United States District Court, Eastern District of Pennsylvania
MEMORANDUM RE: PLAINTIFFS’ MOTION TO ENFORCE SETTLEMENT AGREEMENT
Plaintiffs James and Suzanne Villare sought to recover from their auto insurance company, Defendant Geico Casualty Company, after Mr. Villare was injured in a collision with an underinsured motorist. Following a settlement conference with Magistrate Judge Strawbridge, the parties agreed to settle for $100, 000. The terms of the settlement, as memorialized in a February 12, 2015 letter from Defendant’s counsel, included Plaintiffs’ agreement “to satisfy any and all liens being asserted in this matter with these settlement funds.” However, upon reading a Release and Trust Agreement drafted by Geico, Mr. Villare was unable to sign the Release and Trust Agreement in its entirety because it included an inaccurate provision attesting that he is not within 30 months of becoming eligible for Medicare. After striking the inaccurate sentence, the Villares signed the Release and Trust Agreement, including all other provisions requested by Geico. The parties now dispute whether the Villares have fully complied with the terms of the settlement agreement and are entitled to disbursement of the settlement funds.
In this diversity case, the Court had subject matter jurisdiction under 28 U.S.C. § 1332(a)(1). The parties reported that the case had settled and it was dismissed with prejudice under Local Rule 41.1(b) on February 11, 2015 (ECF 19). The order of dismissal did not incorporate the terms of the settlement agreement or explicitly retain jurisdiction over the settlement. As such, if the order of dismissal is left untouched, the Court would need an independent basis for subject matter jurisdiction to enter an Order enforcing the settlement agreement. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 378, 381-82 (1994). However, Local Rule 41.1(b) allows for an order of dismissal to be vacated, modified, or stricken from the record for cause shown within 90 days of the entry of such an order. Given the parties’ dispute over the terms of their settlement agreement, the Court will vacate the order of dismissal (ECF 19) and retain jurisdiction over this matter until the parties report that the settlement has been concluded.
III. Procedural History
The Villares filed their complaint on April 21, 2014 (ECF 1), Geico answered and asserted affirmative defenses on June 6, 2014 (ECF 7), and the Villares replied to Geico’s affirmative defenses on June 17, 2014 (ECF 8). Settlement conferences facilitated by Magistrate Judge Strawbridge took place on December 18, 2014, February 2, 2015, and February 10, 2015 (ECF 15, 17, 18). The case was dismissed with prejudice under Local Rule 41.1(b) on February 11, 2015 after the parties reported that they had reached a settlement (ECF 19).
Plaintiffs filed the pending Motion to Enforce the Settlement Agreement on March 6, 2015 (ECF 21) and the Court held an off-the-record telephone conference with the parties on March 17, 2015. Defendant filed its Opposition to Plaintiffs’ motion on March 19, 2015 (ECF 25) and the Court held a hearing on the motion on March 20, 2015.
IV. The Parties’ Contentions
A. The Villares’ Contentions
Plaintiffs James and Suzanne Villare argue that the material terms of the settlement were (1) Geico would pay $100, 000 in exchange for a full and final settlement of all claims, (2) Plaintiffs would execute a Child Support Affidavit, and (3) Plaintiffs would agree to satisfy any and all liens being asserted in this matter with the settlement funds. Pls. Br. at 2 (ECF 21). These settlement terms were memorialized in a February 12, 2015 letter from Geico’s counsel. Pls. Ex. A (ECF 21-1).
To consummate the settlement, Geico provided a Release and Trust Agreement for Plaintiffs to sign. Consistent with the settlement terms, the Release and Trust Agreement provided in subparagraph 2(e) that any liens have been settled or satisfied, that Plaintiffs will satisfy such liens in the future, and that Plaintiffs will “defend, indemnify, and forever save harmless” Geico from any such liens that have been or may be asserted, including Medicare liens. Pls. Ex. B at 2 (ECF 21-1). However, the next subparagraph, 2(f), requested that Plaintiffs represent that they have not received Medicare or Social Security benefits related to the accident, and that they will not be Medicare-eligible within 30 months. Id. at 2-3. The final sentence regarding Medicare eligibility within 30 months was problematic because Mr. Villare is 64 and will be Medicare eligible when he turns 65.
To remedy this problem, Plaintiffs signed and notarized a version of the Release and Trust Agreement that omits the final sentence from subparagraph 2(f) about not becoming Medicare-eligible within 30 months. Pls. Br. at 4; Pls. Ex. E (ECF 21-1). The signed version otherwise includes all of the representations and indemnification provisions that Geico requested. Id. Plaintiffs argue that this signed agreement fulfills their settlement obligations. Pls. Br. at 4.
Geico, however, insisted that the Villares provide evidence that there are no outstanding Medicare liens in the form of a final letter from Medicare. Pls. Br. at 3-5; Pls. Ex. C (ECF 21-1). In response, the Villares took additional steps to show that there are no Medicare liens. A legal assistant for Plaintiffs’ counsel contacted Medicare to inquire about Mr. Villare’s Medicare status and submitted an affidavit stating that Mr. Villare is not currently Medicare eligible, has no open Medicare claims, has no Medicare number, and that a Medicare representative stated that Medicare cannot provide a letter about his claim status because he is not Medicare eligible and is not registered with Medicare. Id. at 5; Pls. Ex. F (ECF 21-1). Mr. ...