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John Hancock Life Insurance Co. (U.S.A.) v. Leisher

United States District Court, D. Massachusetts

April 11, 2016

JOHN HANCOCK LIFE INSURANCE COMPANY USA; JOHN HANCOCK DISTRIBUTORS, LLC; SIGNATOR INSURANCE AGENCY, INC.; and SIGNATOR INVESTORS, INC.
v.
STEVEN C. LEISHER and POTOMAC GROUP WEST, INC.

MEMORANDUM AND ORDER ON THE ENFORCEABILITY OF THE PARTIES’ SETTLEMENT AGREEMENT

Richard G. Stearns United States District Judge

This is a case of belated onset of buyer’s remorse. On one side are plaintiffs John Hancock Life Insurance Company (USA); John Hancock Distributors, LLC; Signator Insurance Agency, Inc.; and Signator Investors, Inc. (collectively John Hancock). On the other are defendants Steven C. Leisher and Potomac Group West, Inc. (collectively Leisher). At issue is whether the parties are bound by a settlement agreement purportedly to resolve Leisher’s unpaid commissions claim. After a review of the documentary record and for the reasons to be explained, I find that the parties are bound by their agreement of February 19, 2015.

Leisher was a general agent for high-value life insurance products underwritten by John Hancock or its predecessors beginning as early as 1998. John Hancock terminated Leisher in 2007. Following his termination, Leisher claimed that John Hancock had underpaid his commissions in the amount of $413, 000. In 2012, Leisher initiated proceedings with the American Arbitration Association (AAA) as required by the mandatory arbitration provision of his general agent contracts. In January of 2015, the parties participated in an unsuccessful mediation before Judge Robert Morrill (ret.). Following the mediation effort, Judge Morrill convened a “Yankee Auction, ” and separately proposed a settlement figure of $300, 000 to the parties. Both parties accepted.

In February of 2015, the parties exchanged several rounds of email negotiations over the terms of a settlement agreement, but did not execute the agreement in writing. Leisher contends that no “meeting of the minds” was reached among the parties on the material terms of the agreement and asked the AAA to proceed with the arbitration. In October of 2015, John Hancock filed this lawsuit to enjoin the arbitration and to enforce the settlement. Leisher moved to dismiss the Complaint or to stay and compel arbitration, citing to the arbitration provision of his general agent contracts. John Hancock, for its part, contends that the parties agreed on the settlement terms on February 19, 2015, and that the settlement agreement did not by its terms mandate arbitration. Pursuant to Fed.R.Civ.P. 12(d), the court converted Leisher’s motion to dismiss to one for summary judgment on “[t]he pivotal factual question [of] whether the settlement agreement was validly executed and therefore binding.” Dkt. # 20. After a period of focused discovery, the parties filed supplemental briefs with supporting exhibits.

DISCUSSION

Summary judgment is warranted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. “A settlement agreement is a contract and its enforceability is determined by applying general contract law.” Sparrow v. Demonico, 461 Mass. 322, 327 (2012).[1] “[I]n Massachusetts an enforceable settlement agreement arises when the parties to be bound mutually assent to all material terms, even if those terms are not memorialized in a final writing.” Hansen v. Rhode Island’s Only 24 Hour Truck & Auto Plaza, Inc., 962 F.Supp.2d 311, 314 (D. Mass. 2013); see also Targus Grp. Int’l, Inc. v. Sherman, 76 Mass.App.Ct. 421, 428 (2010) (“An enforceable agreement requires (1) terms sufficiently complete and definite, and (2) a present intent of the parties at the time of formation to be bound by those terms.”).

Leisher contends that the settlement is not binding “because the only material term agreed upon [by the parties] was ‘price, ’” Defs.’ Suppl. Br. at 6; the parties did not evince the requisite intent to be bound, id. at 10-11; and the terms of any settlement were not sufficiently defined to be enforceable, id. at 12. The documentary record, however, contradicts these assertions. The parties resolved all material disputes and mutually assented to the third draft agreement on February 19, 2015.

The essential background is as follows. Negotiations opened on February 8, 2015, when Darren Goldstein, the attorney for John Hancock, emailed a first draft of the settlement agreement to Don Christie and George Field, the attorneys for Leisher. See Pls.’ Exs. A, B. The 7-page first draft included 24 paragraphs outlining the terms. Notably, paragraph 2 provided for the payment by John Hancock to Leisher of $300, 000. Paragraphs 4 and 5 provided for a mutual general release of all claims “from the beginning of time through the date of this Agreement, except claims arising from a breach of this Agreement.” Pls.’ Ex. B. at 2-3. The Agreement did not contain an arbitration clause.

The following day, Christie objected that

[t]he draft agreement does not address policies on which [Leisher] is currently receiving commissions or commissions, if any, on the remaining Corry policies which [Leisher] claims are due to him. I think the easiest way to handle this is to have an exhibit with the list of policies still in place and a provision that commissions due on those policies shall not be affected by the release.

Pls.’ Ex. C. Goldstein replied noting “[his] understanding [] that the release is a general release and no other payments in addition to the $300, 000 will be made.” Christie Aff. Ex. 4. Christie responded with an email stating that “if [Goldstein’s] interpretation is correct, then there was never a meeting of the minds and [they] should notify Judge Morrill that there is no settlement.” Christie Aff. Ex. 5. Christie then informed Judge Morrill of the dispute, and told him that “the settlement is, at best, on hold.” Christie Aff. Ex. 6.

Several hours later, Goldstein reported back to Christie and Field that “[his] client [was] willing to pay the on-going commissions so long as [they] can agree on specifically which commissions will be paid.” Pls.’ Ex. E. Christie responded by reiterating his “suggestion [] to prepare an exhibit with a list of policies on which commissions will continue to be paid. . . . [He] also suggest[ed] that the check request be submitted now so [they] can exchange the executed agreement for the check.” Pls.’ Ex. F. On February 18, 2015, Goldstein emailed a second draft agreement to Christie and Field. Pls.’ Exs. G, H. Paragraph 2 of the second draft now characterized the $300, 000 as an “[i]nitial payment, ” and added a subpart B regarding “Renewal Commission Payments” that read:

With respect only to the policies listed on Exhibit A hereto, [John Hancock] will pay to [] Leisher renewal commissions to the extent payable, and in the time periods specified, under the terms of the August ...

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