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Seward v. Musick Auction, LLC

Supreme Court of Idaho

September 19, 2018

KEVIN SEWARD, an individual, Plaintiff-Respondent,
v.
MUSICK AUCTION, LLC, an Idaho limited liability company, Defendant-Appellant.

          Appeal from the District Court of the Third Judicial District of the State of Idaho, Canyon County. Hon. Davis F. VanderVelde, District Judge.

         The judgment of the district court is affirmed.

          Pickens Cozakos, PA., Boise, for appellant. Shelly Cozakos argued.

          Rossman Law Group, PLLC and Barnum Howell & Gunn, PLLC, Boise, for respondent. Matthew Gunn argued.

          HORTON, JUSTICE.

         This appeal relates to a purported agreement resolving a lawsuit between Kevin Seward and Musick Auction, LLC ("Musick"). Seward claimed that the parties entered into a binding oral settlement agreement and he moved to enforce the agreement. The district court granted Seward's motion. Musick's appeal contends that the district court erred in several respects when it held that the parties had entered into a binding settlement agreement. We affirm.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Seward began working for Musick in August of 2014 and was terminated on February 5, 2015. Thereafter, Seward made a written demand for wages that he claimed to be owed. Musick disputed Seward's claim that he was an employee and asserted that Seward had been paid all sums owed to him as an independent contractor.

         Seward filed a complaint on May, 8, 2015, in which he alleged that Musick violated the Wage Claim Act, Idaho Code section 45-601, et seq. The district court ordered the parties to mediate. Judge Stephen Dunn served as the mediator. Kimberly Williams represented Seward in the mediation and Musick, acting through its managing member, Roger Worley, was represented by Brian Webb. Following the mediation, Judge Dunn went into court with the parties and read the terms of the parties' agreement into the record. No court reporter was present. Because of a technical error-the audio was muted-the proceedings were not successfully recorded. Thus, the court minutes represent the only record of the proceedings. The minutes state, in pertinent part:

The Court noted the parties had reached a settlement agreement and stated the terms and conditions of the agreement for the record.
In answer to the Courts [sic] inquiry, each of the parties and their counsel concurred with the settlement agreement as set forth on the record by the Court.
The Court noted the settlement agreement entered into resolved the case and it would notify the assigned Judge of the same.
The Court directed Mr. Webb to submit necessary documents to dismiss the case, including a release.

         Webb sent a draft settlement agreement and release to Williams for her review. The draft contained terms which Seward claims were not discussed during the mediation. These terms included a confidentiality clause, a stipulation that Seward had been an independent contractor rather than an employee, and a requirement that Seward's wife be a party to the agreement (collectively "the additional terms").[1] The draft resulted in an exchange of email between the parties' attorneys. As will be seen, the tenor of the discussions rapidly changed. The following is the exchange:

Williams: I received the proposed settlement agreement provided by your legal assistant. However, there are a few changes that need to be made before Mr. Seward can sign it. There are several items included that were not bargained for, nor agreed upon during the mediation. As we did not receive this draft until after the two week period your client agreed to on record in the hearing conducted on October 28th, please provide a revised copy as soon as possible, but no later than noon on November 20, 2015.
1. Remove Hailey Seward's name from the agreement entirely, including the signature block.
2. Recital paragraph 1[2] change from "asserting they are entitled to" and replace with "asserting a claim for."
3. Agreement paragraph B, [3] change the date from November 12th to November 20, 2015.
4. Agreement paragraph C, [4] remove the last sentence.
5. Agreement paragraph F, [5] remove in its entirety.

         Finally, please have the check made out to Rossman Law Group, PLLC in trust for Kevin Seward. Once the agreement is signed we will be happy to send our runner to your office to pick it up. Feel free to contact me if you have any questions.

Webb: My client will not sign without F. Please ask your client to reconsider.
Williams: That was not a term discussed at the mediation. If your client's position is that he is going to breach the settlement agreement, we can certainly contact Judge Dunn regarding how to proceed.
Webb: Part of the agreement [was] that Musick was going to put together a formal document. It was my client's understanding that the future documents would include a confidentiality provision, which is customary, as is other provisions that were not discussed in detail but that are customarily included in settlement agreements. Moreover, given that Hailey was allowed to participate and this is a CP state, she probably should sign the settlement agreement as well. I am not sure what Judge Dunn is going to do. If your client wishes to asset [sic] a claim for breach of the settlement agreement then Judge Dunn won't really be involved.
Williams: Yes, you were tasked with drafting the agreement pursuant to the terms discussed at mediation and on the record at the hearing. While certain provisions such as integration and counterpart signature clauses are standard language in these agreements, confidentiality is always a negotiated term. By no means can it be assumed to be a term of the agreement without being expressly negotiated. The fact that Hailey was at the mediation does not make her a party and there is no basis whatsoever for requiring her signature.
Webb: Kimberly - does your client really object to a confidentiality provision? My client will not require Hailey to sign if he will agree to it. Did Kevin tell you about his journal he left at Musick before he left? It seems that confidentiality is something he would want in this case.
Williams: Does your client have a copy of Mr. Seward's journal? I am highly offended by your not-so-veiled threat to reveal personal information regarding my client's private life in order to extort an additional term which was not negotiated at the mediation. While I have no basis to expect better of your client, this is highly improper behavior for a member of the bar to be participating in. The journal was in no way related to Mr. Seward's work for Musick Auction, and certainly is not related to Mr. Seward's litigation against Musick Auction. My client does object to the confidentiality agreement, and you have no basis whatsoever to request that Mrs. Seward sign any settlement agreement based upon this litigation. The fact that Idaho is a community property state is the reason for the language in Paragraph A[6] of the settlement agreement.
Mr. Seward is prepared to sign the settlement agreement with the revisions sent to you previously. Please have the revised agreement to me by Wednesday, December 2nd, at 12:00 p.m. Otherwise we will have to move forward with the litigation of this matter.
Again, please have the check made out to Rossman Law Group, PLLC in trust for Kevin Seward.
Webb: Kim - while I understand why you may think I was extorting the situation, that was not my intent. I was merely trying to convey that, given the circumstances, and the lack of agreement to a confidentiality, it can only be supposed that your client intends to disparage mine, in which instance, one could be worried about whether there would be a response, and this would be a way he could prevent that (although that is not something I would condone, or my client for that matter). It was more for your client's peace of mind. A confidentiality provision would be good for both clients.
Additionally, my client is seeking advice from separate counsel. He and they have asked for an extension to tomorrow at noon to consider your demand. Although it is passed the noon deadline already, I would ask that you hold off until tomorrow before taking additional action in the event my client will agree. Please advise.
Williams: Thank you for the explanation. My client has no intention of disparaging Mr. Worley. We do agree to the extension.
Webb: Unfortunately, my client will not sign without a confidentiality agreement. Obviously, his position is that there was not a meeting of the minds on that issue. If your client won't agree to it, then please proceed as you have indicated. He will likely be proceeding with different counsel.
Williams: I have spoken with Mr. Seward, he will include a confidentiality agreement upon the following conditions.

First, the language in F needs to be amended as follows: "The Parties agree that they will not disclose the terms of this Agreement with any individuals or third parties, except tax advisors, or other professional consultants. Further, the Parties agree that hereafter they will not disparage any other Party or tend to impede their ability to transact business. As the Parties are currently business competitors in the same and/or similar business, and in the same geographic area, ...


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