August 20, 2013
TRENT MOTEL ASSOCIATES, L.P.
STADIUM HOTEL RESTAURANT GROUP, INC., AND BRET LEVY D/B/A/ BENNY THE BUM'S INC., APPEAL OF: BRET LEVYTRENT MOTEL ASSOCIATES, L.P.
STADIUM HOTEL RESTAURANT GROUP, INC. AND BRET LEVY D/B/A/ BENNY THE BUM'S INC. APPEAL OF: STEPHEN AND RHODA LEVYTRENT MOTEL ASSOCIATES, L.P.
STADIUM HOTEL RESTAURANT GROUP, INC., AND BRET LEVY D/B/A/ BENNYTHE BUM'S INC. Appeal of: Matt Levy
Appeal from the Order Entered February 29, 2012 in the Court of Common Pleas of Philadelphia County Civil Division at No.: September Term, 2009 No. 000794
Appeal from the Order Entered March 1, 2012 in the Court of Common Pleas of Philadelphia County Civil Division at No.: September Term, 2009 No. 000794
BEFORE: MUSMANNO, J., WECHT, J., and PLATT, J. [*]
Bret Levy ("Levy"), Stephen and Rhoda Levy ("Parents"), and Matt Levy ("Brother") (collectively "Appellants") appeal from the February 29, 2012 and March 1, 2012 orders enforcing a settlement agreement between Appellants and Trent Motels Associates, L.P. ("Trent") and Stadium Hotel Restaurant Group, Inc. ("Stadium") (collectively "Appellees"). We affirm.
In its opinion ordering the enforcement of the settlement agreement between the parties, the trial court detailed the factual and procedural history of this case as follows:
This case has a long and tortured history with this court. [Levy] and [Stadium] are members of a joint venture formed to operate a Benny the Bum's restaurant at the Holiday Inn-Stadium Philadelphia. [Trent] is the owner of the Hotel and the landlord of the Hotel Restaurant. Levy and Stadium are the tenants of the Hotel Restaurant. Levy was the manager and controlled the operation and finances of the restaurant.
On September 11, 2009, Trent instituted suit against Levy and Stadium seeking money damages for breach of the lease, ejectment and declaratory judgment. Trent alleged Levy and Stadium failed to abide by the obligations under the lease including failure to pay rent, failing to pay city liquor taxes and failing to adhere to the terms and conditions of the Hotel's franchise agreement with the Holiday Inn. Simultaneously with the filings of the complaint, Trent also filed a complaint for eviction against Levy and Stadium in landlord tenant court. On October 16, 2009, Trent obtained a judgment of possession. Levy appealed the notice of possession.
On September 17, 2009, Trent filed a petition for preliminary injunction. On September 29, 2009, the parties entered into a court approved stipulation resolving the injunction. The stipulation required Levy to produce among other documents all tax reports for the purpose of renewing the tenant's liquor license. On October 5, 2009, Trent filed a petition for contempt since Levy failed to comply with the conditions of the September 29, 2009 stipulation. On October 29, 2009, after a hearing, the court entered an order compelling Levy to comply with the September 29, 2009 stipulation.
On February 1, 2010, Trent filed a petition for an injunction against Levy seeking to temporarily take over the operation of the Hotel Restaurant and to enjoin Levy from removing any furniture, equipment or fixtures therein. On February 4, 2010, the court issued a rule to show cause upon Levy as to why an injunction should not be granted and scheduled a hearing for February 16, 2010. While the petition for injunction was pending, Levy surreptitiously removed and sold restaurant equipment to William Kearney, a close family friend to the Levy family. Levy sold the equipment to Kearney for $5, 000, a sum which was under 5% of [the] value [of the kitchen equipment]. The equipment included tables, chairs, stools, and kitchen equipment.
On February 16, 2010, the rule returnable date for the injunction petition[, ] Trent[, ] having learned of the equipment's removal, presented evidence that everything taken from the Hotel Restaurant was property of the Hotel Restaurant or the Joint Venture. Levy argued without presenting any evidence or testimony that the property taken belonged to him. Although Kearney was present in the courtroom for the hearing, he was never called as a witness by Levy. Moreover, no testimony was elicited or evidence presented by either party as to where the property was located and whether it was still in Levy's possession or if it had been sold. As such a presumption existed that the equipment removed was still in the possession of Levy.
At the conclusion of the hearing, the court entered an order, dated February 16, 2010, granting immediate possession of the Hotel Restaurant to Trent, enjoining Levy from removing any furniture, fixtures, equipment or any other tangible property from the Hotel Restaurant and ordering Levy to return the property removed from the Hotel Restaurant within five (5) days of February 16, 2010. Prior to the expiration of the deadline set forth in the February 16, 2010 order for Levy to return the property to the Hotel Restaurant, Levy's counsel informed the court that the equipment had been sold to Kearney on February 9, 2010.
On February 22, 2010, the court[, ] after having been notified that Levy sold all equipment to Kearney on February 9, 2010, entered Trent's proposed order enjoining Levy, Kearney, and/or any other third party from selling or transferring any equipment or property identified in the February 16, 2010 order. The court also issued a rule upon Levy to show cause why he should not be held in contempt of the February 16, 2010 order. On June 2, 2010, after a hearing, Levy was found in contempt of this court's order dated February 16, 2010.
On February 25, 2010, Levy appealed this court's February 16 and February 22, 2010 orders to the Superior Court and also filed an application for emergency stay. On March 9, 2010, the Superior Court issued a temporary stay for Trent to file a response to the stay application. On March 26, 2010, the Superior Court issued an order lifting the temporary stay and denying Levy's stay application.
On July 11, 2011, the Superior Court affirmed the court's issuance of an injunction but remanded the preliminary injunction to the court for the imposition of a bond. On July 25, 2011, the court reinstated the February 16, 2010 injunction order and ordered Trent to file a bond with the Prothonotary in the amount of $5, 000 in accordance with the requirements of Pa.R.Civ.P. 1531(b). The court also scheduled a hearing for the contempt petition filed by Trent which sought to compel Levy to satisfy the terms of the prior contempt order entered on June 8, 2010. Trent requested relief in the form of payment to Trent of $119, 026.50 plus $100 per day from June 8, 2010 until the date of the court's ruling, or immediately remanding Levy to county prison until he purged himself of the contempt and paid the Hotel's reasonable attorney fees and costs.
On September 6, 2011, Levy appeared with his parents ["Parents"] and ["Brother"] for a scheduled contempt hearing. Pursuant to the court's instruction, the contempt hearing was transferred from Courtroom 602 City Hall to a courtroom at the Criminal Justice Center. At that time, Levy was informed by his specifically retained contempt counsel, Samuel Stretton, Esquire, that he could go to jail if he did not settle. In the hallway outside the courtroom prior to the hearing, Trent, Stadium, Levy and his family reached an agreement to globally resolve all outstanding litigation including the instant matter as well as the litigation involving Levy's mother and brother filed in this court, the race discrimination suit filed by Levy in federal court and the fraudulent conveyance action filed by Trent in New Jersey.
The material terms of the settlement were placed on the record and consisted of the following:
1. Entry of judgment against Levy in the amount of $500, 000. The judgment will be paid in cash in the amount of $125, 000 payable within 90 days from September 6, 2011. The balance of $375, 000 to be paid in 60 monthly installments. The first 36 installments will be made at $4, 000 per month. The last 24 monthly installments will be made in the amount of $9, 625.
2. The entire judgment was to be secured by a lien on a house in Margate, New Jersey.
3. Complete release of all pending litigation between Trent, Stadium, Levy and his family. However, Stadium's claims against Levy were not to be released in the event the City of Philadelphia chose to pursue tax claims against Stadium's individual shareholders.
4. The amount of $31, 500 shall be released from the Prothonotary and shall be payable to Trent.
5. [Appellants] will cease cooperation with the NAACP as to any racial discrimination claims against Trent.
All parties [to the instant action], including Levy[, ] stated their agreement to the terms on the record.
After the settlement was agreed to, Trent and Stadium discovered a transfer of the Margate property to a trust called the Vendome Irrevocable Trust, of which [Parents] are Co-Trustees. Trent and Stadium were never informed of this transfer by Levy. Despite numerous requests by Trent and Stadium, Levy failed to produce any documents regarding the Trust. Levy has also failed to make payment of $125, 000, the first installment under the Settlement Agreement. Trent and Stadium filed the instant petition to enforce the settlement based on Levy's refusal to meet his obligations under the settlement agreement. In response, Levy argues the settlement agreement is invalid since he entered the agreement under duress due to threat of imprisonment.
Originally, the Margate property was owned by [Levy] and [Brother]. [Levy] subsequently transferred his interest to [Brother] to satisfy a judgment [Brother] obtained against him on August 16, 2011 in a lawsuit filed by [Brother] on April 14, 2010 to recover amounts owed on an alleged loan [Brother] made to [Levy].
On January 23, 2012, [Parents] filed a petition to intervene and file an opposition to plaintiff's petition to confirm settlement. On February 15, 2012, the court granted [Parents] permission to intervene to file a response to the petition to confirm settlement. [Parents] have filed their response of record. Trial Court Opinion ("T.C.O."), 7/13/12, at 1-6 (some footnotes and citations omitted). Brother also has intervened in the instant case.
Parents and Brother assert that the trial court did not have jurisdiction to order non-parties to sign a mortgage upon their property to secure a settlement agreement, and that Parents did not have the authority as trustees to sign a mortgage upon the Margate property. Furthermore, Parents argue that Levy was under duress when he signed the settlement agreement.
On February 29, 2012, the trial court granted Appellees' petition to enforce the settlement agreement. The court held that Levy did not enter the settlement under duress, noting the presence of counsel, Levy's prior knowledge that incarceration could result from contempt, and the universal agreement reached by Appellants to settle all pending litigation. T.C.O. at 7-8. The trial court also held that Parents and Brother consented to the jurisdiction of the trial court by participating in the settlement negotiations with Appellees and receiving benefits from the settlement. Id. at 9.
Accordingly, the trial court ordered Parents and Brother to sign the mortgage upon the property located in Margate, New Jersey, to secure the settlement agreement. Id.
On March 13, 2012, Levy filed a notice of appeal. On March 16, 2012, Parents filed a separate notice of appeal. On March 30, 2012, Brother filed his own notice of appeal. On July 13, 2012, the trial court authored an opinion pursuant to Pa.R.A.P. 1925(a), detailing the reasons for the order enforcing the settlement agreement.
Each of the Appellants raises distinct issues on appeal. Levy raises one issue:
Since first deciding the issue over 100 years ago, this Court has consistently held that a person under threat, restraint or under circumstances which might produce a like effect upon persons act[s] under duress. Should this Court now abrogate well established law by agreeing with the hearing court [which] disregarded ample evidence that Levy acted under duress when he settled after being told repeatedly by his attorneys that he had to agree or be incarcerated?
Brief for Levy at 4.
Parents raise three issues on appeal:
1. Did the trial court err by ordering a mortgage on a property held in trust, when the trustees [i.e., Stephen and Rhoda Levy] neither agreed to nor had the authority to pledge the trust for the benefit of Levy's settlement agreement?
2. Did the trial court abuse its discretion when it made factual and [credibility] determinations against [Parents] without their having appeared before the court?
3. Is the settlement agreement unenforceable as the product of duress?
Brief for Parents at 4.
Brother raises a single issue for review:
Did the trial court have in personam jurisdiction over [Brother], a non-party to the matter that was before the Court, to direct him to sign a mortgage to satisfy the debt of another, [Levy], a defendant in said action.
Brief for Brother at 4.
Because these issues implicate similar arguments, we will address them together. For the reasons that follow, we find that Levy was not under duress when he negotiated and accepted the settlement agreement with Appellees, and that Parents and Brother were within the jurisdiction of the trial court when they participated in and benefited from the settlement agreement.
Our standard and scope of review when reviewing orders granting a motion to enforce a settlement agreement are as follows:
When reviewing a trial court's decision to enforce a settlement agreement, our scope of review is plenary as to questions of law, and we are free to draw our own inferences and reach our own conclusions from the facts as found by the court. However, we are only bound by the trial court's findings of fact which are supported by competent evidence. The prevailing party is entitled to have the evidence viewed in the light most favorable to its position. Thus, we will only overturn the trial court's decision when the factual findings of the court are against the weight of the evidence or its legal conclusions are erroneous.
Salsman v. Brown, 51 A.3d 892, 893-94 (Pa.Super. 2012) (citations omitted).
Settlement agreements are favored in Pennsylvania. Courts favor the resolution of disputes between parties. Settlements reduce the burden on the courts and expedite the transfer of money into the hands of a complainant. Mastroni-Mucker v. Allstate Ins. Co., 976 A.2d 510, 518 (Pa.Super. 2009). Courts enforce a settlement agreement in the same manner as a contract; so long as the contracting parties agree upon all the material items and there is no clear showing of fraud, duress, or mutual mistake, the court will enforce the agreement. Felix v. Giuseppe Kitchens & Baths, Inc., 848 A.2d 943, 947 (Pa.Super. 2004).
Duress is defined as "that degree of restraint or danger, either actually inflicted or threatened and impending, which is sufficient in severity or apprehension to overcome the mind of a person of ordinary firmness." Strickland v. Univ. of Scranton, 700 A.2d 979, 986 (Pa.Super. 1997) (quoting Carrier v. William Penn Broadcasting Co., 233 A.2d 519, 521 (Pa. 1967)). Specifically regarding allegations of duress, "in the absence of threats of actual bodily harm there can be no duress where the contracting party is free to consult with counsel." Carrier, 233 A.2d at 521. This rule of law, known as the Carrier rule, is firmly entrenched in Pennsylvania jurisprudence. See Degenhardt v. Dillon Co., 669 A.2d 946, 952 (Pa. 1996) (finding that appellant had reasonable opportunity to consult with counsel before entering into a contract and therefore could not claim duress); accord Simeone v. Simeone, 581 A.2d 162, 167 (Pa. 1990); Hamilton v. Hamilton, 591 A.2d 720, 721-22 (Pa.Super. 1991).
Levy argues that he entered into the settlement agreement under duress due to the threat of incarceration. He asserts that he learned of his potential incarceration on the day of the hearing, when the court moved the hearing from City Hall to the Criminal Justice Center. Levy's counsel informed him that the reason that the court moved the hearing was that the court wanted a police officer available if it decided to incarcerate Levy for contempt. Levy further states that his counsel then told him that the only way to avoid incarceration was to settle with Appellees. Based upon these facts, Levy argues that the threat of incarceration caused such apprehension in him that it overtook his mind, subjecting him to duress. Brief for Levy at 11, 20, 23.
To support his arguments, Levy cites decisional authority holding that threats of prosecution and threats of imprisonment can constitute duress when forming a contract. See Griffith, et al. v. Sitgreaves, 90 Pa. 161 (Pa. 1879); Germantown Mfg. Co. v. Rawlinson, 491 A.2d 138, 145 (Pa.Super. 1985) (invalidating a contract where defendant told plaintiff that her husband could be prosecuted unless she agreed to a confessed judgment); Ortt v. Schwartz, 62
Pa.Super. 70, 75 (Pa.Super. 1915) (finding that father was coerced to sign a note when he was told his daughter could be prosecuted and sent to jail). Levy also argues that the Carrier rule does not apply because consultation with counsel cannot dispel the coercive effects of threatened incarceration when a threat of incarceration is an "actual threat." Brief for Levy at 16. Levy couches this argument in the exception to the Carrier rule that, "absent threats of actual bodily harm[, ] there can be no duress where the contracting party is free to consult with counsel." Carrier, 233 A.2d at 521 (emphasis added). To support his claim that a threat of incarceration is an actual bodily threat, Levy cites Otto v. Powers, 110 A.2d 847 (Pa.Super. 1955). Levy further argues that consultation with counsel does not dispel duress when the duress comes from counsel. See Commonwealth v. Middleton, 473 A.2d 1358, 1360 (Pa. 1984).
Levy misconstrues and misapplies the case law involving duress, and omits facts pertaining to the instant case that distinguish this case from those cited. Germantown Manufacturing is distinguishable, because the plaintiff there did not consult with an attorney and the opposing party told her that she did not need to do so. 491 A.2d at 140, 145. For precisely that reason, the Germantown Manufacturing court did not discuss or apply the Carrier rule. Some of the cases that Levy cites involve situations in which the threatened party did not have the benefit of counsel. See Baker v. Morton, 79 U.S. 150 (1870); Fountain v. Bigham, 84 A. 131 (Pa. 1912). These cases, too, are distinguishable for that very reason.
Levy's reliance on Otto is also misplaced. In Otto, a party coerced the appellant to sign a contract by stating that "one more dead body won't make any difference to me, " a threat that is categorically different than the threat of incarceration at issue in this case. The court in Otto noted that the advice of counsel is irrelevant when addressing a threat of bodily harm, whereas the advice of counsel is sufficient to invoke the Carrier rule when addressing a threat that is merely legal. Otto, 110 A.2d at 848. Levy admits that a threat of incarceration is not a threat of actual bodily harm. Brief for Levy at 16. Levy attempts to argue that Otto supports the proposition that being able to consult with counsel is irrelevant when facing a threat of incarceration. Otto does not support that claim. The court in Otto specifically referenced actual bodily harm and no other type of harm. When discussing threats of actual bodily harm and the effectiveness of counsel, the Otto court noted:
[W]hen one's life is threatened . . . it would be little comfort to know that if he were killed the slayer would have committed an illegal act . . . a lawyer could have no more effect than consulting any other person, whose advice though proper would not necessarily allay the fear of the one whose life was threatened.
Otto, 110 A.2d at 848.
Despite Levy's argument, it is well-settled that when a party consults with counsel, the threat of incarceration does not establish duress. See Otto, 110 A.2d at 848. Levy consulted with counsel regarding his possible incarceration and the terms of the settlement agreement, weighing the settlement's pros and cons. After consultation, Levy agreed with his family that the best option was to settle. T.C.O. at 9; Notes of Testimony ("N.T."), 1/11/12, at 10-11; Letter from Samuel C. Stretton ¶2. Accordingly, the threat of incarceration alone did not establish such duress as would void the settlement agreement.
Regarding Levy's argument that his own counsel was the source of the threat of incarceration and duress, we find that this argument also lacks merit. The threat of incarceration did not first appear during the September 6, 2011 hearing, as Levy alleges. Levy was aware that incarceration was possible based upon his participation in prior contempt hearings and because the petition for contempt filed by Appellees specifically requested incarceration. Furthermore, the trial court found that Levy's counsel did not threaten Levy, but merely informed Levy of the likely outcome of the contempt hearing and advised Levy to settle. The trial court noted that Levy had a full opportunity to consult with counsel, who fully reviewed "the pros and cons of settlement and negotiated with counsel for [Appellees] as to the terms of the settlement." T.C.O. at 8. We find no basis upon which to conclude that Levy's own counsel threatened Levy with incarceration.
We also agree with Appellees that the purpose of a civil contempt proceeding is to induce a party to comply with a court order. The purpose of a civil contempt proceeding is to coerce the defendant into compliance either by imposing a fine or imprisonment, conditioned upon obeying the court's order. See Crozer-Chester Med. Center v. Moran, 560 A.2d 133, 136-7 (Pa. 1989); Knaus v. Knaus, 127 A.2d 669, 672 (Pa. 1956). To find that a settlement agreement was procured under duress when entered to avoid a finding of contempt and the attendant threat of incarceration would completely defeat the purpose of civil contempt. Accordingly, we find that Levy was not under duress when he negotiated and accepted the settlement agreement with Appellees.
Having resolved the issue of duress, we now address the argument that the trial court lacked jurisdiction to order Parents and Brother to mortgage the Margate property as security for the settlement payments. We address this argument in three parts: first, we determine whether the trial court had jurisdiction over non-parties to the underlying case based upon their involvement in the settlement; second, we address whether Parents and Brother in fact agreed to the settlement; and third, we resolve whether Parents had authority as trustees to mortgage the Margate property.
Brother argues that the trial court lacked jurisdiction to order him to sign a mortgage upon the Margate property because he was a non-party to the underlying case. Brother cites no legal authority to support this argument, and we find no case law to support the proposition that a non-party who participates in a settlement cannot be subjected to the jurisdiction of the court. Brother also argues that the trial court did not have in personam jurisdiction over him because his contacts with Pennsylvania were insufficient. We will address this argument first.
Brother bases his argument that the court lacked in personam jurisdiction upon the assertion that he is a non-resident, and that he did not consent to the court's jurisdiction. Brief for Brother at 11-12. Despite Brother's claim that he is a non-resident of Pennsylvania, the record reflects that Brother resides at 2725 Barry Lane, Huntingdon Valley, Pennsylvania. See Supplemental Memorandum by Trent in Response to Intervention by Parents, Exhibit B, at 7. Residence within the Commonwealth is sufficient for the exercise of jurisdiction by the courts. Commonwealth ex rel. Graham v. Graham, 80 A.2d 829, 833 (Pa. 1951). The record also reflects that Brother consented to the court's jurisdiction. Pennsylvania statutory law regarding jurisdiction states as follows:
The existence of any of the following relationships between a person and this Commonwealth shall constitute a sufficient basis of jurisdiction to enable the tribunals of this Commonwealth to exercise general personal jurisdiction over such person, or his personal representative in the case of an individual, and to enable such tribunals to render personal orders against such person or representative:
(i) Presence in this Commonwealth at the time when process is served.
(ii) Domicile in this Commonwealth at the time when process is served.
(iii) Consent, to the extent authorized by the consent.
See 42 Pa.C.S. § 5301. It is well-settled that a party may expressly or implicitly consent to a court's personal jurisdiction either by an affirmative statement or by taking steps that demonstrate his submission to the court's jurisdiction. Wagner v. Wagner, 768 A.2d 1112, 1120 (Pa. 2001).
Brother participated in a settlement agreement supervised by the trial court. Brother along with Levy and Parents negotiated with Appellees and agreed that the best option was to settle. T.C.O. at 4. In agreeing to the settlement, Appellees discontinued claims against Appellants, including a fraudulent transfer claim that named Brother as a defendant. Id. at 4-5. Furthermore, when the parties and the trial court discussed the settlement agreement and entered into it in open court, Brother did not protest the Margate property being used as a security interest. Brother presents no evidence or argument that he was not present in court on September 6, 2011, or that he did not participate in the negotiations prior to the hearing. For the foregoing reasons, we agree with the trial court that Brother "consented to the jurisdiction of this court by voluntarily partaking in the settlement negotiations, consenting to the settlement and receiving a benefit from the settlement." Id. at 8.
We now address Brother's argument that his status as a non-party to the underlying case prevents the trial court from exercising jurisidiction over him. Trial courts may order a non-party to send a representative to participate in a settlement negotiation. Mulligan v. Piczon, 779 A.2d 1143, 1149 (Pa. 2001). The Commonwealth Court, our sister court, has stated that it "has been unable to find any case law which holds that a trial court is without jurisdiction over a person or entity when supervising the negotiation of a settlement or other proceedings." Mulligan v. Piczon, 739 A.2d 605, 608 (Pa. Cmwlth. 1999).
Establishing that a trial court has jurisdiction over parties who negotiated and accepted a settlement under court supervision is a natural extension of the jurisdiction of the trial court over the initial settlement negotiations between the parties. This is not an issue of jurisdiction over parties and non-parties, as such, but of jurisdiction established by a contract agreed upon before the court to settle the instant case and other related cases. Brother participated in the negotiations for the settlement and benefitted from the agreement to settle. T.C.O at 4. Although the settlement was negotiated and agreed upon under the heading of the instant case, a case in which Brother is not a party, it indisputably affected Brother in other related litigation. Id. Indeed, Appellees agreed to discontinue two claims against Brother as part of the settlement agreement. Id. At 5 (Settlement Agreement ¶3); N.T., 8/6/11, at 7. The trial court had jurisdiction over the proceedings in which Brother participated in the negotiations, agreed to the settlement, and benefited from the settlement. Because of his participation and agreement, the trial court necessarily established and retained jurisdiction over Brother in order to enforce the settlement.
Next, Parents argue that the court overstepped its jurisdiction when it ordered Parents to secure a mortgage upon the Margate property because Parents did not agree to the settlement. Parents assert that there is no evidence that demonstrates that they agreed to the settlement, because the agreement was not reduced to writing, because they were not sworn in, and because they did not speak at the contempt hearing. Brief for Parents at 10-11.
As stated, Pennsylvania law favors settlement agreements between parties. Such agreements are enforced in the same manner as contracts. See Mastroni-Mucker, 976 A.2d at 518; Felix, 848 A.2d at 947. The essence of a settlement is that "[t]here is an offer (the settlement figure), acceptance, and consideration (in exchange for the plaintiff terminating his lawsuit, the defendant will pay the plaintiff the agreed upon sum)." Mastroni-Mucker, 976 A.2d at 518 (quoting Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, 587 A.2d 1346, 1349 (Pa. 1991)). If there is no clear showing of fraud, duress, or mutual mistake, the court will enforce the contract. Felix, 848 A.2d at 947.
The record shows that Parents and Brother agreed to the settlement. Both Parents and Brother were present during the settlement negotiations, and the trial court found that Parents and Brother participated in the negotiations. T.C.O. at 9; see Affidavit of Samuel C. Stretton ("Affidavit"), 11/2/11, ¶¶4-5, 9, 11. Specifically, "[a]fter extensive discussions with the [Appellants] and negotiations with counsel for [Appellees, Appellants] agreed that it was in their collective best interest to globally resolve all outstanding litigation." Affidavit ¶4; see T.C.O. at 9. Mr. Stretton further elaborated that, "All of the [Appellants], including [Parents] and [Brother], participated in the settlement negotiations with [Appellees] . . . ." Affidavit ¶5. Mr. Stretton believed that Appellants fully understood and agreed to the settlement, as reflected in the following statement:
I have reviewed the response [Appellants] filed to [Appellees'] Petition to Enforce Settlement Agreement, and I was shocked when I read it because the allegations are completely false. In particular, any suggestion by [Appellants] that the settlement was in any way tentative or not binding on the [Appellants] is completely false, as [Appellants] fully understood, from my discussions with them, the terms of the settlement and binding nature of the agreement. Similarly, any suggestions that
[Appellants] were not parties to the settlement negotiations and agreement reached in the courthouse is completely false.
Affidavit of Samuel C. Stretton ¶11.
We find that Parents' arguments lack merit. We previously have held that it is not necessary for parties to reduce a settlement agreement to writing. See Mastroni-Mucker, 976 A.2d at 522. Although it is true that Parents were not sworn in and did not speak at the contempt hearing, the affidavit of Samuel C. Stretton states that "[t]he terms of the agreed settlement were then placed on record in open court, while all members of the Levy Family were in the court room. No member of the Levy Family expressed any objection." Affidavit ¶9. Parents do not dispute that they were present at the settlement negotiations, nor do Parents rebut the statements made by Mr. Stretton in his affidavit.
We will not overturn a trial court's decision to enforce a settlement unless its factual findings are not based upon competent evidence. Salsman, 51 A.3d at 893-94. The trial court's determination that the parties agreed to the settlement is supported by competent evidence, specifically the affidavit of Mr. Stretton. T.C.O. at 7-8. Parents present no conflicting evidence to demonstrate that they were not aware of the terms of, or did not agree to, the settlement. Thus, the trial court did not err or abuse its discretion in finding that Parents and Brother agreed to the settlement following negotiations with Appellees.
Parents also argue that they lacked authority to place a mortgage upon the Margate property to secure the settlement payment because they hold the property as trustees. They base this argument upon the terms and articles contained in the Vendome Irrevocable Trust ("Trust"), a trust in which Parents hold the Margate property as trustees for the beneficiary. See Parents' Response in Opposition to Plaintiff's Petition to Confirm Settlement, Attachment 1. Specifically, Parents argue that the Trust's
Article VII Spendthrift Provision, Article IX Exercise of Powers, and Article XIII Governing Law and Trustee Powers prevent them from using the Margate property to secure the settlement payment. Brief for Parents at 10. Article VII, the Spendthrift Provision, provides as follows:
Each trust shall be a spendthrift trust to the maximum extent permitted by law and no interest in any trust hereunder shall be subject to a beneficiary's liabilities or creditor claims, assignments, or anticipation. Notwithstanding the foregoing, no provision of this Article shall prevent the appointment of an interest in a trust through the exercise of a power of appointment.
Trust at 5. In Pennsylvania, the Uniform Trust Code and other relevant statutes govern the law of trusts. See 20 Pa.C.S. § 7702. The effect of placing a spendthrift provision in a trust is that "[a] beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision. Except as otherwise provided in this subchapter, a creditor or assignee of the beneficiary of a spendthrift trust may not reach the interest or a distribution by the trustee before its receipt by the beneficiary." 20 Pa.C.S. § 7742(c). Parents' reliance on the Spendthrift Provision is impacted by Article XIII(G). Article XIII(G), entitled Compromise Claims or Debts, states that "[t]he Trustee may compromise claims or debts and abandon or demolish any property which the Trustee shall determine to be of little or no value." Trust at 22.
When Appellants and Appellees negotiated the settlement agreement, Appellees agreed to resolve all litigation that involved Levy, Parents, and Brother. T.C.O. at 9. Trent had brought several claims against Brother and Rhoda Levy based upon their involvement with the issue at the heart of this case. Specifically, Trent initiated a fraudulent transfer claim against Levy and Brother when Levy transferred his interest in the Margate property to Brother to satisfy an alleged loan. See Trent's Reply to Parents' Response in Opposition to Confirm Settlement at 11. The settlement agreement provided that Trent would discontinue the fraudulent transfer claim against Levy and Brother. Settlement Agreement ¶3.
Pennsylvania statutory law establishes that trustees have the power to "settle a claim by or against the trust by compromise, arbitration, or otherwise." See 20 Pa.C.S. § 7780.6(a)(2). Article XIII(G) also grants Trustees the authority to compromise claims or debts. Trust at 22. Furthermore, all parties who were involved in the Trust were present at the settlement negotiations and acquiesced, expressly or implicitly, in the use of the Margate property as security for the settlement. The result of the settlement was the dismissal of all claims levied against each of the Appellants, and specifically the claims against the presumptive trust beneficiary, Brother. For the foregoing reasons, we conclude that Parents were authorized as trustees to use the Margate property as collateral for the settlement agreement.
We also note that the transfer of the Margate property between the various Appellants raises questions as to the purpose of the Trust. The timing and method of the Trust's creation, and the use of the Trust to-date, raise serious doubts to whether the Trust was created in good faith for Brother's benefit or rather to avoid the loss of the Margate property in litigation. The establishment of the trust did not preclude the parties from securing the settlement agreement with the Margate property.
For the foregoing reasons, we find that Levy was not under the stress of duress when he negotiated and agreed to the settlement. Furthermore, we hold that Parents and Brother were subject to the jurisdiction of the trial court, and that Parents as trustees had the authority to use the Margate property as security for the settlement payments. Thus, the court properly ordered Parents and Brother to sign the mortgage upon the Margate property, as agreed upon pursuant to the settlement agreement.