United States District Court, M.D. Pennsylvania
Martin C. Carlson United States Magistrate Judge
Now pending before the Court is the defendants’ motion to enforce a settlement agreement that the defendants contend the parties reached in full resolution of this litigation. In support of this motion the defendants insist that the parties had agreed upon the essential and material terms of an agreement in the autumn of 2014, and were merely negotiating the agreement’s language after forming a binding oral contract. In contrast, the plaintiffs maintain that the parties never reached a full agreement on the terms of a settlement, but instead had simply exchanged offers that had not yet been accepted by both parties, thereby permitting the plaintiffs to insist upon new or even different terms weeks after the draft settlement document was exchanged.
After this action was transferred to the undersigned, we convened an evidentiary hearing during which Defendant’s counsel and the Defendant Sheryl Storch testified, and where the parties presented argument. Upon consideration of that evidence and the parties’ competing views; and finding that the parties had not, in fact, entered into an enforceable settlement agreement, we are constrained to deny the defendants’ motion.
This is a local property dispute between former neighbors. On April 30, 2014, plaintiffs John and Diane Giambra commenced a lawsuit in the Court of Common Pleas of Luzerne County. (Doc. 1.) In the complaint, the plaintiffs alleged that the defendants, Charles and Sheryl Storch, tortiously interfered with contract and were otherwise liable for nuisance. According to the complaint, the plaintiffs own real property at 15 Whispering Way, in Jenkins Township, Pennsylvania. The property is adjacent to property owned by the defendants located at 360 Westminster Road, Jenkins Township. A section of the plaintiff’s land, which the plaintiffs develop, is located between two parcels of land owned by the defendants. The plaintiffs endeavored to sell their property to a third-party purchaser, and the plaintiffs allege that after they entered into an agreement for that sale, the defendants acted in a manner that was threatening and tortious, and impaired the sale of the property.
This lawsuit followed, with the plaintiffs bringing claims for tortious interference with contract and nuisance under Pennsylvania law. The defendants removed the action to this Court on or about June 4, 2014, pursuant to 28 U.S.C. § 1441, on the grounds that there existed diversity of citizenship under 28 U.S.C. § 1332.
On September 10, 2014, the parties attended a settlement conference before the Honorable Thomas M. Blewitt. With the benefit of hindsight, the reported dynamics of this conference may have contributed to the compounding confusion which was later exhibited in this case, since the testimony revealed that the principals were not all physically present together at the conference. Instead, some of the tentative understandings that the parties believed that they had reached were communicated to the principals through third parties by telephone, a process which allowed imprecision to creep into these discussions. During that conference the parties discussed a number of terms under which settlement could be reached. One of these terms related to the outstanding demands for damages, and attorneys fees, made by each party. At the close of the conference, it was reported to Mrs. Storch that each party would agree to abandon their pending and current requests for costs, fees or damages as part of a settlement. This understanding was a material condition of any settlement for Mrs. Storch. While Mrs. Storch understood that the mutual abandonment of pending damages and fee claims was part of the tentative agreement, notably missing from the agreement was any discussion regarding how the parties might allocate the cost of potential future expenses for the improvement of the defendants’ property, including future utility access payments for the defendants in the event that they attempted to improve and market plots of land that they owned within the larger development maintained by the plaintiffs, and sought to take advantage of existing utility lines which the plaintiffs had installed throughout this larger tract of land. The failure of the parties to anticipate, or address, this question would compound the confusion in this case in the following weeks.
On September 26, 2014, the parties exchanged a draft settlement agreement. Each party, however, may have construed this document in a different way. The defendants represent that the parties had in fact agreed to all material terms orally and were simply memorializing the agreement, whereas the plaintiffs maintain that the parties had not reached a meeting of the minds and that their negotiations were ongoing. Three days later, counsel for the Defendants represented that he was in his office and available to discuss the proposal and, in fact, proposed revisions to the draft that had been circulated. (Doc. 38, Ex. A, Email dated Sept. 29, 2014 from Matthew J. Carmody, Esq. to Joseph J. Mashinski, Esq.)
On October 7, 2014, the defendants again wrote to the plaintiffs, inquiring about the status of the settlement agreement. (Id., Ex. B, Email dated Oct. 7, 2014 from Matthew J. Carmody, Esq. to S. Falcone, Esq. and Joseph J. Mashinski, Esq.) In that email, counsel asked, “Any updates on the settlement agreement? If it’s not going to be finalized before 11 am tomorrow, I suggest we at least call the judge’s chambers this afternoon if we’re able to catch him or first thing in morning and ask for additional time. I don’t want to waste his time waiting for a conference call.” (Id.) Counsel for the plaintiffs agreed, noting that “more time is necessary. . . . It is most likely best for us to get together later this week to finish this.” (Id.) This exchange reveals that discussions were still on-going between the parties, but shed little definitive light on what the parties’ respective views may have been regarding the terms of their agreement.
On October 8, 2014, Judge Blewitt entered an order rescheduling the parties’ telephone conference to October 15, 2014. (Doc. 29.) On October 8, 2014, counsel for the defendants confirmed that the conference had been rescheduled, and concluded by asking opposing counsel to “Let me know if/when you want to meet to finalize the agreement.” (Doc. 38, Ex. C.) Thereafter, on October 15, 2014, the Court convened the conference call and entered a note on the docket reflecting that “Settlement negotiations ongoing. Court schedules follow up telephonic status conference for October 21 at 9:30 a.m.” (Doc. 30.)
The Court scheduled another telephone conference for October 21, 2014 (Doc. 31), but that conference was thereafter continued to October 29, 2014 (Doc. 32). The reason for the continuance is not clear, but the defendants’ counsel sent an email on October 20, 2014, inquiring whether plaintiffs’ counsel had “time to address this settlement today?” (Doc, 38, Ex. D.) The telephone conference was again continued to October 31, 2015, and then continued again until November 12, 2014. (Doc. 34.)
It appears that during the latter stages of this process, the plaintiffs presented an issue which had not been squarely addressed in prior negotiations, the allocation of future potential utility hook-up costs in the event that the defendants improved and marketed plots of land that they owned, and sought to take advantage of existing utility lines which the plaintiffs had installed throughout this tract. For their part, the plaintiffs now insisted upon a $10, 000 utility hook-up payment as part of any settlement, if the defendants wished to utilize the existing utility lines installed by the plaintiffs as part of their development of this tract.
The inclusion of a term like the term proposed by the plaintiffs in the settlement agreement is understandable since one element of the settlement was resolution of competing property owner interests in the future between the parties, a resolution that would necessarily have to prescribe rules governing the conduct of the parties in the event that the defendants sought to improve and market one of the lots that they owned within the plaintiffs’ development. Yet the timing of the addition of this term to the agreement is unfortunate, and in some respects ...