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Atanasoff v. Lower Dauphin School Dist.

February 14, 2006


The opinion of the court was delivered by: Sylvia H. Rambo United States District Judge


Before the court is Defendants' Motion to Enforce Settlement and Mediation Agreement. (Doc 49.)The parties have briefed the issue, and the matter is ripe for disposition. For the reasons that follow, the court will deny Defendants' motion.

I. History

On July 6 and August 5, 2005, pursuant to a joint case management plan (Doc. 23), the parties participated in mediation sessions with a court-appointed mediator. On August 8, 2005, the court-appointed mediator entered a letter with the court indicating that the parties had "reached a tentative settlement agreement that was contingent upon approval by the School Board." (Doc. 32.) According to the court-appointed mediator's report: "[A] settlement will not be reached until school board approval has been given." (Id.) The Lower Dauphin School District School Board ("School Board") meeting and vote on the tentative agreement was scheduled for August 22, 2005. (Id.)

On August 24, 2005, the court appointed mediator sent a second letter to the court. (Doc. 49, Ex. F) In this report, the mediator indicated that: "[P]laintiffs' counsel advised that his clients had reconsidered and would only agree to the settlement with additional language added to the written non-monetary agreement between the parties." (Id.) Furthermore, the report stated that "the School Board did approve the tentative settlement agreement as it existed at the time of the [first] letter [to the court]." (Id.) Finally, the court-appointed mediator expressed that the mediation had reached an impasse and that there was nothing further that he could do to facilitate a settlement. (Id.) Based on the affirmative School Board vote, Defendants Randall L. Umberger, Sherri L. Smith, and Jeffery D. Hughes signed the settlement agreement; however, Plaintiffs refused to sign. On September 13, 2005, Defendants filed a Motion to Enforce Settlement and Mediation Agreement (Doc. 33), based on events that transpired at the mediation sessions and afterwards, through various in-person, e-mail, and telephone conversations. Plaintiffs then filed a Motion to Strike Defendants' Motion to Enforce (Doc. 36), on September 23, 2005, on the grounds that Defendants' motion disclosed the content of the mediation sessions in violation of Local Rule 16.8.6(c). On October 7, 2005, Defendants filed a Motion to Compel production of the transcript of an August 5, 2005 voicemail message from Plaintiffs' counsel Luther Milspaw to the court-appointed mediator. (Doc. 41.)

On October 13, 2005, the court granted Plaintiffs' motion to strike and struck the motion to enforce, without prejudice to the filing of a new motion that complied with Local Rule 16.8.6(c). (Doc. 44.) The court also granted Defendants' motion to compel production of the transcribed August 5, 2005 voicemail message from Mr. Milspaw to the court-appointed mediator and ordered in camera submission of the transcript, with the condition that any references to the substance of the settlement negotiations made in the mediation sessions be redacted. (Id.) However, the court-appointed mediator's voicemail from Plaintiffs' attorney was inadvertently deleted. (Doc. 46.) Defendants subsequently filed a motion to depose the court-appointed mediator by interrogatories to ascertain what Plaintiffs' counsel communicated in the August 5, 2005 voicemail. (Id.)

On December 28, 2005, the court issued an Order vacating the portion of its October 13, 2005 Order that granted Defendants' motion to compel production of the transcribed August 5, 2005. (Doc. 44.) In addition, the court denied Defendants' motion to take depositions of the court-appointed mediator. (Id.) The court held, pursuant to Local Rule 16.8(c), that only communications between the court and the court-appointed mediator may be disclosed. (Doc. 55.) Therefore, in the instant motion the only documents available for court review are the August 8 (Doc. 32) and the August 24, 2005 (Doc. 49, Ex. F) reports submitted by the court-appointed mediator, Mr. Lavery.

II. Discussion

Defendants argue that their motion to enforce should be granted because the parties reached a tentative agreement on August 5, 2005 during mediation, and the tentative agreement is a binding contract on Plaintiffs. (Doc. 49.) Defendants also urge that underlying policy considerations favoring settlement agreements should prevail, and thus, Plaintiffs should not be allowed to take advantage of the time between the close of mediation and School Board approval to revoke the settlement. (Id.) Plaintiffs assert that the settlement agreement is not binding because, under Pennsylvania law, only the Lower Dauphin County School Board and not the Defendants present at the mediation conference can bind the school district.*fn1 Further, Plaintiffs argue that since a contract did not exist, they were able to revoke their offer without consequence.*fn2 The issue for disposition is whether the tentative agreement, which was contingent upon School Board approval, was a binding contract upon both Plaintiffs and Defendants.

A. Tentative Agreement

Settlement agreements reached through court-ordered mediation are as binding as though reached during litigation. D.R. v. E. Brunswick Bd. of Educ., 838 F.Supp 184, 190 (D.N.J. 1993). Settlement agreements are binding contracts and interpreted under traditional contract principles. See Pennwalt Corp. v. Plough, Inc., 676 F.2d 77, 79 (3d Cir. 1982); Sch. Dist. of Philadelphia v. Framlau Corp., 328 A.2d 866, 870 (Pa. Commw. Ct. 1974). Enforceability of a contract is based on "whether both parties have manifested an intention to be bound by its terms and whether the terms are sufficiently definite to be specifically enforced." ATACS Corp. v. Trans World Commc'n, Inc., 155 F.3d 659, 665 (3d Cir. 1998).

Determination of the parties' intent involves evaluating the parties manifestation of assent to the terms and to the consideration of the promise. Id. (citing Restatement (Second) of Contracts § 22 (1981)). Therefore, the court looks to: (1) whether both parties manifested an intention to be bound by the agreement; (2) whether the terms of the agreement are sufficiently definite to be enforced; and (3) whether there was consideration. Id.

In the instant case, the court only needs to examine part one of the three part test to determine that the parties did not reach an enforceable agreement. Manifestation of intent is an objective inquiry, which overlooks the subjective intentions of individual parties. See Espenshade v. Espenshade, 729 A.2d 1239, 1243 (Pa. Super. Ct. 1999). Pennsylvania law governs the manifestation of intent of school boards by requiring that a school district may not "enter into a contract of any kind, . . . where the amount involved exceeds $100 dollars,"*fn3 without the majority vote of all of the school board of directors. 24 Pa. Cons. Stat. Ann. § 5-508 (West 1992). Furthermore, all official actions of a school board must take place at a meeting open to the public. 65 Pa. Cons. Stat. Ann. § 704 (West 2000). Therefore, as a matter of law, a school district does not express its objective intent to be bound by a contract until the school board votes, by a majority, at a public meeting. See Framlau, 328 A.2d at 870. Pending that vote, the parties retain the power to revoke or terminate the offer under general contract principles. See First Home Sav. Bank, FSB v. Nernberg, 648 A.2d 9, 15 (Pa. Super. Ct. 1994); Restatement (Second) of Contracts § 35 (1981).

An offeree's power to accept an offer is terminated by a revocation of the offer. See Nernberg, 648 A.2d at 15; See also Restatement (Second) of Contracts § 36 (1981). Furthermore, offerees possess the power to accept or reject an offer. See Restatement (Second) of Contracts § 35 (1981). Therefore, both Plaintiffs and Defendants maintained the power to terminate the tentative agreement prior to or at the School Board meeting.*fn4 Plaintiffs chose to terminate Defendants' power of acceptance when they contacted Defendants shortly after the August 5, 2005 mediation session and expressed their unwillingness to enter into the agreement. ...

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