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LICHTENSTEIN v. LICHTENSTEIN

September 8, 1970

Frances Sharp LICHTENSTEIN
v.
Maurice LICHTENSTEIN and Darby Farms, Inc.


Wood, District Judge.


The opinion of the court was delivered by: WOOD

WOOD, District Judge.

 Before us are several motions relating to the implementation of a settlement agreement between the parties. Some consideration of the relevant background of the case is necessary to make clear the issues presented by these motions.

 On December 5, 1968, this Court approved a settlement agreement presented to it by the parties. This agreement, which provided that the instant litigation "shall be marked discontinued and ended upon the terms and provisions thereof contained therein", *fn1" also purported to settle a similar suit brought by Mrs. Lichtenstein against her husband and Bethayres Estates, Inc. (Civil Action No. 42961). In addition, the agreement constituted a marital property settlement in connection with a divorce action then pending in the state courts.

 Pursuant to the settlement agreement, Stanley Merves, a certified public accountant, was retained to audit the books of Darby Farms, Inc. (para. 11(a)). The agreement contained detailed provisions concerning the duties of the accountant, but the primary purpose of the audit was to determine whether there had been any misuse of funds by Mr. Lichtenstein. It was provided with respect to the certified audit that "the determination by said accountant shall be conclusive and binding on all parties." (para. 11(b)(i)). If the accountant were to determine that funds were due Darby, Mr. Lichtenstein agreed to pay a designated escrow agent within 15 days after notice any deficiency between the amount found by the accountant and funds then on deposit with the escrow agent. After the audit was completed and the escrow agent notified him that the deficiency was $36,037.66, Mr. Lichtenstein sought to take exception to the audit, but he never appeared at any appointments arranged for this purpose.

 Upon the failure of Mr. Lichtenstein to pay the amount of the deficiency, Mrs. Lichtenstein initiated proceedings to hold him in contempt of the order accompanying the settlement agreement. At the hearing on this issue, Mr. Lichtenstein's counsel contended inter alia in attempting to resist a contempt order that before Mr. Lichtenstein could be compelled to pay the assessed deficiency, he had a legal right to take exceptions to the audit. On May 16, 1969, we filed an opinion and order holding Mr. Lichtenstein in contempt and providing further that he could purge himself by satisfying the assessed deficiency by bond or by payment into the registry of the Court. On appeal, the Circuit Court reversed the contempt order on the grounds that the order on which it was based was not definite and specific enough (No. 17915, filed April 2, 1970) and remanded the case to this Court for a further inquiry into Mr. Lichtenstein's contentions with regard to the accountant's audit.

 We now have before us the motion of Mrs Lichtenstein for a specific order that Mr. Lichtenstein make payment in accordance with the accountant's certified audit, and the motion of Mr. Lichtenstein that he now be permitted to take exception to certain findings of the accountant. The issue to be resolved in deciding these motions is whether or not under the settlement agreement between the parties, appeals to this Court from the accountant's audit were precluded. In this respect, the agreement provides in relevant part (para. 11):

 
"* * * (a) Stanley Merves, a Certified Public Accountant shall audit the books and records of Darby at the cost of Lichtenstein (i.e. Mr. Lichtenstein) and render a certified statement covering all receipts, expenditures and disbursements by Darby to the present * * *
 
"(i) He shall aggregate all expenditures of Darby * * * as evidenced by its business records and shall deduct therefrom all repayments and all such, and only such, expenditures which were made for a business purpose of Darby. In that regard he shall have access to all pertinent records which he wishes to see and the principals and accountant of Darby shall cooperate with him so that he can determine whether expenditures were made for a business purpose of Darby. Lichtenstein and Darby shall have the burden of presenting documentation that any or all of said expenditures were for a proper business purpose. The determination by said accountant shall be conclusive and binding on all parties." (Our italics)
 
There follows a list of specific directions to the accountant)

 With regard to this issue, the Circuit Court stated in its opinion, 425 F.2d 1111 fn. 2 at p. 1113 that:

 
"The settlement agreement * * * also provides that Pennsylvania law should ...

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