United States District Court, N.D. New York
DECISION and ORDER
THOMAS J. McAVOY, Sr., District Judge.
Presently before the Court is the motion by Defendant Equifax, Inc., to Dismiss the Case and Enforce Settlement, Dkt. #56, in this case involving Plaintiffs' claims that various Defendants violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq., by reporting derogatory and inaccurate information about Plaintiffs' credit history to third parties. Defendant Equifax, Inc., alleges that the parties agreed to settle the case and request an order from the Court directing the Plaintiffs to comply with that agreement. In conjunction with that motion, Defendant also moves that the case against Equifax, Inc., be dismissed. The parties have briefed the issue and the matter is ripe for determination.
In this case, Plaintiffs, proceeding pro se, seek damages from the Defendants for their allegedly false reports to third parties about Plaintiffs' credit history. The Plaintiffs sued a number of entities involved with consumer loans, including car lenders, auto finance agencies, and credit reporting services. See Cmplt., Dkt. #1-2, at ¶¶ 5-6. Among the Defendants was Equifax, Inc., which Plaintiffs alleged had filed "derogatory and inaccurate statements" about their credit history. Id. at ¶ 9. Equifax allegedly furnished this inaccurate information in consumer credit reports to various entities, despite Plaintiffs' protests, and Plaintiffs suffered damages as a result. Id. at ¶¶ 12-21. Plaintiffs therefore filed claims against Defendant Equifax and other credit reporting agencies under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.
After Defendant Trans Union, LLC removed the case to this Court (See Dkt. #1), Defendant Equifax, Inc., was served with the Complaint and filed an answer. See Dkt. #14. Plaintiffs and Defendant engaged in settlement negotiations. According to the Defendant, the parties reached an agreement to settle the case on October 9, 2013. See Declaration of Brian J. Olson in Support of Defendant Equifax Inc.'s Motion to Enforce Settlement and Dismiss, Dkt. 56-2, at ¶ 7. Defendant contends that Equifax, Inc., agreed to make certain alterations to Plaintiffs' credit reports in exchange for Plaintiffs' dropping their claims against Equifax. Id . Defendant further alleges that Plaintiffs understood that no monetary compensation would be paid them as part of the agreement. Id. at ¶ 8. Defendant avers that on October 24, 2013, Plaintiffs were sent a copy of a settlement agreement. Id. at ¶ 13. Despite repeated requests, Plaintiffs never returned the signed settlement agreement or executed any documents that would have dismissed their claims against Defendant Equifax. Id. at ¶¶ 14-17, 20. Defendant contends that "Equifax performed its part of the bargain and made several changes to Plaintiffs' credit files." Id. at ¶ 19. Plaintiffs deny Defendant's allegations and assert that monetary compensation was always part of any agreement to settle the case. The parties never made any joint representation to the Court that they had settled the case, nor did they introduce the terms of any settlement agreement to the Court for approval.
After Defendant failed to obtain a copy of the signed settlement agreement and documents releasing Plaintiffs' claims against Equifax, Defendant filed a motion to enforce the alleged settlement and dismiss the case. See Dkt. #56. The parties briefed the issues. Plaintiffs' response contained a motion for the Court to enforce the terms of the settlement that Plaintiffs said applied, as well as a request for sanctions against the Defendant for filing the instant motion. Defendant responded, bringing the case to its present posture.
For reasons which shall become apparent, the Court will first address the Defendant's position that the parties had a valid settlement agreement which the Court must enforce.
A. Defendant's Argument
Defendant offers two basic arguments for enforcing the supposed settlement.
The Court will address each in turn.
i. The Parties formed an Enforceable Contract
First, Defendant agues that the parties had an agreement to settle the case that this Court is bound to enforce. Defendant contends that, because Plaintiffs did not dispute an e-mail from Defense Counsel on October 11, 2013 stating the terms of the alleged settlement, no doubt exists that Plaintiffs "consented to the terms of the settlement and agreed to be bound by them." Because a "meeting of the minds" existed between the parties, the Court must enforce the settlement. This argument is essentially a contractual argument; that the parties had an agreement, Plaintiffs breached that agreement, and that the Court must order specific performance.
After asserting that the Court lacks jurisdiction to entertain the motion, Plaintiffs respond by disputing the facts alleged by Defendant. They claim that no agreement to settle the case on the terms urged by the Defendant existed. They insist that they never agreed to settle the case without monetary compensation. Indeed, Plaintiffs assert that Plaintiff Paula Gaul never authorized her husband, Plaintiff Jeffrey Gaul, to make an agreement that failed to include money damages. Plaintiffs assert that they never had any intention to sign the settlement agreement forwarded to them by Defense counsel, and they should not be ordered to do so now. Moreover, only the formal settlement agreement forwarded by Defense counsel could have represented the final settlement agreement, and Plaintiffs have never signed that document. More important, Plaintiffs argue that, because no formal agreement to settle was ever presented to the Court, there is no basis for the Court to order that the Plaintiffs comply with the settlement terms.
Defendant is surely correct that "[a] district court has the power to enforce summarily, on motion, a settlement agreement reached in a case that was pending before it." Mettings & Expositions, Inc. v. Tandy Corp., 490 F.2d 714, 717 (2d Cir. 1974). Defendant has ignored another part of that standard, however: "[s]ettlements of any claim are generally required to be in writing or, at minimum, made on the record in open court." Ciaramella v. Reader's Digest Ass'n, 131 F.3d 320, 326 (2d Cir. 1997). Courts are clear that "[a]n agreement to end a lawsuit is interpreted according to contract principles." United States v. Sforza, 326 F.3d 107, 124 (2d Cir. 2003). "Parties may enter into a binding contract orally, and the intention to commit an agreement to writing, standing alone, will not prevent contract formation." Powell v. Omnicom, 497 F.3d 124, 129 (2d Cir. 2007). Thus, "a voluntary, clear, explicit, and unqualified stipulation of dismissal entered into by the parties in court and on the record is enforceable even if the agreement is never reduced to writing, signed or filed.'" Id . (quoting Role v. Eureka Lodge No. 434 I.A. of M & A.W. AFL-CIO, 402 F.3d 314, 318 (2d Cir. 2005)); see also, Pierre v. Chase Inv. Servs. Corp., No. 13-1398-cv, 2013 U.S. App. LEXIS 6315, * 2 (2d Cir. Apr. 3, 2014) ("Announcing the terms of a settlement agreement on the record in open court memorializes critical litigation events, and serves a cautionary function' ensuring the parties' acceptance is deliberate."). Such a settlement "remains binding even if a party has a change of heart between the time he agreed to the settlement and the time those terms are reduced to writing." Id . In Omnicom, the parties stated the clear terms of their settlement for the record "in open court, " and each side affirmed that the terms were the ones to which they agreed. Id . Under those circumstances, "the fact that the settlement was never reduced to writing is insufficient to render the settlement nonbinding." Id.
Defendant's position is that the parties came to an oral agreement to settle the case and Plaintiffs now seek to back out of that agreement. Defendant admits, however, that Plaintiffs never signed the settlement agreement sent them, despite promises to do so. There was also no presentation of the settlement agreement to the Court. The only time the terms of the agreement have been presented to the Court is in an exhibit to the ...