RICHARD H. KYLE, District Judge.
On December 22, 2011, a representative of Plaintiff Unitarian Universalist Church of Minnetonka ("UUCM"), Mayor Ken Wilcox of Defendant City of Wayzata (the "City"), several City Council members, and the parties' respective counsel appeared before Magistrate Judge Leung for a settlement conference. After almost twelve hours of negotiations, the parties entered Judge Leung's courtroom and dictated onto the record "all the material terms" of
Now, more than seven months later, UUCM moves to reopen, arguing that the parties "did not and have not agreed to all of the material terms" of a settlement and, hence, "[a] binding settlement has never been formed between" them. For the reasons that follow, the Court rejects these arguments and, accordingly, will deny the Motion.
UUCM is a 200-member church that has worshipped at a building on Rice Street in the City since the 1960s. It commenced this action in 2010 after the City denied its application to construct a new, larger church in a residential area at 2030 Wayzata Boulevard East. It asserted that the City had violated its rights under the First Amendment to the United States Constitution and the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc et seq. The parties undertook discovery for the better part of a year and, in mid-2011, cross-moved for summary judgment. The Court held oral argument on the Motions on November 29, 2011.
Before the Court ruled on the Motions, Magistrate Judge Leung held a lengthy settlement conference on December 22, 2011. Around 10:00 p.m., the parties went into the courtroom and onto the record because, in Judge Leung's words, they had "actually been able to reach a negotiated settlement of this lawsuit" and were to "read into the record the material-all the material terms of the full and final settlement agreement," (12/22/11 Hear. Tr. at 2.) The City's counsel then recited those terms for the record:
(Id. at 3-6.) The parties indicated that they would work to reduce the terms of their agreement to writing with a "target date" of January 16, 2012, for completion. (Id. at 5.)
Judge Leung then inquired whether an additional material term was that the parties had agreed to bear their own costs, and counsel answered in the affirmative. (Id. at 6.) Judge Leung also asked:
(Id. at 6-7.) Counsel agreed. (Id. at 7.) And counsel also then confirmed that "all the material terms of the agreement" had been placed on the record. (Id. at 9.)
The Magistrate Judge then proceeded to question the parties directly. Robert Dachelet, UUCM's representative, was asked whether he "accept[ed] all these as the material terms as the full and final settlement to bind the church?" (Id. at 11.) He answered, "Yes." (Id.) The same question was asked of Mayor Wilcox, who also answered in the affirmative. (Id. at 12.) Mayor Wilcox also indicated that he had spoken with several members of the City Council (whose approval at an open meeting was the lone "contingency" the parties had noted), and they had expressed their "support [for] the settlement terms as outlined." (Id. at 13.) With their agreement fully dictated onto the record, the Magistrate Judge thanked the parties and closed the proceedings.
A few days after the settlement conference, Judge Leung added a minute entry to the docket (Doc. No. 101) indicating that the parties had reached a settlement. Based on that docket entry, the undersigned issued an Order dismissing this action, with a reservation of jurisdiction for 60 days to permit the parties to "finalize a settlement agreement." (Doc. No. 103.) A short time later, the parties requested that the Court extend the 60-day period until September 1, 2012, in order to "allow them to accomplish a number of actions
The parties then turned their attention to drafting a document memorializing the settlement terms. That process, however, became ever more complicated, and the parties' written agreement slowly expanded far beyond the simple terms dictated onto the record at the settlement conference. As the docket indicates, the parties exchanged multiple letters and drafts of a written agreement, and on several occasions they requested Magistrate Judge Leung's assistance. Unsurprisingly, the tenor of the parties' correspondence reflected an increasing frustration over their inability to fully reduce their agreement to writing. Eventually, UUCM presented the City with a "final and best" draft agreement that it requested the City Council consider at a meeting on May 1, 2012. (Diehl Aff. Ex. 18.) UUCM also informed the City that if it did "not accept this proposal by that deadline," it would "deem" the proposal "withdrawn and UUCM will then return to Court, taking whatever action [it] believes proper and necessary." (Id.)
The City Council did not act by May 1, 2012-likely because, on April 17, 2012, Judge Leung issued an Order requiring the parties to submit red-lined versions of their respective draft agreements by May 2, 2012, so that he could resolve their ongoing disputes. (Doc. No. 109.) Nevertheless, on May 2, 2012, UUCM wrote Judge Leung and informed him that because the City Council had not acted on its proposal on May 1, 2012, "there is currently no settlement and no active settlement negotiation in this case." (Diehl Aff. Ex. 19.) UUCM also indicated that it intended to move to reopen the proceedings.
In light of the foregoing, the Court scheduled this matter for a status conference on May 21, 2012. At the conference, UUCM's counsel asserted that there was no agreement between the parties because the settlement negotiated before Judge Leung was contingent on City Council approval at a public hearing. Five months had passed since the settlement conference without the parties agreeing on a final written document, and hence nothing had been presented to the City Council for a public "thumbs up or thumbs down." (5/21/12 Hear. Tr. at 9.) As a result, UUCM averred that it was "at the end of the rope" and believed that it had "no choice but to [move to] reopen." (Id.)
The City responded that "[t]here is a settlement in this case," the "material terms" of which were "comp[rehensive] plan [amendment], rezoning, planning or development process through to the end, and then a dismissal when that's approved" by the City Council. (Id. at 10.) The City's attorney pointed out that the parties had agreed, on the record, to bring any disputes about the settlement documents to Judge Leung, to whom they had granted "final" authority to resolve those disputes. (Id. at 10.) Counsel expected the Magistrate Judge to resolve the parties' disputes imminently, which would allow a final agreement to be "take[n] back to the City Council" for approval shortly thereafter. (Id. at 11.) The City's attorney further averred that he had "every reason to believe [Judge Leung's forthcoming order] would be favorably received" by the City Council. (Id.)
In its Order dismissing this action, the Court reserved jurisdiction to reopen the proceedings "for good cause shown." UUCM proffers two arguments why there (purportedly) exists good cause to reopen the proceedings at this juncture, but the Court is unpersuaded.
It is well established that settlement agreements are governed by "basic principles of contract law." MIF Realty L.P. v. Rochester Assoc., 92 F.3d 752, 756 (8th Cir.1996); accord, e.g., Sheng v. Starkey Labs., Inc., 117 F.3d 1081, 1083 (8th Cir.1997). Under Minnesota law,
As recited above, the parties placed onto the record at the settlement conference a "full and final" agreement with relatively simple material terms: (1) UUCM would apply to the City to rezone (as part of a planned unit development) the property at 2030 Wayzata Boulevard, in "general conformity" with its prior application; (2) the City would process that application in its "normal" fashion; and (3) if the application were approved, the parties would release all claims and bear their own costs in this action, save for a $500,000 payment from the City to UUCM. The City also agreed to negotiate the purchase of two adjoining lots from the Minnesota Department of Transportation, and the parties agreed to take any "disagreements on wording" of their settlement documents to Judge Leung, to whom they granted "final" authority to resolve those disputes. Counsel agreed that these represented all the material terms between the parties, and each party's representative accepted those terms on the record. Simply put, there can be no doubt that there was a "meeting of the minds on the essential terms of [an] agreement," and a binding settlement was reached at the December 22 conference.
UUCM argues that the City "did not accept the settlement offer before UUCM terminated" it. (Pl. Mem. at 17.) According to UUCM, the agreement placed on the record at the settlement conference was "contingent" on City Council approval at a public hearing, and, accordingly, it retained the power to "withdraw" its settlement "offer" any time before such approval occurred. (Id. at 18.) This argument is flawed for at least two reasons.
First, although the parties couched their settlement agreement as "contingent" on approval at a public hearing "in accordance with Minnesota law" (12/22/11 Hear. Tr. at 3), it is questionable whether such a contingency truly existed. To be sure, many actions by municipalities are required to be undertaken in public under Minnesota's Open Meeting Law, Minn.Stat. § 13D.01. Yet, the Minnesota Supreme Court has indicated that this statute yields to the judiciary's inherent power to "order[] a litigating public body into a closed settlement conference." State by Archabal v. Cnty. of Hennepin, 505 N.W.2d 294, 298 (Minn.1993). In the Court's view, therefore, the noted "contingency" was illusory, and it was unnecessary for the settlement agreement to be vetted by the City Council at a public hearing "in accordance with Minnesota law." The City Council's assent to the agreement's terms at the settlement conference, as stated on the record, was sufficient to create a binding agreement.
Regardless, even if the settlement truly had been contingent on approval at a public hearing, that contingency was satisfied on July 3, 2012, when the City Council considered and approved the "final" agreement attached to Judge Leung's July 2 Order. UUCM argues that this approval was meaningless because it had "withdrawn" its "offer" to settle before that time. But UUCM cannot so easily avoid the settlement agreement.
UUCM apparently believes that City Council approval was a condition precedent to the formation of a binding agreement. (See Pl. Mem. at 19.) But it is mistaken. A condition of approval, such as the one at issue here, "may be construed either as (1) a condition precedent to the initial formation of [a] contract or (2) a condition precedent to an obligation to perform under an existing contract." Stephenson v. Young, Civ. No. 10-2197, 2011 WL 2112021, at *3 (D.Kan. May 26, 2011). In the former instance, no settlement arises because the parties intended their agreement to take effect only once formally approved. "In the latter instance, however, a condition of ... approval does not give either party an absolute right to escape its obligations under the [settlement] agreement because the reserving party has an implied obligation to carry out the objectives of the contract in good faith[,] including submitting the agreement ... for approval." Id. "If reasonably possible, courts treat a condition of ... approval as an enforceable obligation which the reserving party must act in good faith to satisfy." Id. (citations omitted).
Stephenson is instructive, as it is nearly on all fours with the instant case. There, a mediator had suggested possible settlement terms to the parties. The defendants (including a school board) informed the plaintiff that they would accept those terms. The plaintiff, too, later accepted the proposed terms, and she asked the defendants to reaffirm their acceptance. Defense counsel responded that defendants had accepted the settlement proposal
Stephenson rejected the plaintiff's maneuvering and enforced the parties' settlement, concluding that they had "entered a binding oral agreement to settle the case" that "included a condition precedent that the Board must approve the agreement, but that condition did not preclude formation of a binding contract." Id. (emphasis added). Instead, the condition created "an implied obligation to carry out the objectives of the oral agreement in good faith by submitting the settlement agreement for formal Board approval. Under the oral agreement, plaintiff had no right to back out of the deal before the Board had an opportunity to formally approve the agreement." Id. Because the school board "ultimately approved the mediator proposal," the condition was satisfied and an enforceable settlement was created. Id.
In the Court's view, the same result in Stephenson should obtain here. The parties clearly and unmistakably manifested their assent to all the material terms of a "full and final" agreement on the record at the settlement conference. The "contingency" of City Council approval did not undermine the formation of that settlement agreement; it simply obligated the City to "act in good faith" to obtain the called-for approval. Id. While UUCM clearly became frustrated that the City Council had not approved the settlement at a public hearing by the spring of 2012, the Court perceives no bad faith in the City's conduct.
UUCM's second argument for reopening the case fares no better. It contends that "the parties failed to agree at the December 22 settlement conference to all of the material and essential terms" of a binding settlement agreement. (Pl. Mem. at 21.) This argument is perplexing given that Judge Leung expressly asked each party's counsel whether the items recited into the record represented "all the material terms" of their agreement, and each answered, "Yes." (12/22/11 Hear. Tr. at 9.) Judge Leung also confirmed with each party's representative that they "accept[ed] all these as the material terms as the full and final settlement" of this action. (Id. at 11-12.) The record could not be clearer that an agreement as to all essential terms was reached at the settlement conference.
Yet, the transcript of the settlement conference does not support the argument that the parties agreed to negotiate all of the items necessary to obtain City approval of UUCM's application. Rather, the transcript indicates that the City would simply provide UUCM with the necessary conditions. (12/22/11 Hear. Tr. at 4 ("[I]n the settlement agreement that we will be drafting to memorialize ... these material terms, ... the City will include for its presentation as part of the approval process the conditions for the planned unit development.") (emphasis added).) That is consistent with the remainder of the parties' agreement, which indicates that the City agreed to "process and review" UUCM's application "under its normal proce[dures]." (Id. at 3.) Nothing before the Court indicates that the City "normally" negotiates the conditions it imposes on applicants for a planned unit development.
Regardless, an agreement to negotiate the provisions necessary for approval would not undermine the existence of a settlement. To be enforceable, a settlement agreement need not dot every "I" or cross every "T," and a valid settlement may exist even when some matters are reserved for later negotiation and resolution. See, e.g., Sheng, 117 F.3d at 1083 ("The fact that the parties left some details for counsel to work out during later negotiations cannot be used to abrogate an otherwise valid agreement."); Trnka v. Elanco Prods. Co., 709 F.2d 1223, 1226 n. 2 (8th Cir.1983). This is especially true when the parties have recited on the record what they believe are the essential terms of their agreement-such a recitation demonstrates the parties' objective intent regarding the material terms of their deal. Rosenbloom v. Gen. Nutrition Ctr., Inc., Civ. No. 09-1582, 2010 WL 1050297, at *3 (D.Minn. Mar. 18, 2010) (Frank, J.).
At the settlement conference, the parties set forth a simple outline for resolution of UUCM's claims: UUCM would submit a planned unit development application, in "general conformity" with its prior application, which the City would then "review under its normal process" and either accept or reject. It is of no consequence that UUCM dislikes the terms on which the City has conditioned approval of its application. Had UUCM been concerned about those terms, it should have noted them on the record before agreeing to a "full and final" settlement on December 22. See Sowada v. Luberts, Civ. No. 09-3320, 2011 WL 1869208, at *6 (D.Minn. Mar. 28, 2011) (Report & Recommendation of Brisbois, M.J.) ("[I]f the Plaintiffs had any objection or reservations as to the terms of a settlement agreement in this case, they should have clearly expressed it during the court proceedings laying out [those] terms."), adopted in relevant part, 2011 WL 1843018 (D.Minn. May 16, 2011) (Davis, C.J.); Rosenbloom, 2010 WL 1050297, at *3 ("Any reservation or limitation as to the scope of a settlement agreement must be clearly expressed.").
In the Court's view, the terms about which UUCM now complains were, at most, ancillary to the parties' agreement and do not undermine the settlement. Only those terms upon which a settlement
Perhaps most notably, UUCM's conduct following the settlement conference confirms that it did not view the approval conditions as material to the settlement. The parties granted Judge Leung authority to resolve disputes over non-material settlement terms. (See 12/22/11 Hear. Tr. at 6-7 ("[F]or purposes of putting together the settlement documents, ... if the parties can't work that wording out, ... the Court will make the final decision ... except that obviously the Court will not change what has been identified as the material terms of the settlement.").) Yet, it was UUCM that repeatedly sought the Magistrate Judge's intervention when the parties could not resolve their disputes over conditions for approval of the planned unit development (see Diehl Aff. Exs. 11, 14-15), thereby implicitly acknowledging that such conditions were not material. Indeed, UUCM revised its draft agreements, without objection, to reflect the Magistrate Judge's comments regarding those conditions (see id. Ex. 16); if they had in fact been material to the agreement, he would have lacked authority to alter them.
Finally, the Court pauses to address UUCM's Objections (Doc. No. 120) to Judge Leung's July 2, 2012 Order and the "final" settlement agreement attached thereto. According to UUCM, the Order wrongly "impose[s] a binding settlement agreement on the parties" (id. at 6), but the Order does nothing of the sort. Rather, it simply (1) memorializes the terms stated on the record, and assented to by the parties, at the settlement conference, and (2) resolves the parties' disagreements concerning additional terms they had unsuccessfully attempted to reduce to writing, for which they granted Judge Leung authority to make a "final decision based on either informal or formal proceedings at the Court's discretion." (12/22/11 Hear. Tr. at 7.) This same reasoning undermines UUCM's argument that Judge Leung lacked authority, under 28 U.S.C. § 636 and the Local Rules of this Court, to "bind the parties to a settlement agreement." (Objections at 7-8 (emphasis added).) Lastly, having reviewed the "final" settlement agreement attached to the Order, the Court rejects UUCM's argument that the agreement varies from the material terms stated on the record at the settlement conference. (See Doc. No. 119 Ex. A, § 2.1 (UUCM to submit planned unit development application in general conformity with prior application); id. §§ 2.5, 3.1 (City to process and review application "under its ordinary and normal process"); id. §§ 4.1, 5 (if application approved, dismissal with prejudice and $500,000 payment); id. § 7 (City to negotiate for purchase
UUCM objects that the final agreement does not actually resolve certain of the parties' disputes regarding conditions for approval of its planned unit development, leaving them open to future negotiations. (See id. Ex. B ("The Parties shall negotiate reasonably and in good faith to finalize agreement on additional conditions for a PUD that are consistent with this Agreement.").) As set forth above, however, the Court does not believe those terms are material to the parties' settlement, and leaving them "for later negotiation does not vitiate the validity of the agreement." Trnka, 709 F.2d at 1226 n. 2; accord, e.g., Sheng, 117 F.3d at 1083.
But in the Court's view, this particular Objection drives home a far more important point: the parties have lost sight of the forest for the trees. No matter the outcome of these proceedings or the proposed planned unit development process, the parties are now, and will remain, bedfellows. UUCM has worshipped in the City since the 1960s, and that will continue regardless of whether a new church is constructed. Simply put, the parties need to learn to work together and not against one another, and they must resolve their disputes (and negotiate with one another) in good faith. It is the Court's sincere hope, with this litigation put to rest, that the parties will stop viewing each other as adversaries', put aside their differences, and "be ... good neighbors to each other." (12/22/11 Hear. Tr. at 15.)
Based on the foregoing, and all the files, records, and proceedings herein,
