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Bank of America National Trust and Savings Association v. Hotel Rittenhouse Associates

argued: June 4, 1986.


On Appeal from the United States District Court for the Eastern District of Pennsylvania; D.C. Civil No. 83-2809, 84-1514

Author: Sloviter

Before: ALDISERT, Chief Judge, GARTH and SLOVITER, Circuit Judges


SLOVITER, Circuit Judge.

In this appeal, we are faced with an issue that this court has confronted with increasing frequency in recent years: under what circumstances documents filed in the district court may be sealed from public access.


Facts and Procedural History

The dispute that forms the basis for this case arose out of the construction of the Hotel Rittenhouse in Philadelphia, which is not yet completed. The factual record before us is spare. There appears to be little dispute about the relevant historical facts, which we present briefly from the appellant's perspective.

In 1981, the Bank of America (the Bank), contracted with Hotel Rittenhouse Associates (HRA) and other developers to finance the construction of the hotel. FAB III, the appellant here, was the concrete contractor on the project.

In June 1983, the Bank filed suit against HRA, its partners and some involved individuals (referred to collectively as HRA) in the United States District Court for the Eastern District of Pennsylvania to foreclose on the Hotel Rittenhouse property and to collect on a loan. HRA counterclaimed on numerous state and federal law grounds.*fn1

In April 1984, FAB III filed suit in federal court against the Bank, but not against HRA, seeking over $800,000 on the basis of an alleged assurance by the Bank of direct payment for FAB III's HRA work. The Bank moved to dismiss on the ground that HRA was an indispensable party and that joinder of HRA would destroy diversity of citizenship. Apparently, this motion has never been decided.

The Bank-HRA action proceeded to trial in January 1985. Before the case was sent to the jury, the parties reached a settlement and the jury was discharged. At the parties' request, the settlement agreement was filed under seal in the district court. Prior to this time, all proceedings in the litigation had been open to the public.

Shortly thereafter, there was a disagreement between the Bank and HRA about the settlement. On March 11, 1985, HRA filed a "Motion to Enforce Settlement Agreement." The Bank responded the next day with a similar motion. A series of documents regarding this dispute was filed under seal in the district court. According to the appellees' brief, release of the documents filed to enforce the settlement would reveal the contents of the settlement agreement.

In March and April 1985, the district court rendered a series of orders in the Bank-HRA litigation which apparently were pursuant to the motions asking it to enforce the settlement agreement. On March 25, the court gave judgment for the Bank against HRA for over 38 million dollars on one count of its complaint and dismissed all other counts of the Bank's claim and all of HRA's counterclaims. This judgment also ordered the Hotel Rittenhouse property sold at a Marshal's sale and set some of the terms of the sale. App. at 71a-73a. On April 12, the court filed another order setting the terms of payment for the Marshal's sale. The district court docket sheet also shows an entry on April 26 that "Order of Court is Filed Under Seal and Not to be Opened Until Further Order." The subject of this order is not otherwise explained but FAB III surmises that it refers to another part of the district court's judgment.

At about this time, FAB III began its efforts to obtain the settlement agreement and the documents filed in federal court to enforce the settlement. In April 1985, FAB III and other creditors of HRA met with the district court and requested it to unseal the documents. This request was denied without a written order.

In June 1985, FAB III moved to submit its dispute with the Bank to arbitration before the American Arbitration Association. The district court stayed the federal proceedings while the arbitration proceeded. The arbitration is still pending.

On July 1, 1985, FAB III filed a complaint in state court against the Bank and HRA charging them with a continuing conspiracy to deny it money owed for its work on the Hotel Rittenhouse project. In that complaint, FAB III charges that as part of the conspiracy "the Bank and the Wolgin Group [HRA] agreed to seal certain portions of the otherwise public proceedings in the federal court action." App. at 15a.

Shortly thereafter, FAB III filed a formal motion with the district court to unseal the settlement documents. Following what FAB III's brief characterizes as "an informal conference in chambers," see Brief of Appellant at 9, the court denied the motion to unseal. In a one-paragraph order, the court stated that it had weighed "the public interest in access to judicial records," as well as FAB III's interest in access to the settlement, against "the public and private interests in settling disputes" and found that the latter interest was paramount. See App. at 89a-90a. FAB III appeals the denial of its motion to unseal.*fn2


Scope of the Order

As a preliminary matter, we must determine whether the court's order denied access only to the settlement agreement or whether it also reaffirmed the earlier order sealing the motions and related documents. The written motion filed by FAB III was "to unseal docket and court records," and alleged that "no public interests are served by the sealing of any portions of this Court's records herein." App. at 9a, 10a. In their opposing memorandum filed in the district court, HRA and the Bank treated FAB III's motion to unseal as directed to the motions to enforce the settlement agreement and related papers, as well as the settlement agreement itself. For example, that memorandum argued, "the only material not open to the public is the parties' settlement agreement and certain motions and briefs filed after settlement regarding interpretation of the agreement which disclosed its terms." App. at 26a. However, the district court's order of November 7, 1985 described the motion of FAB III as one "to unseal the agreement of settlement" and denied "FAB III's motion to unseal the agreement of settlement." The district court may not have distinguished between the motions to enforce the settlement agreement and the agreement itself because, as the brief of appellees HRA and Bank concedes, the "several motions and briefs . . . filed [in the district court] requesting the Court to enforce the settlement agreement . . . disclosed the terms of the settlement agreement." Brief of Appellees at 5.

The briefs for all parties on appeal have treated the district court's order as denying access to the motions to enforce the agreement, as well as to the settlement agreement itself. Moreover, the appellees' brief states the issue for review as, "Whether the District Court abused its discretion in denying a motion to unseal a confidential settlement agreement and certain post-settlement motions, briefs and orders, which disclose the terms of the settlement agreement." Id. at 1 (emphasis added). Therefore, we regard as disingenuous the belated contention by counsel for the appellees, expressed at oral argument, that the district court's order applies only to the settlement agreement and leaves unresolved FAB III's motion to unseal the motion papers.

In the first place, the district court's order denied FAB III's motion in its entirety. In the second place, the appellees never suggested in this court that because part of the motion remained pending, the matter was not ripe for disposition by this court. We will construe the district court's order as the parties have construed it in their written position before this court and as the district court apparently intended it, i.e., as a refusal to unseal not only the settlement agreement that was filed of record in the district court in civil action No. 83-2809 but also the motion papers filed of record in that court seeking to enforce the settlement agreement, which papers disclose all or part of the terms of that settlement agreement.



FAB III bases its claim for access to the documents filed in the district court on the common law right of access, rather than on the First Amendment. The right of the public to inspect and copy judicial records antedates the Constitution. Criden I, 648 F.2d at 819 (citing United States v. Mitchell, 179 App. D.C. 293, 551 F.2d 1252, 1260 (D.C. Cir. 1976)).

The Supreme Court reaffirmed the common law right of access to judicial records and proceedings in Nixon v. Warner Communications, Inc., 435 U.S. 589, 55 L. Ed. 2d 570, 98 S. Ct. 1306 (1978), where it held that there was a presumption in favor of access to "public records and documents, including judicial records and documents." Id. at 597 (footnotes omitted); see also id. at 602.

This court first considered that right of access in Criden I, where we held that there was a "strong presumption" that the public and the media were entitled to access to tapes played during the criminal trial of two of the Abscam defendants. 648 F.2d at 823. See also United States v. Martin, 746 F.2d 964 (3d Cir. 1984) (access to audiotapes introduced in evidence in criminal case governed by Criden I). We have also held that the common law presumption of access encompasses as well all "civil trials and records." Publicker Industries, Inc. v. Cohen, 733 F.2d 1059, 1066-67 (3d Cir. 1984). More recently, we held that "the common law right of access to judicial records enunciated in Criden I is fully applicable to transcripts of sidebar or chambers conferences in criminal cases at which evidentiary or other substantive rulings have been made." United States v. Smith, 787 F.2d 111, 115 (3d Cir. 1986) (footnote omitted) (Smith II).

Other opinions in this court have grounded access to court hearings on the First Amendment. In United States v. Criden, 675 F.2d 550 (3d Cir. 1982) (Criden II), we held that there is a First Amendment right of access to pretrial criminal proceedings. In Publicker, we explicitly based our holding that the press and the public could have access to a hearing in a civil proceeding and the transcript thereof on the First Amendment right of access as well as the common law, 733 F.2d at 1067-71.

It follows from our decisions in Criden I, Smith II, and Publicker that the common law presumption of access applies to motions file din court proceedings and to the settlement agreement between HRA and the Bank which they filed and submitted to the district court for approval. Therefore, we need not decide whether such a right might also be grounded on the First Amendment, and decisions restricting access to other categories of records under a construction of the First Amendment are inapplicable here. See Capital Cities Media, Inc. v. Chester, 797 F.2d 1164 (3d Cir. 1986) (in banc) (investigative records of state environmental agency); First Amendment Coalition v. Judicial Inquiry and Review Board, 784 F.2d 467 (3d Cir. 1986) (in banc) (records of judicial inquiry board).

HRA and the Bank argue that a settlement agreement is a nonpublic aspect of litigation that "may properly be sealed from strangers to the agreement." Brief of appellees at 12. They rely on the Supreme Court's decision in Seattle Times v. Rhinehart, 467 U.S. 20, 81 L. Ed. 2d 17, 104 S. Ct. 2199 (1984). We find that case inapposite. In Seattle Times, the Court held that the First Amendment did not preclude the district court from entering a protective order limiting disclosure of the products of pretrial discovery. Id. at 37. Such discovery, ...

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