United States District Court, W.D. Missouri, Western Division
ORDER AND OPINION DENYING PLAINTIFF'S MOTION TO
ENFORCE SETTLEMENT AGREEMENT
PHILLIPS, JUDGE UNITED STATES DISTRICT COURT
initiated this suit in state court, alleging a single claim
for breach of contract. Defendant removed the case to federal
court. The parties mediated their dispute and during the
mediation they signed an agreement that resolves their
dispute. Now pending is Plaintiff's Motion to Enforce
Settlement Agreement. (Doc. 28.) After considering the
parties' arguments, the Court denies Plaintiff's
agreement executed during the mediation, (Doc. 29-1; Doc.
30-1), provided that Defendant would pay Plaintiff a total of
$175, 000, and that the parties would exchange mutual
releases. In addition, the agreement provides that
“Plaintiff agrees to satisfy all liens.” During
the mediation, it was known that Plaintiff owed the IRS back
taxes of approximately $475, 000. Plaintiff concedes that
when it filed for Chapter 11 bankruptcy in 2013 it “had
some outstanding tax debt, ” (Doc. 29, p. 6), and the
Record includes the Proof of Claim filed by the IRS. (Doc.
30-3.) The bankruptcy was dismissed without a reorganization
plan being approved or any of Plaintiff's debts being
after the mediation, Defendant (through counsel) contacted
Plaintiff (again, through counsel) and asked “How do
you want to handle the liens against [Plaintiff]? Because of
the bankruptcy, we have notice of creditor claims, although I
am not sure [Plaintiff's principal] has been served any
lien notices.” (Doc. 31-1, p. 9.) The parties then
discussed (1) whether there were any liens and (2) how to
resolve the issue. For instance, on December 6,
Defendant's counsel expressed concern “that the IRS
lien is a ‘silent lien' meaning a third party who
pays amounts due a debtor, particularly an insolvent debtor
like [Plaintiff], instead of the IRS is liable for the
amounts paid . . . .” (Doc. 31-1.) Plaintiff continued
to dispute the existence of a lien, and Defendant continued
to propose ways to alleviate its concern that it not be
liable to the IRS if it paid the settlement funds to
Plaintiff. Some of Defendant's proposals included (1)
obtaining lien waivers from the IRS confirming that there are
not liens, (2) placing the settlement proceeds in trust until
the debt was resolved, or (3) requiring Plaintiff to resolve
all tax debts before receiving payment. Plaintiff found these
proposals, and all others from Defendant, unacceptable and
favored having Defendant simply pay the proceeds to
Plaintiff. In late December, Defendant mailed requests for
lien waivers to the IRS (and, possibly, other taxing
authorities), but to date has not received a response. (Doc.
30, p. 3 n.4.)
contends that Defendant's proposals are inconsistent with
the agreement reached at the mediation, and seek an order
that, inter alia, requires Defendant to
“execute a settlement in accordance with the terms of
the mediation agreement . . . .” (Doc. 29, p. 10.)
Defendant counters that it is Plaintiff that seeks a final
agreement that is inconsistent with the terms established at
the mediation. The Court resolves these arguments below.
courts have the inherent authority to enforce agreements that
settle or resolve cases currently pending before the court.
E.g., Harper Enterprises, Inc. v. Aprilia World Service
USA, Inc.¸ 270 Fed. App'x 458, 460 (8th Cir.
2008). A settlement agreement is a contract, see, e.g.,
Myers v. Richland County, 429 F.3d 740, 745 (8th Cir.
2005), and when considering a settlement agreement the
Court's objective (as is the case with any contract) is
to give effect to the parties' intent. E.g., Cromeans
v. Morgan Keegan & Co., 859 F.3d 558, 566 (8th Cir.
2017). If possible, the contract should be interpreted in a
manner that gives meaning to all of its terms. E.g.,
Portell v. AmeriCold Logistics, LLC, 571 F.3d 822, 824
(8th Cir. 2009).
argues that Defendant's various proposals for
demonstrating that there are no liens (or that any liens that
exist have been satisfied) violate the parties' agreement
because the parties did not specifically agree when or how
the liens were to be satisfied. It thus proposes a settlement
agreement that merely states that Plaintiff is required to
satisfy any liens that may exist on the settlement proceeds.
(Doc. 31-4, p. 3.) The Court concludes that Plaintiff's
argument - and its proposed Settlement and Mutual Release
Agreement - does not effectuate the parties' intent as
expressed in the agreement reached during the mediation.
provision that Plaintiff “satisfy all liens” was
clearly intended to allay Defendant's concerns about any
liens that might exist on the money it paid to Plaintiff.
Defendant understandably does not want to pay the $175, 000
to Plaintiff, only to find out later that (1) the IRS (or
some other taxing authority) had a lien on the money and (2)
Plaintiff did not use the money to pay the tax debt secured
by that lien. It makes no sense for Plaintiff to simply
promise (as it proposes) to resolve any lien issues should
they arise because such an agreement may prove to be
unenforceable as to Plaintiff and therefore insufficient to
protect Defendant's interest in insuring that it pays the
$175, 000 only once.
is correct when it points out that the parties did not agree
on any particular method for insuring that any liens are
satisfied. However, this lack of specificity does not mean
that Plaintiff is absolved of its obligation to provide
Defendant with the assurance that it bargained for.
Furthermore, the Court believes that several of
Defendant's proposals - obtaining lien waivers from the
taxing authorities, placing the money in trust, etc. -
accomplish this objective and are therefore consistent with
the parties' intent.
noted earlier, Defendant has sought lien waivers from taxing
authorities. The Court agrees with Defendant that “[i]f
the waivers are returned the problem is solved.” (Doc.
30, p. 3 n.4.) If the waivers are not returned, then the
parties will know that the taxing authority believes that a
lien exists - and Plaintiff must satisfy the lien. Thus, the
Court agrees that judicial intervention is premature.
Defendant's actions will, eventually, lead to a
resolution. For present purposes, it is sufficient for the
Court to announce its conclusion that Defendant is entitled
to a meaningful assurance that (1) there are no tax liens or
that (2) the funds it pays will be used to satisfy any tax
liens, all to make sure that Defendant has to pay the
settlement proceeds only once.