Heizer v. Shepherd

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not binding precedent, except under the doctrines of law of the case, res judicata,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

-2-
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”).

-3-
 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

-4-
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

-5-
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

-6-
[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

-8-
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

-9-