Heizer v. Shepherd ( 2007 )

UNITED STATES CO URT O F APPEALS
FO R TH E TENTH CIRCUIT
REBECCA L. HEIZER,
Plaintiff-Appellant,
v. No. 04-1308
(D.C. No. 99-F-2024-BNB)
G ERALD RA Y SH EPH ER D, (D . Colo.)
also known as G. Ray Shepherd,
Defendant-Appellee.
OR DER
Filed June 4, 2007
Before O’BRIEN, HOL LOW A Y, and BALDOCK , Circuit Judges.
On M ay 31, 2007, an Order and Judgment was filed in this matter. The
court hereby withdraws the previous Order and Judgment and replaces it with an
amended Order and Judgment issued simultaneously herewith. The amended
decision reflects the addition of footnote one on page three.
Entered for the Court
ELISABETH A. SHUM AKER, Clerk
By:
Deputy Clerk
F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
May 31, 2007
FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
REBECCA L. HEIZER,
Plaintiff-A ppellant,
v. No. 04-1308
(D.C. No. 99-F-2024-BNB)
G ERALD RA Y SH EPH ER D, (D . Colo.)
also known as G. Ray Shepherd,
Defendant-Appellee.
OR D ER AND JUDGM ENT *
Before O’BRIEN, HOL LOW A Y, and BALDOCK , Circuit Judges.
Plaintiff Rebecca L. Heizer sought to enforce an agreement settling her
case against defendant Gerald Ray Shepherd, filed in the wake of the dissolution
of their business and personal relationship. She appeals the district court’s denial
of her motion to enforce the agreement and dismissal of the action. Exercising
jurisdiction over M s. Heizer’s appeal pursuant to 28 U.S.C. § 1291, we affirm.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
I.
In October 1999, after the eight-year relationship between Ms. Heizer and
M r. Shepherd ended, M s. Heizer brought suit seeking termination of the parties’
business partnership, repayment of loans she made to M r. Shepherd, recovery of
personal property, and an aw ard of exemplary damages, interest, and attorneys’
fees. A magistrate judge held several settlement conferences and on June 7, 2001,
less than tw o weeks before trial, the parties reached an agreement on the record.
The parties, however, had difficulty reducing their agreement to writing. W ith
additional intervention by the magistrate judge, they finally executed a settlement
agreement effective M ay 16, 2002. The agreement required M r. Shepherd to
repay his indebtedness to M s. Heizer by providing a $1,750,000 promissory note,
secured by “first deeds of trust on real property owned by the Defendant.” A plt.
App. at 104. As to her personal property, M s. Heizer was to walk through the
residence in the presence of counsel “to ascertain what, if any, items, may still be
located at the residence.” Id. at 107. The parties agreed to resolve the ownership
of disputed items through arbitration. M s. Heizer was also to return specifically
enumerated items to M r. Shepherd.
The parties continued to wrangle after signing the agreement. As security
for the note, M r. Shepherd offered three properties held in the name of a
partnership in which he was the general partner w ith a 50% partnership interest.
M s. Heizer refused to accept these properties as collateral without reviewing the
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underlying partnership agreements. And, for unexplained reasons, the
walkthrough of the residence never took place. M s. Heizer purchased the
residence and M r. Shepherd removed the remaining contents when he moved out.
M s. Heizer’s attorney withdrew from the case, to be replaced by a series of
attorneys.
M s. Heizer filed a motion to enforce the settlement agreement, alleging that
M r. Shepherd had failed to deliver the appropriate collateral or return her
personal items. The same magistrate judge who facilitated the settlement held an
evidentiary hearing, taking testimony from both parties and the attorney who
negotiated the agreement on M s. Heizer’s behalf. 1
1
W e note a possible irregularity in having a magistrate judge actively
conduct settlement proceedings, then serve as a factfinder in a dispute over the
interpretation of the resulting agreement. Cf. Om ega Eng’g, Inc. v. Om ega, S.A.,
432 F.3d 437, 448 (2d Cir. 2005) (finding no abuse of discretion in a magistrate
judge’s denial of an untimely recusal motion where his “knowledge of the
Settlement Agreement arose solely from his judicial duty to oversee the
settlement conference,” and he “was not involved in the actual negotiations, but
simply observed them and provided facilities to support the settlement”). In this
case, however, plaintiff did not file a recusal motion, did not object to the
magistrate judge’s dual role in district court, and did not raise any related issues
on appeal. A ccordingly, we make no comment on the propriety of the procedure.
See Hardin v. First Cash Fin. Servs., Inc., 465 F.3d 470, 478 n.3 (10th Cir. 2006)
(noting that an issue not properly raised in district court is waived on appeal);
Perry v. Woodward, 199 F.3d 1126, 1141 n.13 (10th Cir. 1999) (stating that
“[t]his court . . . will not craft a party’s arguments for him”).
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II.
There were two major issues for the magistrate judge’s consideration:
(1) w hether the tender of the partnership properties satisfied M r. Shepherd’s
obligation to provide security and (2) whether the clause concerning arbitration of
disputes over personal items was limited to a few specific items or included
numerous other items claimed by M s. Heizer. Generally, the magistrate judge
found M r. Shepherd to be a more credible witness than M s. Heizer.
On the issue of security for the promissory note, the magistrate judge found
that M s. Heizer had specifically requested the offered properties as collateral even
though she knew they were not held in M r. Shepherd’s name. He also determined
that, at the time the settlement agreement was executed, M r. Shepherd had the
approval of the partnerships to pledge the property. The magistrate judge
concluded that M s. Heizer’s refusal to accept the agreed-upon collateral during
the term of the partnerships’ approval constituted a breach of the agreement.
According to the magistrate judge, this breach rendered M r. Shepherd’s
performance impossible and relieved him of the obligation to provide any
security.
Concerning the return of M s. Heizer’s “personal items,” the magistrate
judge concluded that “the term . . . as used in ¶6 of the Settlement Agreement is
ambiguous.” Aplt. App. at 69. To interpret the term, the magistrate judge looked
to the testimony, the structure of the settlement agreement, the course of
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settlement negotiations, and the parties’ conduct. He ultimately credited
M r. Shepherd’s statement that the parties’ intention was to limit potential
arbitration to the ownership of “‘[a] plant, a sailfish, some antiques that were in
the attic, a desk that was in the garage, and an antique table that was inside the
house,’” and “‘personal effects,’” such as “‘clothing, a dental thing and
something like that.’” Aplt. A pp. at 68 (quoting Shepherd testimony, id. at 227,
lines 9-12). The magistrate judge also determined that M s. Heizer’s failure to
conduct a timely inspection and itemization of her claimed personal items
rendered any further performance of the provision impossible.
Accordingly, the magistrate judge recommended denial of M s. Heizer’s
enforcement motion and dismissal of the action on the ground that M r. Shepherd
had not failed to perform any obligation imposed on him by the settlement
agreement. M s. Heizer objected, arguing that the magistrate judge’s findings of
fact were clearly erroneous and not supported by the evidence. After conducting
a de novo review , the district court “adopt[ed] [the magistrate judge’s] credibility
findings in their entirety” because he “has had the opportunity to evaluate [the
parties’] credibility throughout the history of this case, during numerous
settlement conferences and the ultimate . . . settlement.” Aplt. App. at 24. The
district court also agreed with the magistrate judge’s decision on the adequacy of
the security and limitations on the scope of the term “personal items.” The
district court therefore entered judgment in favor of M r. Shepherd. M s. Heizer
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has appealed, arguing primarily that the district court’s factual findings are
clearly erroneous.
III.
“A trial court has the power to summarily enforce a settlement agreement
entered into by the litigants while the litigation is pending before it.” United
States v. Hardage, 982 F.2d 1491, 1496 (10th Cir. 1993). Issues involving the
enforceability of a settlement agreement are resolved by applying state contract
law. See United States v. M cCall, 235 F.3d 1211, 1215 (10th Cir. 2000).
This court review s a district court’s decision to grant or deny a motion to
enforce a settlement agreement for an abuse of discretion. See Hardage, 982 F.2d
at 1495. Under this standard, the court will not disturb the decision unless it has
a “definite and firm conviction that the [trial] court made a clear error of
judgment or exceeded the bounds of permissible choice in the circumstances.
This occurs when the district court . . . relies on clearly erroneous fact findings.”
Bailey v. State Farm Fire and Cas. Co., 414 F.3d 1187, 1189 (10th Cir. 2005)
(quotations and alterations omitted).
“A finding of fact is clearly erroneous if it is without factual support in the
record or if the appellate court, after reviewing all the evidence, is left with a
definite and firm conviction that a mistake has been made.” Tosco Corp. v. Koch
Indus., Inc., 216 F.3d 886, 892 (10th Cir. 2000) (quotations omitted). This court
must “be mindful that ‘the resolution of factual issues and conflicting evidence
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[is] solely within the province of the district court.’” Plaza Speedway Inc. v.
United States, 311 F.3d 1262, 1270 (10th Cir. 2002) (quoting Cowles v. Dow
Keith Oil & Gas, Inc., 752 F.2d 508, 511 (10th Cir. 1985)). “If the district
court’s account of the evidence is plausible in light of the record view ed in its
entirety, the court of appeals may not reverse it even though convinced that had it
been sitting as the trier of fact, it would have weighed the evidence differently.”
Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985). A factfinder’s
choice between two permissible view s of the evidence cannot be clearly
erroneous. Id. at 574.
A. Security provision
Concerning security for the promissory note, M s. Heizer argues clear error
in the district court’s misapprehension that M r. Shepherd actually “put[] up” the
partnership properties and that M s. Heizer had the option to “foreclose and sell
the security if M r. Shepherd fails to pay on the promissory note.” Aplt. App. at
22. This misunderstanding, however, did not affect the district court’s conclusion
that the settlement agreement “did not have any additional requirement that M s.
Heizer actually approve . . . the designation of properties as security” and that, as
a consequence, “whether M s. Heizer accepted the properties as security is not
material to the issue of whether M r. Shepherd fulfilled the terms of the
settlement.” Id.-7-
Because the district court’s comment was not related to its assessment of
material issues, it cannot constitute reversible error. See United States v. Velarde,
214 F.3d 1204, 1211 (10th Cir. 2000) (stating that error is harmless unless it
affect party’s substantial rights, such as errors with a “substantial influence on the
outcome or which leaves one in grave doubt as to whether it had such an effect”)
(quotations and alterations omitted); see also Fed. R. Civ. P. 61 (prescribing
harmless error analysis in rulings and orders in civil cases ). For similar reasons,
it is unavailing for M s. Heizer to argue that the magistrate judge mistakenly relied
on her counsel’s agreement with the general proposition that property of a party
other than the debtor may be used to secure the payment of the note. Although
the magistrate judge characterized counsel’s statement as a concession, this
consideration was not a substantial factor in the case outcome.
In sum, our review of the entire appellate record does not leave us “with
the definite and firm conviction that a mistake has been made.” Tosco, 216 F.3d
at 892. Based on the facts presented, another factfinder may have resolved the
issue differently. Nevertheless, we see no abuse of discretion in the district
court’s conclusion that M r. Shepherd tendered appropriate collateral under the
settlement agreement’s security provisions, but M s. Heizer refused to accept it.
B. Personal items provision
M s. Heizer asserts that the district court erred in crediting M r. Shepherd’s
testimony on the parties’ intent to limit the ambiguous term “personal items” to a
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narrow list of personal property. She claims that the court improperly disbelieved
her own testimony, along with the corroborating testimony of her attorney, that
the term included a broad range of items, including artwork, jewelry, antiques,
crystal, china, silverware, rugs, china, and books. Also, she argues that the
district court unfairly faulted her for the lack of a walkthrough before
M r. Shepherd moved out of the residence.
Faced with conflicting testimony, the magistrate judge made credibility
determinations in accord with the role of fact-finder. Based on the record as a
whole, the district court’s interpretation of the term “personal items” is a
reasonable one. Its decision to relieve M r. Shepherd of obligations under the
provision because M s. Heizer failed to make the walkthrough required by the
agreement is also supported by the evidence. Under the deferential standard
applicable to this court’s review, we cannot say that the factual findings relevant
to the definition of “personal items” are clearly erroneous.
IV.
The judgment of the district court is AFFIRMED.
Entered for the Court
W illiam J. Holloway, Jr.
Circuit Judge
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