the entry of the judgments to which the defendants agreed will simply lead to non-performance of further payment; but this is exactly the scenario the settlement agreement addressed in the clearest of terms. The parties were fully aware of the possibility of default and provided for it. The purpose of the settlement agreement would not then be “frustrated” in any respect that the law countenances by the entry of the agreed judgments. Indeed, their entry is the exact thing the parties envisioned happening upon the defendants' default. Could plaintiff do better by going back to the drawing board with the defendants and setting up yet another payment plan? Perhaps, but it doesn't seem likely, especially given the defendants' track record. And more importantly, the defendants' alternative course of action would make a mockery out of the importance and sanctity of federal settlement agreements and of contracts generally. Defendants are already over a year behind on the payment due under the settlement agreement, 16 years behind on the original loan and note, and the defendants give no indication they will do any better the next time around. All they say is they have no liquid assets sufficient now to pay the agreed judgment amounts. That is not legally sufficient to scrap the conditions the defendants agreed to and give them a third chance hopefully to make good on their financial obligations. But, in any event, the plaintiff has every right to demand the entry of the agreed judgments, which is the exact relief the parties bargained for and to which they agreed.

         The defendants have some additional objections to living up to the terms of their settlement agreement. These objections begin with the total amount of the judgment - $2, 157, 260.27 - that the plaintiff seeks to have entered. The problem for the defendants is the calculation of interest and the plaintiff's delay in seeking this reinstatement because the plaintiff waited about a year after the $925, 000 payment was due before bringing this motion. [Dkt. #83-1, at 3]. But, the defendants ignore the provisions of the settlement agreement; provisions they agreed to. They specifically waived any objections based on the plaintiff's diligence in collection proceedings or presentation of notice of default. [Dkt. #77-3, at 11, ¶ 19(b)].

         Defendants also complain that the plaintiffs failed to explain how they calculated interest to reach the final judgment amount of $2, 157, 260.27. [Dkt. #83-1, at 2]. But, the judgments the defendants agreed to made clear that interest would be calculated at the “simple interest rate of 10% per annum on the sum of (i) $350, 000 plus (ii) the unpaid balance of the Principal Amount outstanding from time to time after January 1, 2010" with a setoff for the $175, 000 the defendants actually paid. [Dkt. #77, at 3; #77-1, #77-2, #77-3, at 7, ¶12]. The defendants balk at interest being ...

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