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Aurora Commercial Corp. v. Paramount Residential Mortgage Group, Inc.

United States District Court, D. Colorado

March 17, 2014



BOYD N. BOLAND, Magistrate Judge.

This matter arises on Plaintiff's Motion to Enforce Settlement [Doc. # 48, filed 2/18/2014] (the "Motion to Enforce"). I held an evidentiary hearing on the Motion to Enforce this morning and made findings and conclusions, which are incorporated here. I respectfully RECOMMEND that the Motion to Enforce be GRANTED.[1]

A settlement agreement is a contract between the parties. Citywide Bank of Denver v. Herman , 978 F.Supp. 966, 977 (D. Colo. 1997). The law favors compromise and settlement, and settlement agreements will be enforced. City & County of Denver v. Adolph Coors Co. , 813 F.Supp. 1476, 1479 (D. Colo. 1993). A trial court has the power summarily to enforce a settlement agreement entered into by the parties where, as here, the litigation remains pending before it. United States v. Hardage , 982 F.2d 1491, 1496 (10th Cir. 1993).

The court must apply state contract law to issues involving the formation, construction, and enforcement of a settlement agreement. United States v. McCall , 235 F.3d 1211, 1215 (10th Cir. 2000). The parties agree that Colorado law applies here. Under Colorado law, a settlement agreement does not have to be in writing to be enforced, Citywide Bank , 978 F.Supp. at 977; DiFrancesco v. Particle Interconnect Corp. , 39 P.3d 1243, 1248 (Colo.App. 2001), but its terms must be clear, unambiguous, and capable of enforcement. City & County of Denver , 813 F.Supp. at 1479. "Unless the words used by the parties to express their agreement are found to be ambiguous in some material respect, the court should give them legal effect according to their plain, ordinary and popular meaning." Florom v. Elliott Mfg. , 867 F.2d 570, 575 (10th Cir. 1989).

Where, as here, there are disputed issues of material fact concerning the existence or terms of a settlement agreement, the court must hold an evidentiary hearing in order to resolve the disputed issues of fact. Hardage , 982 F.2d at 1496.

The Colorado Supreme Court articulated the law applicable to the determination of the existence of an enforceable agreement in I.M.A., Inc. v. Rocky Mountain Airways, Inc. , 713 P.2d 882, 888 (Colo. 1986):

In order to establish the existence of a contract, the evidence must show that the parties agreed upon all essential terms. The parties' agreement is evidenced by their manifestations of mutual assent. Furthermore, evidence of the parties' conduct, their oral statements and their writings, and other evidence illuminating the circumstances surrounding the making of an agreement are admissible to clarify the intent and purpose of the parties.

(Internal citations omitted.) The fact that the parties recognize that there would be a subsequent and more formal writing of their agreement does not foreclose a finding that they entered into an enforceable contract:

The mere intention to reduce an oral or informal agreement to writing, or to a more formal writing, is not of itself sufficient to show that the parties intended that until such formal writing was executed the parol or informal contract should be without binding force.

Id. (internal citations omitted).

In addition, a party arguing that it did not intend to be bound by a settlement agreement until "a formal document is executed" bears the burden of establishing that fact:

[T]he party arguing that the parties intended not to be bound until the execution of a formal writing has the burden of proving either that both parties understood they were not to be bound until the executed contract was delivered, or that the other party should have known that the disclaiming party did not intend to be bound before the contract was signed.

City & County of Denver , 813 F.Supp. at 1481 (internal quotations deleted). A party who knowingly and voluntarily authorizes the settlement of his claims cannot avoid the terms of the settlement simply because it has changed its mind. Woods v. Denver Dept. of Revenue , 45 F.3d 377, 378 (10th Cir. 1995).

The parties are sophisticated business entities with a long-standing relationship. Here, the evidence establishes that on Saturday, January 25, 2014, Aurora Commercial Corp. ("ACC") sent an email to Paramount ...

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