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recognizing that a party may void a contract if the party can prove that the contract was the produce of “duress or undue influence, or by fraud or mistake”
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CIV-19-860-G
04-19-2021
ALLIE THOMAS CHESTER, Plaintiff, v. JACOB PARSONS, et al., Defendants.
REPORT AND RECOMMENDATION
SHON T. ERWIN, UNITED STATES MAGISTRATE JUDGE
Plaintiff Allie Thomas Chester, appearing pro se and in forma pauperis, filed an Amended Complaint under 42 U.S.C. § 1983, alleging a violation of his constitutional rights. (ECF No. 20). United States District Judge Charles B. Goodwin referred this matter to the undersigned magistrate judge for initial proceedings consistent with 28 U.S.C. § 636(b)(1)(B)-(C). Currently before the Court is Defendants' Motion to Enforce Settlement Agreement. (ECF No. 52). Plaintiff has filed a Response to the Motion and Defendants have filed a Reply. (ECF Nos. 55 & 56). For the reasons set forth below, it is recommended that the Court GRANT Defendants' Motion.
I. PROCEDURAL BACKGROUND
Mr. Chester filed this action against two Altus police officers-Jacob Parsons and Allen Collins-alleging the two officers used excessive force against him during an arrest which resulted in a broken arm. (ECF No. 20:4-6; 20-1:1-2). Mr. Chester sued Defendants in their official and individual capacities, and sought monetary relief. (ECF No. 20:4-6). On January 25, 2021, following a dismissal of the official capacity claims without prejudice and limited discovery, Defendants filed a “Notice to Court of Settlement, ” informing the Court that the parties had reached a settlement agreement and would be filing a joint stipulation of dismissal within ten days. (ECF No. 49). Defendants have submitted a copy of the “Release and Settlement Agreement” signed by Mr. Chester on December 11, 2020, which stated, in part:
(ECF No. 28).
1. Defendants agreed to pay Plaintiff $1, 000.00 in exchange for a full and complete release of all claims asserted in the lawsuit;
2. Plaintiff understood that under Oklahoma law, the $1, 000.00 could not be paid directly to him, but instead, the money would be paid to the Oklahoma Department of Corrections (DOC) for the benefit of Plaintiff and how the money would thereafter be distributed between the DOC and Plaintiff;
3. Once Defendants verified to Plaintiff that the money had been sent to the DOC for Plaintiff's account, Mr. Chester agreed to dismiss the lawsuit with prejudice.(ECF No. 52-2).
On January 7, 2021, Margie Weaver, counsel for the DOC, acknowledged receipt of the $1, 000.00 check made payable to Plaintiff. (ECF No. 52-3). On January 14, 2021, counsel for Defendants wrote Plaintiff a letter, informing him of the check deposit and enclosing a stipulation of dismissal with prejudice for Plaintiff to sign, per the terms of the Release and Settlement Agreement. (ECF No. 52-4). On January 21, 2021, Plaintiff replied with a letter of his own, which stated:
Sir The check you mailed to the Department of Corrections in my Name got Governed by them so I Never received it, can you raise the Settlement Officer to 2, 000.00 and send one more check out for 1, 000.00. It'd be greatly appreciated Sir you can send The 1, 000.00 Check to my Older Brother he has Power of Attorney over me will give his address to you But you might have to call him to get his postage address. Hope and pray you can fix this issue please.(ECF No. 52-5). Counsel for Defendants replied to Mr. Chester's letter, stating that Defendants were unwilling to pay more money and, again, requesting that Plaintiff sign the Joint Dismissal with Prejudice per the prior agreement. (ECF No. 52-6). Plaintiff replied in a letter dated February 5, 2021, stating that he was unwilling to sign the dismissal paperwork because “[he] ha[d] not received the Agreed amount of money.” (ECF No. 52-7). According to Mr. Chester, he did not know who Margie Weaver was, and he “never had a thousand Dollars or any money From [defense counsel's] Law Firm on [his] account.” (ECF No. 52-7). Plaintiff once again requested that a one thousand dollar check be sent to his brother, and if not, he would not “sign anything Agreeing to a dismissal.” (ECF No. 52-7).
The undersigned notes that the date of the reply letter is “January 14, 2021.” See ECF No. 52-6. Presumably this is a typographical error/failure to change the heading/date from the prior letter sent to Plaintiff, as the second letter is clearly a reply to Mr. Chester's letter, which was dated January 21, 2021.
On February 22, 2021, counsel for Defendants filed a Motion to Enforce Settlement Agreement, per the terms of the December 11, 2020 agreement. (ECF No. 52). On March 23, 2021, Plaintiff filed a “response” in the form of a letter to the Court stating that at the time he signed the Release and Settlement Agreement he: (1) lacked legal counsel, (2) was not taking his prescribed medication, and (3) was under duress by other inmates, and (4) was coerced by defense counsel. (ECF No. 55). As a result, Plaintiff argues that “The Agreement Should Be Voided and No. longer Good.” (ECF No. 55).
In a Reply Brief, Defendants attached evidence from Margie Weaver, showing that the $1, 000.00 check which had been deposited with the DOC on behalf of Plaintiff had been distributed as follows and in accordance with Oklahoma law, Title 57, Section 566.1:
Section 566.1 provides:
• $840.00 to DOC Probation & Parole Fees in Plaintiff's Jackson County Oklahoma Case No. CF-2016-0059; and
• $140.00 to the Western District of Oklahoma for filing fees associated with this case.(ECF No. 56-1).
II. THE COURT SHOULD GRANT DEFENDANTS' MOTION
Because settlement agreements are contracts, “[i]ssues involving the formation and construction of a purported settlement agreement are resolved by applying state contract law.” Walters v. Wal-Mart Stores, Inc., 703 F.3d 1167, 1172 (10th Cir. 2013). Under Oklahoma law, settlement agreements, which may be oral or written, are controlled by “the rules of offer and acceptance and of mutual assent which control any issue of contract formation.” In re De-Annexation of Certain Real Property from City of Seminole, 204 P.3d 87, 89 (Okla. 2009). The consent of the parties must be free, mutual, and “[c]ommunicated by each to the other.” Id. If the language of a contract is clear and without ambiguity, the Court is to interpret it as a matter of law. Corbett v. Combined Communications Corp. of Oklahoma, Inc., 654 P.2d 616, 617 (Okla. 1982). Finally, a party generally may not repudiate a settlement agreement absent fraud, duress, undue influence, or mistake. Whitehorse v. Johnson, 156 P.3d 41, 46 (Okla. 2007).
In his March 23, 2021 Response, Plaintiff offers four reasons to void the settlement agreement he signed on December 11, 2020. (ECF No. 55). The Court should find none of Plaintiff's reasons persuasive.
First, Mr. Chester cites a lack of legal counsel. (ECF No. 55). On October 21 & 23, 2019, Plaintiff filed a Motion to Appoint Counsel and Supplement thereto. (ECF Nos. 12 & 17). On January 14, 2020, the Court denied Plaintiff's Motion, without prejudice to his ability to request counsel at a later stage in the proceedings. (ECF No. 25). On June 16, 2020, Plaintiff again requested counsel by filing a one-sentence pleading stating: “On Case Number CIV-19-860 G please consider me getting Legal Help.” (ECF No. 36). On October 22, 2020, the Court again denied Plaintiff's Motion, without prejudice to his ability to request counsel at a later stage in the proceedings. (ECF No. 42).
On December 3, 2020, following Plaintiff's deposition, defense counsel told Plaintiff that he would like to discuss settling the case. (ECF No. 56:3). At no time thereafter did Plaintiff renew his Motion for Appointment of Counsel, but instead, Mr. Chester signed the Release and Settlement Agreement only 8 days following the discussion with defense counsel. See ECF No. 52-2. Considering the change of circumstances at that point-i.e.- an offer of settlement-Mr. Chester could have renewed his motion for counsel, but did not. In hindsight, Plaintiff should not now be allowed to rely on his lack of legal counsel as a basis for rescinding the settlement agreement.
Second, Plaintiff alleges that at the time he signed the settlement agreement, he “was'nt [sic] on [his] medication” which he was supposed to be taking; medications which included Haldol, Cogentin, Remeron, and Vistaril. See ECF No. 55. But prior to this time and throughout his correspondence with defense counsel, Plaintiff never discussed a lack of medication or argued the same as a rationale to default on the settlement agreement. See ECF Nos. 52-5, 52-7. Furthermore, Plaintiff fails to inform the Court regarding how the alleged lack of prescription medication had affected his ability to sign the settlement agreement. As such, the Court should not allow Mr. Chester to invoke a lack of medication as a basis for voiding his contractual obligations.
Third, Plaintiff claims he was under duress to sign the settlement agreement by other inmates “[who] said [Plaintiff] owed them money and it would turn into violence if [he] didn't sign.” (ECF No. 55). This type of duress is defined as “menace” under Oklahoma law, and, as stated, is a basis to rescind a settlement agreement. See supra, Whitehorse. Regarding duress as a means to void a contract, the Oklahoma Supreme Court has stated:
See 12 O.S. §§ 55, 56.
In defense of an action where the valitity of a contract is sought to be voided on the ground of duress, the question in each such case is: Was the person so acted upon by threats of the person claiming the benefit of the contract, for the purpose of obtaining such contract, as to be bereft of that quality of mind essential to the making of a contract, and was the contract thereby obtained.Nolan v. Mathis, 295 P. 801, 801 (Okla. 1931). In evaluating the existence of facts regarding Mr. Chester's defense of duress, “a party may not rely on the allegations of his pleadings or the bald contention that certain facts exist; rather, the trial court's judgment must be based upon the record actually presented.” Vela v. Hope Lumber & Supply Co., 966 P.2d 1196, 1198 (Okla.Civ.App. Div. 1, Oct. 9, 1998).
The Court should conclude that the record presented does not demonstrate that Plaintiff was under duress at the time he signed the settlement agreement. Indeed, prior to this argument being raised in his Response, Mr. Chester never alluded to “duress” or any type of threat from other inmates to sign the settlement agreement. See ECF Nos. 52-2, 52-7. Instead, Plaintiff's correspondence with defense counsel regarding his refusal to sign the Joint Dismissal appeared to relate to the fact that Mr. Chester was not satisfied with: (1) the amount of money paid to DOC on behalf of Plaintiff and/or (2) how the settlement funds were disbursed.
As stated, on January 21, 2021, Plaintiff complained that the settlement check “got Governed by” the DOC, so Plaintiff “Never received it.” (ECF No. 52-5). Plaintiff then requested that the “Settlement Offer” be raised to $2, 000.00, but instead of asking for another check for $2, 000.00, Plaintiff requested an additional $1, 000.00 check be sent to his brother who held Plaintiff's power of attorney. See ECF No. 52-5. By this request, Plaintiff essentially admitted that the prior agreement had been satisfied, through payment of the agreed-to amount-one thousand dollars. Even so, because Plaintiff was dissatisfied with the fact that the money had been used to satisfy a financial obligation pursuant to Oklahoma law, Plaintiff refused to uphold his portion of the agreement by signing a Joint Dismissal with Prejudice. But nowhere in his correspondence with defense counsel or his Response did Mr. Chester allege he was unaware of the mandatory statutory obligation regarding the disbursement of settlement funds under 57 O.S. § 566.1 or that he had been misled regarding the same.
See supra note 3.
Finally, Plaintiff alleges defense counsel coerced him into signing the settlement agreement by telling Plaintiff that “he really [didn't] even have a case.” (ECF No. 55). Liberally construed, Mr. Chester's allegation is one of “undue influence, ” which Oklahoma law defines as:
1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him.
2. In taking an unfair advantage of another's weakness of mind; or,
3. In taking a grossly oppressive and unfair advantage of another's necessities or distress.15 O.S. § 61. The Court should conclude that Mr. Chester's bald assertions regarding defense counsel's statement about the merits of Plaintiff's case are insufficient to establish undue influence as a basis to rescind the settlement agreement.
In sum, the Court should conclude that Mr. Chester entered into a binding contract by signing the Release and Settlement Agreement on December 10, 2020. The language of the agreement is clear and without ambiguity, and as such, the Court is to interpret it as a matter of law. The document indicated an offer, acceptance, and meeting of the minds which rendered the contract complete. The terms were unambiguous and Plaintiff was informed that the settlement funds would be paid to the DOC for the benefit of Plaintiff, which is precisely what happened. The funds were deposited in Mr. Chester's account and disbursed in accordance with Oklahoma law for his benefit and in obligation of his outstanding financial debts. At this stage, Mr. Chester should not be allowed to void the contract, especially in light of his failure to demonstrate that he had entered into the agreement under duress or undue influence, or by fraud or mistake. See Coulter v. Carewell Corp. of Oklahoma, 21 P.3d 1078, 1082 (Okla.Civ.App. Div. 2, Mar. 6, 2001) (“There was a meeting of the minds concerning the mediation agreement, and implicit in [the plaintiff's] acceptance of [the defendant's] offer of settlement was an obligation to execute the release. [Plaintiff's] request that the court enforce the financial terms of the settlement agreement exclusive of the release is unreasonable and contrary to what the law intends.”).
III. RECOMMENDATION AND NOTICE OF RIGHT TO OBJECT
The Court should GRANT Defendants Motion to Enforce Settlement Agreement (ECF No. 52). The terms of enforcement-i.e.-compelling specific performance of the contract regarding Plaintiff's signing a Joint Dismissal with Prejudice pursuant to the terms of the settlement agreement or an outright dismissal with prejudice of the instant action-shall be left to the discretion of the District Judge.
Plaintiff is hereby advised of his right to object to this Report and Recommendation. See 28 U.S.C. § 636. Any objection must be filed with the Clerk of the District Court by May 6, 2021. See 28 U.S.C. § 636(b)(1); and Fed.R.Civ.P. 72(b)(2). Failure to make timely objection to this Report and Recommendation waives the right to appellate review of both factual and legal questions contained herein. Casanova v. Ulibarri, 595 F.3d 1120, 1123 (10th Cir. 2010).
IV. STATUS OF THE REFERRAL
This Report and Recommendation disposes of all issues currently referred to the undersigned magistrate judge in the captioned matter.
A. Any inmate as defined in paragraph 2 of subsection B of Section 566 of this title who successfully obtains a final court order or settlement agreement awarding damages for any cause of action in any federal or state proceedings against the state, a state agency, the Department or any political subdivision, or any employee thereof, shall pay or satisfy from the award:
1. Any previous assessments of court costs or fines involving the criminal convictions of the offender;
2. Victims compensation assessments;
3. Restitution awards;
4. Probation or parole fees;
5. Child support or alimony;
6. Civil judgments; and
7. Any deficiencies of debts not paid of which the state or the Department of Corrections has notice by judgment, lien, garnishment, or other appropriate process.