Eagle v. Kan. Counselors, Inc.

RYAN EAGLE, Plaintiff,

v.KANSAS COUNSELORS, INC., Defendant.

CIVIL ACTION No. 12-2533-KHV

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

Dated: January 8, 2013

MEMORANDUM AND ORDER

Ryan Eagle brought suit pro se against Kansas Counselors, Inc., a debt collection agency, for violating the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., in efforts to collect a $244.17 medical debt that plaintiff disputed with the original creditor. On October 9, 2012, plaintiff signed a settlement agreement. This matter is before the Court on Plaintiff's Motion To Vacate Settlement Agreement (Doc. #26) filed October 19, 2012, and defendant's Motion To Enforce Settlement Agreement (Doc. #37) filed November 1, 2012. After plaintiff filed his motion, counsel entered their appearance for plaintiff. Because the parties entered a binding, written settlement agreement with no evidence of fraud or bad faith, the Court overrules plaintiff's motion to vacate and sustains defendant's motion to enforce.

Legal Standards

The Court has the power to summarily enforce a settlement agreement while the case is pending before the Court. United States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993). State contract law governs the formation, construction and enforceability of settlement agreements. United States v. McCall, 235 F.3d 1211, 1215 (10th Cir. 2000). Under Kansas law, "in the absenceof bad faith or fraud, when parties enter into an agreement settling and adjusting a dispute, neither party is permitted to repudiate it." Krantz v. Univ. of Kan., 271 Kan. 234, 241-42, 21 P.3d 561, 567 (2001); see also Woods v. Denver Dep't of Revenue, Treasury Div., 45 F.3d 377, 378 (10th Cir. 1995) (party who knowingly and voluntarily enters settlement ordinarily cannot avoid settlement because he changes his mind); Lewis v. Gilbert, 14 Kan. App.2d 201, 203, 785 P.2d 1367, 1368 (1990) (party's change of mind no basis for not enforcing agreement). The Court may, however, set aside a settlement agreement on the ground of mutual mistake of the parties. Id. at 241-43, 21 P.3d at 567-68. But a "mere mistake of fact on the part of one of the parties to a release, in the absence of fraud, duress, undue influence, or mental incapacity, is not sufficient ground for the avoidance of a release." Fieser v. Stinnett, 212 Kan. 26, 30, 509 P.2d 1156, 1160-61 (1973). The law favors the compromise and settlement of disputes. Krantz, 271 Kan. at 241-42, 21 P.3d at 567.

A binding agreement requires a meeting of the minds on all essential terms. Albers v. Nelson, 248 Kan. 575, 580, 809 P.2d 1194, 1198 (1991); Augusta Bank & Trust v. Broomfield, 231 Kan. 52, 60, 643 P.2d 100, 106-07 (1982). To constitute a meeting of the minds, the parties must have a fair understanding that normally accompanies mutual consent, and the evidence must show with reasonable definiteness that the minds of the parties met upon the same matter and agreed upon the terms of the contract. Steele v. Harrison, 220 Kan. 422, 428, 552 P.2d 957, 962 (1976); see Andra v. Lean P. Peebler Revocable Trust, 286 P.3d 576 (Table), 2012 WL 4937465, at *6 (Kan. App. 2012) (meeting of minds is shorthand for requirement that parties to contract objectively manifest intent to be bound by, and share understanding of, terms of proposed agreement). The intent of the parties, which is a question of fact, controls. Steele, 220 Kan. at 428, 552 P.2d at 962.

Under Kansas law, settlement agreements need not be in writing to be enforceable. Lewis,14 Kan. App.2d at 203-04, 785 P.2d at 1368-69. But where the parties agree in writing, and the agreement is unambiguous, Kansas courts determine the intent of the parties from the four corners of the instrument, harmonizing the language therein if possible. Hall v. JFW, Inc., 20 Kan. App.2d 845, 848-49, 893 P.2d 837, 840 (1995) (citing Brown v. Lang, 234 Kan. 610, 610, 675 P.2d 842, 843 (1984); Wiles v. Wiles, 202 Kan. 613, 619, 452 P.2d 271, 276-77 (1969)). They enforce unambiguous contracts according to plain, general and common meaning. Id. (citing Wood River Pipeline Co. v. Willbros Energy Servs. Co., 241 Kan. 580, 580, 738 P.2d 866, 867 (1987)). When a contract is complete, unambiguous and free from uncertainty, parol evidence of prior or contemporaneous agreements or understandings tending to vary the terms of the contract evidenced by the writing is inadmissible. Simon v. Nat'l Farmers Org., Inc., 250 Kan. 676, 679-80, 829 P.2d 884, 887-88 (1992).

Contracting parties have a duty to learn the contents of a written contract before signing it. Albers, 248 Kan. at 578-79, 809 P.2d at 1197. This duty includes reading the contract and, if necessary, getting an explanation of its terms. Id.; Sutherland v. Sutherland, 187 Kan. 599, 610, 358 P.2d 776, 785 (1961). Negligent failure to read a contract estops the contracting party from voiding the contract on the ground of ignorance of its contents. Albers, 248 Kan. at 578-79, 809 P.2d at 1197; Rosenbaum v. Tex. Energies, Inc., 241 Kan. 295, 299, 736 P.2d 888, 891-92 (1987). A party who signs a written contract is bound by its provisions regardless of his failure to read or understand the terms, unless he entered the contract due to fraud, undue influence or mutual mistake. Albers, 248 Kan. at 578-79, 809 P.2d at 1197; Rosenbaum, 241 Kan. at 299, 736 P.2d at 891-92; Sutherland, 187 Kan. at 610, 358 P.2d 785.

Factual Background

On October 9, 2012, plaintiff and defendant's counsel attended a scheduling conference with U.S. Magistrate Judge James P. O'Hara. Judge O'Hara strongly encouraged the parties to settle the case. Heeding Judge O'Hara's good advice, the parties promptly resumed settlement negotiations. Before leaving the courthouse, the parties orally agreed to settle the case. Plaintiff states that he understood defendant's obligations under the settlement agreement to include paying money and "fixing" the alleged credit reporting error. In exchange, plaintiff would keep the agreement confidential and dismiss the case with prejudice. In light of the parties' agreement, defendant's counsel contacted Judge O'Hara's chambers to inform him of the settlement. The record contains no contemporaneous memorialization of the terms of the parties' oral agreement.

Defendant's counsel reduced the oral agreement to writing and emailed it to plaintiff, stating as follows: "Please see attached & give me your thoughts. If you are ready to sign, please sign & return to me by fax or email. Thanks." Doc. #27-4. The written settlement agreements states in part as follows:

Ryan Eagle agrees to dismiss with prejudice the Lawsuit, which is currently pending in the United States District Court for the District of Kansas. Ryan Eagle also hereby agrees that he will not individually, or as a member of a class, commence any action or proceeding against Defendant regarding the Occurrence. Ryan Eagle also agrees that he will not provide information or make any claim or complaint to any federal, state, or local agency or any other public or private entity regarding the Occurrence. All such claims that were made or could have been made are fully and forever released, and any information relating to said claims is strictly confidential as set forth below.

In exchange for, and in consideration of, Ryan Eagle's dismissal with prejudice of the Lawsuit, and fully confidential release of all such claims, Defendant hereby agrees to pay to the order of Ryan Eagle the sum of one thousand three hundred fifty dollars even ($1,350.00). As inducement for Defendant to enter into this mutual agreement, Ryan Eagle agrees that the settlement of the Occurrence, the terms of settlement, the terms of this Release, the facts surrounding the Occurrence,and any recordings or other documentation of any type that in any manner relates to the Occurrence or any of the facts surrounding the Occurrence, shall remain STRICTLY CONFIDENTIAL, . . . .

The Parties agree that actual damages flowing from breach of the confidentiality obligations created by this agreement or other such terms set forth above would be difficult or impossible to assess and prove, and therefore stipulate to liquidated damages in the amount of one thousand three hundred fifty dollars even ($1,350.00) plus all court costs and process fees incurred and $250.00 attorney fees associated with any lawsuit filed to enforce the terms of this Agreement or to collect the liquidated damages following a breach of confidentiality. Nothing in this full release shall be construed so as to prevent either party from enforcing the terms of this Agreement in the future by whatever legal means are available.

Ryan Eagle acknowledges that Defendant denies liability and responsibility for any and all claims asserted by Ryan Eagle and nothing herein should be construed as an admission of liability. Ryan Eagle represents and warrants that he has not assigned all or any portion of the rights, titles, or interests in or with respect to the matters released hereunder, and that no trustee in bankruptcy or assignee for the benefit of creditors has any right to his claims hereby released. Ryan Eagle further acknowledges that nothing in this Release and Settlement of All Claims shall act to forgive any underlying debt. Ryan Eagle acknowledges that Kansas Counselors, Inc. does not have authority to resolve any underlying debt. No debt is forgiven.

As additional consideration for the dismissal of the Lawsuit pending in federal court in the state of Kansas, the Parties acknowledge that they fully understand the terms of the settlement and that they voluntarily accept the terms of this agreement for the purpose of making full and final compromise, adjustment, and settlement of any losses and damages. The Parties have had a full and fair opportunity to review this Agreement, and have it reviewed by independent counsel, and the Parties agree that it shall be treated as

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