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Federal Deposit Insurance Corporation v. Broom

United States District Court, D. Colorado

August 28, 2014

FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for AmTrust Bank, Plaintiff,
v.
TERRANCE G. BROOM, an individual, B&B APPRAISAL, INC., a Colorado corporation, JOSEPH S. PACE, an individual, JSP PROPERTIES AND APPRAISAL, a Colorado company, and Does 1 through 40, inclusive, Defendants.

ORDER

PHILIP A. BRIMMER, District Judge.

This matter is before the Court on the Amended Recommendation of United States Magistrate Judge (the "Recommendation") [Docket No. 111] filed on June 26, 2014. The magistrate judge recommends that the Motion to Enforce Settlement [Docket No. 78] filed by defendants Joseph S. Pace and JSP Properties and Appraisal (collectively, the "Pace defendants") be granted. Docket No. 111 at 5. The Court will "determine de novo any part of the magistrate judge's disposition that has been properly objected to" by plaintiff. Fed.R.Civ.P. 72(b)(3). In the absence of a proper objection, the Court may review a magistrate judge's recommendation under any standard it deems appropriate. See Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991); see also Thomas v. Arn, 474 U.S. 140, 150 (1985) ("[i]t does not appear that Congress intended to require district court review of a magistrate's factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings").

The facts relevant to reviewing the Recommendation are as follows. Plaintiff brought this suit as receiver for AmTrust Bank ("AmTrust"), a failed insured depository institution. Docket No. 1 at 2, ¶ 3. On March 5, 2014, the magistrate judge held a settlement conference. Docket No. 77. The parties reached an agreement as to the material terms of a settlement, reduced their agreement to writing, and signed the agreement. Docket No. 78-1; Docket No. 78-2. The Material Terms of Settlement Agreement ("Material Terms") are as follows:

1. The Plaintiff agrees to release all claims that have been brought against Defendants in this lawsuit.
2. The settlement is a compromise of disputed claims. No party admits any liability to the other party.
3. Defendants agree to pay Plaintiff the total of one-hundred and ninety-five thousand dollars ($195, 000.000) in complete settlement of all claims that were or could have been brought in this lawsuit, whether known or unknown, against Defendants.
4. Defendants make no representation as to the tax consequences of this Settlement or the payments referenced herein.
5. The parties agree that this Material Terms of Settlement Agreement is binding and enforceable. Plaintiff's counsel will take the lead in drafting a Final Settlement Agreement based on Plaintiff's form agreement encompassing the material terms set forth herein, and counsel for defendants will cooperate, and will assist in preparing a Stipulation of Dismissal with Prejudice to be filed within 20 days. Each party will pay its own attorney's fees and costs.

Docket No. 78-1. The Pace defendants later executed a nearly identical agreement containing substantially the same terms, but providing that the Pace defendants would pay $97, 500.00 in complete settlement of all claims and that payment would be made within thirty days of the execution of a final settlement agreement as contemplated in paragraph five of the Material Terms. Docket No. 78-2.[1] Pursuant to paragraph five of the Material Terms, plaintiff proposed a form agreement (the "form agreement") used regularly by the FDIC when acting as a receiver containing the following reservation of rights:

Notwithstanding any other provision of this Agreement, nothing in this Agreement shall be construed or interpreted as limiting, waiving, releasing, or compromising the jurisdiction and the authority of the Federal Deposit Insurance Corporation in the exercise of its supervisory or regulatory authority or to diminish its ability to institute administrative enforcement or other proceedings seeking removal, prohibition, or any other relief it is authorized to seek pursuant to its supervisory or regulatory authority against any person.

Docket No. 96-1 at 4, ¶ III.C.2. The Pace defendants state that they did not agree to the inclusion of this provision and filed the present motion. Docket No. 78 at 2-5.[2] Defendants Terrance G. Broom and B&B Appraisal, Inc. (collectively, the "Broom defendants") joined in the Pace defendants' motion. Docket No. 83 at 1. The Pace defendants seek the following relief: "Pace Defendants move the court to adopt paragraphs 1 and 3 of the material terms [sic] the settlement agreement... as an order of the court. Pace defendants further move that the court find no further settlement or release agreement form' is needed to effect the complete settlement of all claims.'" Docket No. 78 at 6. Plaintiff responded that the parties agreed to abide by the form agreement and, further, that the form agreement "make[s] clear that the FDIC-R, acting in its receivership capacity, does not and cannot release any potential claims belonging to other government entities, including the FDIC in its corporate or regulatory capacity." Docket No. 91 at 5.[3]

After conducting a hearing on the motion to enforce, Docket No. 108, [4] the magistrate judge found that the form agreement contained a different material term than those contained in the Material Terms, namely, a reservation of legal rights against defendants by the FDIC in its regulatory capacity. Docket No. 111 at 4. The magistrate judge therefore found that the parties' agreement consisted of "the long form submitted by the FDIC, with the exception that the release is a global release of the Defendants by the FDIC, with no reservation of rights." Id. Plaintiff objects "to the extent that the Recommendation finds that the FDIC as Receiver for a failed bank is not a separate legal entity from the FDIC in its general capacity as a regulator of banks." Docket No. 112 at 1.

Generally, a "trial court has the power to summarily enforce a settlement agreement entered into by the litigants while the litigation is pending before it." United States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993) (citation omitted); DiFrancesco v. Particle Interconnect Corp., 39 P.3d 1243, 1247 (Colo.App. 2001) ("A court may summarily enforce a settlement agreement if it is undisputed that a settlement exists"). "Issues involving the formation and construction of a purported settlement agreement are resolved by applying state contract law." Shoels v. Klebold, 375 F.3d 1054, 1060 (10th Cir. 2004).

The issue before the Court is not, strictly speaking, whether FDIC-R and FDIC-C are separate legal entities. Rather, the question the Court must first resolve is whether the Material Terms had the effect of releasing defendants from future supervisory, regulatory, or administrative claims that could be ...


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