Free Order on Motion to Enforce - District Court of Arizona - Arizona

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Case 2:04-cv-00595-MHM Document 201 Filed 04/11/2007 Page 1 of 14

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Estate of Joseph J. Studnek, by and) through its Personal Representative,) Joseph M. Studnek, ) ) Plaintiff/Counterdefendant, ) ) vs. ) ) ) Ambassador of Global Missions UN) Limited His Successors, A Corporation) Sole, et al., ) ) Defendants/Counterclaimants.) _________________________________

No. CIV-04-0595-PHX-MHM

ORDER

Presently pending before the Court is Plaintiff's Motion to Enforce the Settlement Agreement (Doc. 165), which is fully briefed including Plaintiff's supplemental Reply (Docs. 189, 191, 193 & 194) and Defendants Michael Cambra's and Joseph L. Williams' Requests for Judicial Notice (Docs. 190 & 192). The current Motion stems from Defendants Joseph L. Williams', Michael and Gloria Cambra's, Ambassador of Global Missions UN Limited's, El Shaddai Ministries', and Second Chance Christian Evangelistic Ministries' ("settling Defendants") refusal to sign a written settlement agreement after their claims settled with an oral agreement entered on the record in open court before Magistrate Judge David K. Duncan on September 19, 2006. After carefully considering the parties' briefs and the transcript of the settlement conference, the Court hereby issues the following Order.

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BACKGROUND This is a breach of contract case that Defendants removed from Maricopa County Superior Court based on diversity of citizenship. On June 19, 2006, the Court Ordered the parties to participate in a settlement conference before the Honorable David K. Duncan, United States Magistrate Judge for the District of Arizona. Judge Duncan held a settlement conference on September 19, 2006, after which Judge Duncan reported that the parties had reached a settlement agreement. On November 15, 2006, Plaintiff filed a Motion to Enforce the Settlement Agreement and for Judgment for Breach of the Settlement Agreement and Motion for Attorneys Fees and/or Sanctions and/or for the Court's Order of Contempt. Defendants Williams and Cambra ("responding Defendants") have filed Oppositions to Plaintiff's Motion to Enforce. However, neither Ambassador of Global Missions UN Limited ("Global Missions"), a Nevada sole corporation headed by Mr. Williams; El Shaddai Ministries and his Successors, A Corporation Sole ("El Shaddai") headed by Mr. Cambra; nor Second Chance Christian Evangelistic Ministries ("Second Chance"), a California corporations also headed by Mr. Cambra, have filed an opposition to Plaintiff's Motion to Enforce the Settlement Agreement. During a December 6, 2006 hearing, pursuant to defense counsel Debra Ann Hill and Ronda R. Fisk's request and Ms. Hill's sealed affidavit, the Court granted defense counsel's Motion to Withdraw as counsel from their representation of Mr. Cambra, Global Missions, El Shaddai, and Second Chance. During the hearing, the Court specifically directed Mr. Cambra and Mr. Williams as the sole representatives of corporate defendants Global Missions (Mr. Williams), and El Shaddai and Second Chance (Mr. Cambra) to retain counsel as soon as possible. To date, no appearances have been made by new counsel for either Global Missions, El Shaddai, or Second Chance. Also during the December 6, 2006 hearing, the Court granted Defendants an extension of time until January 11, 2007 to respond to Plaintiff's Motion to Enforce the Settlement Agreement. Defendants claimed the need for an extension based on their need to find and hire new corporate counsel. On December 7, 2007, one day after the hearing in which the -2Document 201 Filed 04/11/2007 Page 2 of 14

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Court granted defense counsel's Motion to Withdraw and granted Defendants an extension of time in which to file a response to Plaintiff's Motion to Enforce the Settlement, Mr. Williams filed a twenty-four (24) page Response with eighty-five (85) pages of exhibits.1 On January 9, 2007, Mr. Cambra filed an "Opposition to Plaintiff's Motion to Enforce the Settlement Agreement," which the Court has construed as a Response. Mr. Cambra's Response is thirty-eight (38) pages in length. On January 11, 2007, Mr. Williams filed an Amended Response that is thirty-eight (38) pages and contains substantially similar format and similar arguments as those in Mr. Cambra's Response. In their similarly-drafted Response and Amended Response Defendants Cambra and Williams have argued that the Court lacks subject matter jurisdiction; that venue is improper; that they signed the settlement agreement under duress; and that the settlement agreement need not be upheld because it is not in writing. In addition, both Mr. Williams and Mr. Cambra have filed Requests for Judicial Notice. Mr. Williams' Request for Judicial Notice is a continuation of his already-over-thepage-limit Response to Plaintiff's Motion to Enforce the Settlement Agreement. Mr. Williams again argues that the Court lacks jurisdiction and that the settlement agreement is unenforceable because it is not in writing. In Mr. Cambra's Request for Judicial Notice, he argues that he was not authorized to represent El Shaddai or Second Chance during the settlement conference. To date, neither Global Missions, El Shaddai, nor Second Chance have filed a Response to Plaintiff's Motion to Enforce the Settlement Agreement. In its Reply, Plaintiff asserts that the settlement agreement should be upheld as to all Defendants because three Defendants did not respond to the Motion to Enforce (Global Missions, El Shaddai, and Second Chance) and because Defendants Williams and Cambra did not present any compelling arguments as to why the Court should release Defendants

Local Rule 7.2(e) provides that a response to a motion, including its supporting memorandum, shall not exceed seventeen (17) pages. -3Document 201 Filed 04/11/2007 Page 3 of 14

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from their contractual agreement. Plaintiff also requests the Court strike Defendants' Responses and Requests for Judicial notice because they significantly exceed the seventeenpage page limit as provided in Local Rule 7.2(e). DISCUSSION I. ENFORCEMENT OF SETTLEMENT AGREEMENT The relevant portions of the settlement conference transcript are as follows: THE COURT: . . . Now, turning to you, Mr. Williams, first in your individual capacity, do you understand what are the essential terms are? Yes, I do. And do you agree to be bound by them? Yes, I do. And now in your capacity as the defendant Global Mission Un Limited, a sole corporation, do you understand what the essential terms are? Yes, I do. And do you agree to be bound by them? Yes, I do. And, Mr. Cambra, as a party to this settlement agreement and as a defendant in this lawsuit, do you understand what the essential terms are? Yes. And, do you agree to be bound by them? Yes.

MR. WILLIAMS: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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THE COURT: MR. WILLIAMS: THE COURT:

MR. WILLIAMS: THE COURT: Mr. WILLIAMS: THE COURT:

Mr. CAMBRA: THE COURT: Mr. CAMBRA: *** MR. WEECH:

I think when you were talking with Mr. Cambra you did not address the entities that he represents. -4Document 201 Filed 04/11/2007 Page 4 of 14

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THE COURT:

All right. Mr. Cambra, you're here, apparently, also as a representative of certain entities. Is that correct? Yes. And do you agree to be bound on behalf of those in your capacity as a representative of those entities as well? Yes. All right. Your Honor, could we have those entities specified for the record? What are they, in your view, Mr. Weech? I think that's better addressed by Mr. Cambra and his counsel. Your Honor, those entities are El Shaddai and Second Chance as named in the complaint. And did you understand those entities and do you agree that those are the entities that you would be representing, Mr. Cambra? Yes.

MR. CAMBRA: THE COURT:

MR. CAMBRA: THE COURT: MR. WEECH:

THE COURT: MR. WEECH:

MS. FISK:

THE COURT:

MR. CAMBRA:

Settlement Conference Transcript at 30 & 32. Courts have inherent authority to enforce settlement agreements between parties in an action pending before it. See Metronet Services Corp. v. U.S. West Communications, 329 F.3d 986,1013-1014 (9th Cir. 2003) (cert. granted and judgment vacated on other grounds by Quest Corp. v. Metronet Services Corp., 540 U.S. 1147 (2004); Doi v. Halekulani Corporation, 276 F.3d 1131,1136- 1138 (9th Cir. 2002); In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 1994); Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987); TNT Marketing, Inc. v. Agresti, 796 F.2d 276, 278 (9th Cir.1986). An oral agreement made in open court on the record as to the material terms is a binding agreement. See Doi, 276 F.3d

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at 1136. In Doi, the court stated, "[a]n agreement announced on the record becomes binding even if a party has a change of heart after [he] agreed to its terms but before the terms are reduced to writing." Id. at 1138 (citations omitted). Accordingly, if a subsequent written settlement is "consistent with the terms of the agreement made on the record in open court," a district court may enforce the written settlement agreement. Id at 1140. In Doi, the Ninth Circuit exposed the rationale for its holding as follows: At a time where the resources of the federal judiciary, and this Circuit especially, are strained to the breaking point, we cannot countenance a [party's] agreeing to settle a case in open court, then subsequently disavowing the settlement when it suits [him]. The courts spend enough time on the merits of litigation; we need not (and therefore ought not) open the flood gates to this kind of needless satellite litigation. Id at 1141. For a settlement agreement to be enforceable requires satisfaction of two elements. Marks-Foreman v. Reporter Pub Co., 12 F.Supp 2d 1089, 1092 (S.D.Cal. 1998). First, the settlement agreement must be complete. Id., citing Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir. 1994); Doi, 276 F.3d at 1137. Second, the settlement agreement must be the result of an agreement made by the parties or their authorized representatives concerning the terms of the settlement. Marks-Foreman, 12 F.Supp at 1092, citing Harrop v. Western Airlines, Inc., 550 F.2d 1143, 1144-1145 (9th Cir. 1977), Doi, 276 F.3d at 1137-1138. Where parties objection to the settlement terms after they agree to a settlement, the court may rightfully deny such objections. Harrop, 550 F.2d at 1144.

It is clear from the settlement conference transcript, partially recited above, that both Mr. Williams, Mr. Cambra individually, and Global Mission, El Shaddai, and Second Chance through their respective representatives, Mr. Williams and Mr. Cambra, that these Defendants intended to enter into a settlement agreement, that they completed a settlement agreement during the settlement conference, and that the settlement agreement is the result -6-

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of an agreement of the parties. In fact, when one of the terms of the agreement was not as Plaintiff's counsel Weech understood it to be, the parties went off the record to discuss the questionable term and then went back on the record, noted that they had reached agreement regarding the final outstanding term, and then recorded their assent to all terms of the settlement agreement. The transcript of the settlement conference indicates that Mr. Williams and Mr. Cambra each were asked if they understood the essential terms of the settlement agreement and if they agreed to be bound by them. Mr. Williams responded affirmatively in his individual capacity and again as the representative of Global Missions. Then Mr. Cambra responded affirmatively in his individual capacity and again as the representative of El Shaddai and Second Chance. There is no indication from the transcript or the papers submitted that the parties only intended for the settlement agreement to be complete upon the signing of a written memorialization of the terms agreed upon at the settlement conference. Defendants Global Missions, El Shaddai, and Second Chance have not filed an opposition to Plaintiff's Motion to Enforce the Settlement Agreement. Nor has an attorney filed a notice of appearance on behalf of any of these corporate entities since the Court granted previous counsel's Motion for Leave to Withdraw in December 2006. This is true despite the Court's strong advisement to Mr. Williams and Mr. Cambra that corporate Defendants must be represented by counsel. See Rowland v. California Men's Colony, 506 U.S. 194, 202, 113 S.Ct. 716, 721 (1993) (holding that a "corporation may appear in the federal courts only through licensed counsel."). In Defendants Cambra and Williams' Response and Amended Response to Plaintiff's Motion to Enforce the Settlement Agreement, Defendants Cambra and Williams raise similar arguments. Cambra and Williams argue (a) that they agreed to the settlement agreement under duress; (b) that the agreement is unenforceable because they did not sign the agreement; (c) that Defendants are entitled to an evidentiary hearing to determine whether the parties formed an enforceable contract; and (d) that the Court lacks both subject matter and personal jurisdiction over the Defendants and that venue is more proper in California. -7Document 201 Filed 04/11/2007 Page 7 of 14

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Finally, Mr. Cambra argues that he was not authorized to represent El Shaddai and Second Chance during the settlement conference. The Court will address each of Defendant's arguments in turn. A. DURESS

After agreeing to the terms of the settlement agreement on the record in open court, the responding Defendants now argue that they agreed to the terms of the settlement agreement under duress. They assert that they believed that if they did not attend the settlement conference they would be held in contempt of court and possibly jailed, further they assert they were intimidated by the stature of the federal courthouse. However, Defendant Williams is responsible for removing the case to federal court from Maricopa County. Moreover, as Plaintiff points out, Judge Duncan's June 21, 2006 Settlement Conference Order, which was sent to the parties, stated that the parties should notify the Court prior to the scheduled conference if they believed a settlement conference would be futile. If Judge Duncan had received such a notice, he would have cancelled the conference. In other words, Defendants had an opportunity to vacate the settlement conference. However, at no time after Judge Duncan's Order, prior to the settlement conference, did Defendants notify the Court that a settlement conference would be futile. As further evidence against Defendant's duress argument, Judge Duncan's Settlement Conference Order stated that the settlement conference "will be conducted in such a manner as not to prejudice any party in the event settlement is not reached." This statement provided clear notice to the parties prior to the settlement conference that they were not obligated to settle the case during the settlement conference. Defendants assert that after the parties reached an agreement and Judge Duncan was reading the agreement onto the record, Plaintiff's counsel "tricked" Defendants into assenting to new terms. Defendants claim this happened when Plaintiff's counsel stood up and stated that Plaintiff had a contrary understanding of one of the terms of the settlement agreement. The transcript of the settlement conference does indicate, in fact, that Plaintiff's counsel raised an issue regarding a term of the agreement as Judge Duncan had recited it. However, -8Document 201 Filed 04/11/2007 Page 8 of 14

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the transcript also shows that immediately after Plaintiff's counsel raised the issue, Judge Duncan gave the parties time to discuss the issue off the record. When the parties reconvened on the record, all parties indicated an understanding of the revised term and a willingness to assent to all terms of the settlement agreement. Defendants argue that the settlement agreement should not be upheld because they claim that Judge Duncan told them that "[i]f the agreement is not completed you folks will not have a judgment for $150,000 against you folks, but that you folks will go back to square one and continue the litigation to trial." Thus, Defendants assert that they are "confused to the nature of the motion [to enforce the settlement agreement]." Whether Judge Duncan made this statement is unclear. Regardless, what Defendants fail to recognize is that they, in fact, did complete a settlement agreement in this case.2 Defendants stated on the record during the settlement conference that they understood the terms of the agreement and were willing to assent to the terms in both their individual capacity and as representatives of their respective corporate entities. As stated above, "[a]n agreement announced on the record becomes binding even if a party has a change of heart after [he] agreed to its terms but before the terms are reduced to writing." Doi, 276 F.3d at 1138. Defendants may not avert compliance after the fact by claiming that they did not finalize the agreement. By assenting to the terms verbally on the record in open court, the agreement was complete. Thus, there is no indication from the settlement conference transcript that the Defendants were under duress during the settlement conference nor that they were forced into settling the case. B. NEED FOR WRITTEN AND SIGNED AGREEMENT

Defendants assert that because they did not sign a written settlement agreement, the terms of the agreement cannot be enforced against them.

There was only one contingency built into the agreement, which was approval by the Alaska Probate Court administering the Estate. The parties included no other contingencies in the agreement. The Alaska Probate Court has since granted approval of the settlement agreement. -9Document 201 Filed 04/11/2007 Page 9 of 14

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Local Rule 83.7 provides as follows: No agreement between parties or attorneys is binding, if disputed, unless it is in writing signed by the attorney of record or by the unrepresented party, or made orally in open court and on the record; provided, however, that in the interests of justice the Court shall have the discretion to reject any such agreement. LRCiv. 83.7 (emphasis added).

6 "An agreement does not have to be in writing to be binding. An oral agreement is 7 binding. . . ." Doi, 276 F.3d 1131 at 1136. In Doi, a case with very similar facts to the instant 8 case, the Ninth Circuit upheld a district court's ruling to enforce a settlement agreement 9 memorialized on the record in open court. As in Doi, this Court finds that the parties stated 10 on the record in open court that they understand the terms of the settlement agreement and 11 asserting thereto. This is enough to uphold the agreement and grant Plaintiff's Motion to 12 Enforce the Settlement Agreement. The agreement need not be reduced to writing for it to 13 be enforceable. Consequently, the Court is not persuaded by Defendants argument that the 14 settlement agreement is unenforceable because it was not reduced to writing and signed by 15 all settling parties. 16 C. 17 "[W]here material facts concerning the existence or terms of an agreement to settle 18 are in dispute, the parties must be allowed an evidentiary hearing." Callie v. Near, 829 F.2d 19 20 an evidentiary hearing because the parties never had a meeting of the minds regarding all the 21 terms of the settlement agreement. Id. at 891. However, as mentioned earlier, the district 22 court has the power to enforce complete settlement agreements that are the result of an 23 agreement between the parties as to the terms of the settlement. Marks-Foreman, 12 F.Supp 24 2d at 1092. Furthermore, a trial court is not required to hold an evidentiary hearing if "the 25 facts produced in support of the claim or defense have so little probative value, given the 26 quantum of evidence required, that reasonable people could not agree with the conclusion 27 28 - 10 Case 2:04-cv-00595-MHM Document 201 Filed 04/11/2007 Page 10 of 14

NECESSITY OF EVIDENTIARY HEARING

888, 890 (9th Cir. 1987). In Callie, the Ninth Circuit found that the parties were entitled to

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advanced by the proponent of the claim or defense." Ruelas v. Staff Builders Pers. Servs., Inc., 199 Ariz. 344, ¶ 7, 18 P.3d 138, ¶ 7 (App.2001) (internal quotations omitted). Defendants assert that the Court is required to hold an evidentiary hearing to determine whether the settlement agreement is enforceable. However, here, unlike in Callie, the parties documented on the record that they agreed that they had reached a settlement agreement and they agreed to the terms of the agreement. Defendants made such

representations on their own behalf and on behalf of the corporations they represent. Thus, there can be no factual dispute that a settlement had been created and agreed to. Therefore, the Court is empowered to enforce the completed settlement agreement without holding an evidentiary hearing. D. JURISDICTION AND VENUE

Defendants also have raised issue with this Court's jurisdiction, both subject matter and personal, and whether venue is proper in Arizona. These arguments are misplaced in a Response to a Motion to Enforce the Settlement Agreement. However, because subject matter jurisdiction cannot be waived, the Court nevertheless considers Defendant's arguments.3 Subject matter jurisdiction is proper where the acts and events giving rise to the cause of action occurred. By Defendant Williams' own account, as asserted in his Counterclaim filed on April 15, 2004 (Doc. 2), "[t]he acts and events giving rise to this cause of action occurred in Maricopa County, Arizona. Jurisdiction and venue are proper in this District." Def. Williams' Answer and Counterclaim at 5 ¶ 3. In light of the fact that the acts that gave rise to the instant lawsuit occurred in Arizona, this Court has subject matter jurisdiction over the suit.

The Court hereby denies Plaintiff's Motion to Strike Defendant's Responses and Requests for Judicial Notice. - 11 Document 201 Filed 04/11/2007 Page 11 of 14

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Regarding personal jurisdiction, a party who wishes to challenge personal jurisdiction must raise the challenge in the first responsive pleading. Defendants have long since waived any challenge to personal jurisdiction. Defendants contend that venue is proper in California. Venue is proper in a district where a substantial part of the claim arose. As stated above, according to Defendant Williams' own assertion, the acts and events giving rise to this lawsuit occurred in Maricopa County, Arizona. The Court reiterates that this case is in the District of Arizona by Defendant Williams own doing. Defendant Williams removed this case from Maricopa County to federal court in the District of Arizona. The Court finds that venue is proper in Arizona. Whether venue is proper in California as well is irrelevant. E. AUTHORIZATION FOR CORPORATE REPRESENTATION

In his Request for Judicial Notice, Mr. Cambra states that the settlement agreement should not be enforced as to El Shaddai and Second Chance because when Mr. Cambra assented to the terms of the settlement agreement during the settlement conference Mr. Cambra was not authorized to represent El Shaddai and Second Chance. However, Mr. Cambra's argument fails for a number of reasons. First, Mr. Cambra stated on the record at the settlement conference that he, in fact, was authorized to represent El Shaddai and Second Chance. Second, both El Shaddai and Second Chance are corporate soles. Mr. Cambra is the sole representative of El Shaddai and Second Chance. The only person who could authorize or not authorize Mr. Cambra to represent El Shaddai and Second Chance is Mr. Cambra. Therefore, the Court is not compelled by Mr. Cambra's argument. Accordingly, the Court will uphold the settlement agreement as to El Shaddai and Second Chance ­ neither of which filed responses to Plaintiff's Motion to Enforce the Settlement Agreement. The Court will uphold the settlement agreement as to Global Missions for the same reason. Also in his Request for Judicial Notice, Mr. Cambra cites Davis v. City of Springfield, 2006 WL 3590185 (C.D.Ill. Dec. 8, 2006), a case in which the district court in Illinois held that to create an enforceable settlement agreement with a city municipality requires approval from the city counsel. Mr. Cambra asserts that because Plaintiff here has not obtained city - 12 Document 201 Filed 04/11/2007 Page 12 of 14

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counsel approval, the settlement agreement cannot be enforced. Not only is Davis not precedent in the District of Arizona, the theory does not apply here because unlike Davis, the instant case does not involve a city municipality. F. CONCLUSION

The Court has compared the terms of the written settlement agreement to the transcript of the settlement conference. The terms of the written settlement agreement track the transcript of the settlement conference. Thus, for the foregoing reasons, the Court grants Plaintiff's Motion to Enforce the Settlement Agreement. II. ATTORNEYS' FEES, SANCTIONS AND CONTEMPT Plaintiff requests the Court grant attorneys' fees and costs incurred to enforce the settlement agreement. A district court's power to enforce a settlement agreement also has the authority to award damages for failure to comply with the settlement agreement. TNT Marketing, Inc. v. Simon, 796 F.2d 276, 278-79 (9th Cir. 1986). Such authorities also includes the power to award attorneys' fees and costs the non-breaching party incurred in seeking enforcement of a settlement agreement. Id. It is clear from the settlement conference transcript that the settling Defendants were aware of the terms of the agreement and assented thereto. To now argue duress or confusion without any such showing, challenge jurisdiction, and disregard an Order of the Court to retain new corporate counsel is unfair to the other parties involved in the settlement agreement. Therefore, under the facts of this case, the Court deems it appropriate to exercise its power to award attorneys fees. CONCLUSION For the foregoing reasons, IT IS ORDERED that Plaintiff's Motion to Enforce the Settlement Agreement (Doc. 165) is granted as to all settling Defendants, specifically Mr. Williams, Mr. and Mrs. Cambra, Ambassador of Global Missions UN Limited, El Shaddai Ministries, and Second Chance Christian Evangelistic Ministries.

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IT IS FURTHER ORDERED that Plaintiff's request for attorneys' fees and costs incurred to enforce the settlement agreement is granted. Plaintiffs shall file the appropriate documentation regarding attorneys' fees and costs within ten (10) days of the file-date of this Order. IT IS FURTHER ORDERED that Plaintiff's request to strike Defendants Williams and Cambra's Responses to Plaintiff's Motion to Enforce the Settlement Agreement is denied. IT IS FURTHER ORDERED that Plaintiff's request for oral argument is denied. DATED this 11th day of April, 2007.

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