UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-2232
STANLEY MARVIN CAMPBELL, Trustee in Bankruptcy for ESA
Environmental Specialists, Inc.,
Plaintiff,
and
PROSPECT CAPITAL CORPORATION,
Plaintiff - Appellant,
v.
ADKISSON, SHERBERT & ASSOCIATES,
Defendant - Appellee,
and
NATHAN M. BENDER; HOULIHAN SMITH & COMPANY, INC.; CHARLES J.
COLE; JACOB COLE; SANDRA DEE COLE; DAVID C. EPPLING; MICHAEL
ANTHONY HABOWSKI; TRACEY HAWLEY; JOHN M. MITCHELL; DENNIS M.
MOLESEVICH; HOULIHAN SMITH; SHELTON SMITH; SUNTRUST BANKS,
INC.; CHERRY BEKAERT AND HOLLAND LLP; ELLIOT & WARREN;
CHESTER J. BANULL,
Defendants.
No. 12-2264
STANLEY MARVIN CAMPBELL, Trustee in Bankruptcy for ESA
Environmental Specialists, Inc.,
Plaintiff,
and
PROSPECT CAPITAL CORPORATION,
Plaintiff – Appellee,
v.
ADKISSON, SHERBERT & ASSOCIATES,
Defendant – Appellant,
and
NATHAN M. BENDER; HOULIHAN SMITH & COMPANY, INC.; CHARLES J.
COLE; JACOB COLE; SANDRA DEE COLE; DAVID C. EPPLING; MICHAEL
ANTHONY HABOWSKI; TRACEY HAWLEY; JOHN M. MITCHELL; DENNIS M.
MOLESEVICH; HOULIHAN SMITH; SHELTON SMITH; SUNTRUST BANKS,
INC.; CHERRY BEKAERT AND HOLLAND LLP; ELLIOT & WARREN;
CHESTER J. BANULL,
Defendants.
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Max O. Cogburn, Jr.,
District Judge. (3:09-cv-00465-MOC-DCK; 3:09-cv-00546-MOC-DCK;
3:07-bk-31532)
Argued: September 19, 2013 Decided: November 7, 2013
Before AGEE, DAVIS, and DIAZ, Circuit Judges.
No. 12-2232 affirmed; No. 12-2264 dismissed by unpublished
opinion. Judge Davis wrote the opinion, in which Judge Diaz
joined. Judge Agee wrote a separate opinion concurring in the
judgment.
ARGUED: Karl Christopher Huth, IV, PROSPECT ADMINISTRATION, LLC,
New York, New York, for Prospect Capital Corporation. Frederick
Kingsley Sharpless, SHARPLESS & STAVOLA, PA, Greensboro, North
Carolina, for Adkisson, Sherbert & Associates. ON BRIEF: Robert
2
C. Bowers, MOORE & VAN ALLEN, PLLC, Charlotte, North Carolina,
for Prospect Capital Corporation.
Unpublished opinions are not binding precedent in this circuit.
3
DAVIS, Circuit Judge:
Prospect Capital Corporation (“Prospect”), a New York-based
private equity firm, made a substantial commercial loan to ESA
Environmental Specialists, Inc. (“ESA”), a Charlotte, North
Carolina-based environmental and industrial engineering firm.
Thereafter, ESA’s financial condition deteriorated rapidly and
it filed a voluntary Chapter 11 petition in bankruptcy; the
Chapter 11 case was soon converted to a Chapter 7 liquidation. 1
Prospect, alleging gross misconduct by the officers and
directors of ESA and several others, filed suit in the United
States District Court for the Southern District of New York
against a host of defendants, including Adkisson Sherbert &
Associates (“ASA”), ESA’s North Carolina accounting and auditing
firm, against which Prospect asserted claims for professional
negligence. The case was transferred to the federal district
court for the Western District of North Carolina, where the ESA
bankruptcy was pending.
In the North Carolina district court, Prospect and ASA
entered into settlement negotiations by telephone and email.
After their counsel exchanged several draft settlement
1
In Campbell v. Hanover Ins. Co. (In re ESA Envtl.
Specialists, Inc.), 709 F.3d 388 (4th Cir. 2013), we considered
issues unrelated to those presented here arising out of the ESA
bankruptcy.
4
agreements, Prospect refused to sign. This prompted ASA to move
the court to enforce an alleged oral settlement agreement, and
for an order of dismissal and an award of attorney’s fees.
After conducting an evidentiary hearing, the district court
rendered findings of fact and conclusions of law, holding that
(1) the parties had indeed reached a binding and enforceable
oral settlement agreement, and (2) Prospect had not proceeded in
bad faith such that an award of attorney’s fees was warranted.
The district court refused to dismiss Prospect’s claims but it
did certify its order for immediate appeal. Prospect filed a
timely appeal from the district court’s order, and ASA timely
filed a protective cross-appeal.
Upon our review of the district court’s findings and
conclusions, we discern no clear error or abuse of discretion
warranting the reversal of the district court's judgment.
Accordingly, we affirm the judgment of the district court
enforcing the parties’ agreement, and we dismiss the cross-
appeal.
I.
Prospect loaned more than $12 million to ESA. In its
capacity as ESA’s accounting firm, ASA had provided financial
information to Prospect in connection with the loan. Among other
claims against numerous parties, Prospect sued ASA alleging that
ASA negligently provided inaccurate information about ESA’s
5
financial status. On September 2, 2011, after the transfer of
the case to the Western District of North Carolina, the district
court ruled that Prospect’s complaint failed to allege
sufficient facts to state a claim against ASA but it granted
Prospect leave to file an amended complaint. The district
court’s order also encouraged the parties to “discuss an
amicable resolution” of the action. J.A. 134. 2
A little over a week later, Prospect’s counsel, H. Marc
Tepper, Esq., contacted ASA’s counsel, Rich Sharpless, Esq., and
requested ASA’s consent to a motion for an extension of time for
Prospect to file its amended complaint. In the request, Tepper
indicated that the parties could “utilize this time to place all
our efforts toward reaching a settlement rather than the ongoing
expense of litigation.” J.A. 612. On October 10, 2011, the
parties’ attorneys discussed the possibility of a settlement and
agreed to consult with their respective clients.
Prospect filed a Second Amended Complaint on October 14,
2011. Shortly afterwards, Sharpless asked Tepper to agree to an
2
Citations to “J.A. ---” are to the Joint Appendix filed by
the parties to this appeal. Volume II of the Joint Appendix,
consisting of pages 354 through 662, are under seal, in keeping
with the agreed Confidentiality Order entered by the district
court during proceedings in that court on the motion to enforce
settlement agreement. From time to time in this opinion, we
quote from the sealed Joint Appendix to portions of the record
that do not disclose confidential matters.
6
extension of time for ASA to respond to the Second Amended
Complaint. Tepper agreed, but stated that the consent was
“contingent on our furthering our settlement discussions.” J.A.
613.
In due course, ASA filed a motion to dismiss the Second
Amended Complaint, and Tepper sent an email to Sharpless on or
about November 1, 2011, inquiring into the status of settlement
efforts. After an exchange of correspondence as to the
settlement amount, the parties agreed over the telephone that
ASA and Cherry Bekaert & Holland (“CBH”) 3, a second CPA firm that
Prospect was proceeding against in North Carolina state court on
similar claims, would each pay Prospect a sum certain in
exchange for a dismissal of the action with prejudice.
Specifically, as the district court later found, Sharpless and
Tepper spoke on November 22, 2011, and agreed to settle the
litigation on the following material and essential terms:
1) ASA would pay Prospect a sum certain;
2) Prospect would file a dismissal with prejudice of
all claims against ASA;
3) Prospect would release ASA from any and all claims
it might have against ASA;
4) The terms of the settlement would be confidential;
5) The parties would bear their own costs.
3
ASA’s counsel, Sharpless, was counsel to CBH as well.
7
See J.A. 608, 614, 654.
Also on or about November 22, 2011, Prospect filed a motion
for an extension of time to respond to ASA’s still-pending
motion to dismiss. Prospect informed the court that “Prospect
and ASA (collectively the ‘Settling Parties’) have agreed to the
principal terms of a settlement agreement, but require
additional time to complete the drafting and execution of the
settlement agreement.” J.A. 287. Prospect also stated that the
“Settling Parties negotiated the material terms of the
settlement . . .” Id. The court granted the motion.
On November 29, 2011, Sharpless emailed Tepper confirming
the terms of the agreement. Tepper replied to Sharpless on
December 1, 2011 with a draft Confidential Settlement Agreement.
The draft contained the same terms that were in Sharpless’s
November 29, 2011, email, and included additional terms.
Ultimately, the parties exchanged a total of six drafts of the
document between December 1, 2011 and December 15, 2011.
Prospect had included New York choice-of-law and venue
provisions in the written agreement sent to ASA on December 1,
2011. ASA objected to those clauses and replaced them with North
Carolina choice-of-law and venue provisions, to which Prospect
raised no objection. Also, each of the drafts contained merger
and integration clauses and stated that no agreement would be
binding until both parties executed and delivered a signed
8
agreement. ASA proposed a few revisions to the additional terms,
but never objected to the merger and integration clause or
execution and delivery requirements.
On December 15, 2011, Tepper, on behalf of Prospect,
emailed a “final” revised copy of the Confidential Settlement
Agreement to Sharpless, asking him to “Please sign and return.”
J.A. 615. On December 19, 2011, Sharpless asked Tepper for the
Tax Identification Number of Tepper’s law firm so that ASA could
issue a check for the settlement amount. Tepper emailed the Tax
Identification Number to Sharpless the same day. Two days later,
Sharpless, on behalf of ASA, emailed an executed copy of the
written agreement to Tepper. On December 28, 2011, Sharpless
mailed the settlement check to Tepper.
The next day, December 29, 2011, Prospect filed a second
motion for an extension of time to oppose ASA’s motion to
dismiss. Therein, Prospect represented to the court that:
2. Prospect and ASA (collectively the ‘Settling
Parties’) have agreed to the principal terms of a
settlement agreement, but require additional time to
complete the drafting and execution of the settlement
agreement.
. . .
5. The Settling Parties have concluded their
settlement negotiations and now need to fully execute
the Settlement Agreement.
6. Due to the holidays, no individual with
authority to sign on behalf of Prospect will be
available to execute the Settlement Agreement prior to
9
the January 3, 2012, deadline to respond to ASA’s
Renewed Motion to Dismiss.
7. Accordingly and for the forgoing reasons,
Prospect respectfully requests a ten-day extension of
the January 3, 2012 deadline for Prospect to execute
the Settlement Agreement and discontinue this action.
J.A. 290-91. The court granted the motion.
Alas, the new year brought a refusal by Prospect to execute
the Confidential Settlement Agreement. Specifically, on or about
January 17, 2012, Tepper returned the settlement check to
Sharpless with correspondence stating, in part, that “Prospect
Capital Corporation has not authorized me to hold on to the
settlement check as its agent and has further authorized me to
inform you that it will not be executing a settlement Agreement
or directing our office to file a Stipulation of Dismissal as to
your client.” J.A. 641.
On March 30, 2012, ASA filed a motion (1) to enforce what
it alleged was a binding oral agreement reached on November 22,
2011, and (2) to dismiss the case and for an award of attorney’s
fees. Meanwhile, CBH (the other accounting firm represented by
Sharpless in connection with the settlement negotiations) filed
a similar motion to enforce the settlement agreement in the
state court litigation, but the state court apparently denied
CBH’s motion. But see infra pp. 20-21.
On August 15, 2012, the district court held an evidentiary
hearing during which it heard testimony from ASA’s counsel,
10
Prospect’s counsel, and Prospect’s corporate representative. 4 On
August 30, 2012, the district court granted in part ASA’s motion
to enforce settlement agreement and ordered the parties to file
a notice of settlement within 30 days. The court reasoned that
ASA “produced considerable evidence” that demonstrated an
enforceable agreement. J.A. 658. According to the court, this
included several months’ emails indicating that the parties
continued to iron out a final agreement but that the material
terms, including payment price and costs per side, mutual
releases, and a confidentiality requirement, were settled during
the November 22, 2011 telephone call. 5 See supra p. 7.
Addressing Prospect’s contentions that the choice-of-law
and venue provisions were outstanding material terms at the time
of the November 22, 2011 call, the court found that Prospect’s
4
At a preliminary status hearing held on June 20, 2012, in
response to the district court’s inquiry into what happened to
cause the settlement efforts to break down, Prospect’s new
attorney, Karl Huth, Esq., stated “[t]he problem is senior
management thinks this case is worth a lot more than this
proposal would have been worth.” J.A. 339.
5
In the proceedings before the district court, although
Prospect did not concede Tepper’s authority, it expressly and
indeed, emphatically, disclaimed reliance on any argument that
Tepper lacked actual authority to settle the case and bind
Prospect. See J.A. 465 (“I’m saying we have not contended that
he did not have authority to settle this case and that’s not an
issue before this court . . . . Prospect has made it clear
throughout the briefing that what we are contesting is whether
an agreement was ever formed. We are not contesting Mr. Tepper’s
authority . . . .”).
11
counsel “willingly agreed to ASA’s revision that North Carolina
law be applicable without additional consideration from ASA.”
J.A. 658. Prospect’s willingness to accept ASA’s revision to
that term, without demanding additional consideration, indicated
to the court that, from Prospect’s perspective, the choice-of-
law and venue provisions were not material terms.
The court also found that, based on the emails and
counsel’s testimony, Prospect’s management did not learn of the
terms of the agreement until after ASA emailed the Confidential
Settlement Agreement and mailed the check for full payment. It
was at that time that Prospect’s management refused to give
assent to the terms of the agreement, specifically the
settlement amount. The court concluded that “Prospect’s
dissatisfaction with the settlement amount, however, is simply a
risk of litigation and the nature of its investment business.
Indeed, it appears that Prospect had ‘second thoughts,’ which
are insufficient to set aside the remaining agreement.” J.A.
659.
The court further found that Prospect was judicially
estopped from denying the existence of an agreement after it
represented to the court that the parties had reached a
settlement. The court held that for Prospect to now ask ASA to
“begin its settlement negotiations anew . . . would clearly
impose a detriment upon ASA” and “not enforcing the contract
12
would strain this court’s limited resources and permit parties
to stall litigation indefinitely.” Id. Finally, the court
declined to find ASA was collaterally estopped from raising the
enforceability of the November 22, 2011 agreement based on the
North Carolina state court’s decision denying CBH’s motion to
enforce the same agreement.
The district court denied ASA’s motion insofar as it sought
dismissal with prejudice of Prospect’s claims under Federal Rule
of Civil Procedure 41(b), finding that “‘dismissal other than on
the merits must be supported by a finding of bad faith or other
similar abuse,’” which the district court declined to find
occurred on the facts here. J.A. 661 (quoting Hensley v. Alcon
Laboratories, Inc., 277 F.3d 535, 542 (4th Cir. 2002)). For the
same reason, the court declined to award attorney’s fees to ASA.
With the case in the above posture, Prospect moved to
certify the court’s order as a final judgment under Federal Rule
of Civil Procedure 54(b). The court granted the motion on
December 10, 2012. 6 Prospect filed a timely appeal of the
6
We find the district court acted appropriately in
certifying its order under Rule 54(b). See Culosi v. Bullock,
596 F.3d 195, 203 (4th Cir. 2010).
13
judgment and ASA filed a timely cross-appeal from the district
court’s refusal to dismiss Prospect’s claims. 7
II.
A.
To enforce a settlement agreement under its inherent equity
power, the district court “(1) must find that the parties
reached a complete agreement and (2) must be able to determine
its terms and conditions.” Hensley, 277 F.3d at 540-41 (citing
Moore v. Beaufort Cnty., 936 F.2d 159, 162 (4th Cir. 1991))
(further citations omitted).
We review a district court’s findings of fact for clear
error and its decision to enforce a settlement agreement for
abuse of discretion. Id. at 541 (citing Young v. FDIC, 103 F.3d
1180, 1195 (4th Cir. 1997)). A district court abuses its
discretion when its decision is “‘guided by erroneous legal
principles’ or ‘rests upon a clearly erroneous factual
finding.’” Brown v. Nucor Corp., 576 F.3d 149, 161 (4th Cir.
2009) (quoting Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261
(4th Cir. 1999)). As in other contexts, we will reverse for
abuse of discretion only where we have a “‘definite and firm
conviction that the court below committed a clear error of
7
ASA does not appeal the district court’s refusal to make
an award of attorney’s fees.
14
judgment in the conclusion it reached upon a weighing of the
relevant factors.’” Brown, 576 F.3d at 161 (quoting Westberry,
178 F.3d at 261). As we have held, “[h]aving second thoughts
about the results of a valid settlement agreement does not
justify setting aside an otherwise valid agreement, [ ], and the
fact that the agreement is not in writing does not render it
unenforceable.” Hensley, 277 F.3d at 540 (citations and
quotation marks omitted).
B.
As its most vigorously advanced claims of error, Prospect
challenges the district court’s order on three closely related
grounds: (1) the material terms of the settlement were not
finalized during the telephone call, and therefore the alleged
agreement reached during the call between Tepper, representing
Prospect, and Sharpless, representing ASA, could not serve as an
enforceable oral agreement; (2) the court erred in finding that
the choice-of-law, venue, and release provisions were not
material; and (3) the court erred in considering evidence
outside the actual agreement in coming to its decision. We find
no merit in any of these contentions.
1.
The district court found that the parties had settled on
the material terms of the agreement during the phone
conversation on November 22, 2011. There is no clear error in
15
this finding. Prospect never expressed an intention that the
November 22, 2011 agreement be contingent upon the approval of
its senior management. And the parties never expressly stated,
nor is there evidence in the record, that their agreement was
dependent on the execution of a writing. Prospect represented to
both ASA and the court that a settlement had been reached. The
only thing that changed between Prospect receiving the signed
draft of the agreement and the settlement check, and its sending
the January 17, 2012 letter informing ASA’s counsel that there
was no settlement, was the fact that Prospect’s senior
management expressed dissatisfaction with the settlement amount.
Prospect largely admitted as much in a hearing before the
district court. 8
Nor was there clear error in the district court’s
identification of the material terms of the agreement: “ASA
would pay a sum certain to Prospect; Prospect would file a
dismissal with prejudice [as to] all claims against ASA; the
settlement would be confidential; and the parties would bear
their own costs.” J.A. 654 (internal citations omitted). The
court stated that the terms could be found not only in the
November 29, 2011 email summarizing the parties’ agreement, but
8
See J.A. 339: “The problem is senior management thinks
this case is worth a lot more than this proposal would have been
worth.”
16
also in the first draft of the written version, which Prospect
created. The material terms were the same in both.
At bottom, as the district court and the parties
recognized, the issues presented at the hearing on the motion to
enforce were essentially issues of credibility. See J.A. 466
(The Court: “If the issue of authority [to settle the case] is
not in here, then I’ve got to just decide whether -- who to
believe, this gentleman or this gentleman.” Prospect’s Counsel:
“I think that’s correct, Your Honor, based on the evidence and
the testimony.”). Plainly, we have no basis on which to second
guess the district court’s factual findings.
2.
Prospect’s contention that the district court erred in
finding that the choice-of-law, venue, and release provisions
were not material terms of the parties’ agreement is equally
unavailing. The district court did not err in reasoning that
Prospect’s quick acceptance of ASA’s change of the choice-of-law
and venue provisions, from New York law to North Carolina law,
without further consideration, demonstrated that those
provisions were not of “paramount importance” to Prospect. J.A.
658. The district court also did not err in determining that the
release provision was not a material term. The parties agreed to
a complete release on November 22, 2011, and after a dispute
arose over the written version of the agreement as to whether
17
ESA (the debtor in the Chapter 7 liquidation) was included in
the release, ASA ultimately accepted the release of ESA after
expressing dissatisfaction with it only once. 9 The district
court’s finding that ASA was ready and willing to accept the
release of ESA after mildly disputing the same is neither clear
factual error nor legal error.
In advancing its contrary contention, Prospect’s reliance
on Chappell v. Roth, 548 S.E.2d 499 (N.C. 2001), is misplaced.
In Chappell, the North Carolina Supreme Court held that a
settlement agreement that lacked a release provision was not
binding – but only because the negotiated agreement had a clause
which required “a ‘full and complete release, mutually agreeable
to both parties.’” 548 S.E.2d at 500. Because the negotiation
and agreement on a release was included in the terms, the court
determined that the parties never had a “meeting of the minds”
without that release provision. Id. Unlike in Chappell, the
parties here did not condition their settlement on the
negotiation of a specific release provision.
3.
Prospect also takes issue with the district court’s
consideration of so-called outside evidence, including the final
9
Prospect had purchased most if not all of the assets of
ESA in the bankruptcy proceedings.
18
settlement amount. Prospect’s position is unpersuasive. We have
specifically stated that when there is a factual dispute over
the existence of a settlement agreement (the precise issue in
this case), or over the agreement’s terms, “the court must
‘conduct a plenary evidentiary hearing in order to resolve that
dispute,’ and make findings on the issues in dispute.” Hensley,
277 F.3d at 541 (internal citations omitted) (emphasis added).
Thus, it was entirely proper for the district court to hear the
evidence of the sequence of events that took place during the
negotiations, as well as the settlement amounts considered and
finally agreed upon.
Similarly, Prospect’s reliance on the merger and
integration clauses in the draft written agreement also fails.
Again, the written agreement was never fully executed because
Prospect did not sign it; thus, those provisions could not, and
did not, guide the district court’s inquiry into whether the
parties reached a settlement during the November 22, 2011
telephone conference. Moreover, as ASA correctly contends, the
parol evidence rule (invoked by Prospect before us) “presupposes
the existence of a legally effective written instrument” and so
is inapplicable here because neither party argues that the
19
unexecuted written agreement was binding, as Prospect never
executed it. Deaton v. Coble, 95 S.E.2d 569, 572 (N.C. 1956). 10
C.
Prospect further contends that the district court failed to
give the proper collateral estoppel effect to the North Carolina
state court’s ruling that CBH, the second accounting firm sued
by Prospect, could not enforce the very settlement agreement
that the district court enforced in this case. We find no error
or abuse of discretion.
We review a district court’s decision on an issue of
collateral estoppel de novo. Tuttle v. Arlington Cty. Sch. Bd.,
195 F.3d 698, 703 (4th Cir. 1999). Federal courts must look to
the law of the forum from which a judgment comes to determine
its preclusive effects. Sartin v. Macik, 535 F.3d 284, 287 (4th
Cir. 2008). A successful assertion of collateral estoppel under
North Carolina law requires a party to “show that the issue in
question was identical to an issue actually litigated and
necessary to the judgment, that the prior action resulted in a
final judgment on the merits, and that the present parties are
10
Contrary to Prospect’s contention, the district court’s
finding that the material terms of the oral settlement agreement
are embodied in the unexecuted written agreement is not “self-
contradictory.” See Opening Br. at 2. One would surely expect
that the essential material terms of an oral agreement would
appear in the written agreement, which was, we recall, drafted
by Prospect.
20
the same as, or in privity with, the parties to the earlier
action.” Id. (citing Thomas M. McInnis & Assocs., Inc. v. Hall,
349 S.E.2d 552, 556-57 (N.C. 1986)).
The district court was correct to reject the application of
collateral estoppel in this instance. Fundamentally, even apart
from the fact that ASA was not a party to the state court action
and appears not to be in privity with CBH, Prospect has failed
to show how the state court’s “decision” is a final judgment on
the merits. 11 North Carolina law holds that a “final judgment is
one that determines the entire controversy between the parties,
leaving nothing to be decided in the trial court.” Ratchford v.
C.C. Magnum Inc., 564 S.E.2d 245, 247 (N.C. Ct. App. 2002)
(citations omitted). It is evident that the state court’s
decision did not fully resolve the issues between the parties.
See J.A. 387, 395 (the court stating, “I am going to give you my
initial impression . . . . I will try to sort all this out and
get back to you.”). There is not even sufficient indication in
the record that the state court ruled on the motion to enforce
11
We acknowledge that the courts in North Carolina, like
the courts in many states and the federal courts, have allowed
nonmutual offensive and defensive collateral estoppel in some
circumstances. See Rymer v. Estate of Sorrells, 488 S.E.2d 838,
840 (N.C. Ct. App. 1997). We need not and do not explore that
issue, as the record here reflects no final judgment on the
basis of which the state court litigation might give rise to a
successful invocation of collateral estoppel.
21
the settlement agreement. J.A. 393 (the court stating, “I am
fairly confident . . . I am not going to enforce [the settlement
agreement].”). Prospect fails to point to any other evidence in
the record to show that the state court reached a final judgment
on the merits. Without this essential element, it would be
improper to apply collateral estoppel in this instance.
D.
Finally, Prospect maintains that the district court erred
in invoking the doctrine of judicial estoppel to bar Prospect
from arguing that no agreement existed based on the position it
took in its two motions for extensions of time. Because we
affirm the district court’s judgment for the reasons discussed,
we need not and do not consider the merits of its invocation of
judicial estoppel.
III.
ASA cross-appeals and principally argues that the district
court erred when it denied ASA’s motion to dismiss Prospect’s
claims with prejudice pursuant to Federal Rule of Civil
Procedure 41(b) based on the binding settlement agreement. In
light of our disposition of the lead appeal, the issues raised
by ASA in its cross-appeal are rendered moot and need not be
addressed. Accordingly, we shall dismiss the cross-appeal.
22
IV.
For the reasons set forth, the order of the district court
granting the motion to enforce the settlement agreement is
affirmed. The cross-appeal is dismissed.
No. 12-2232 AFFIRMED
No. 12-2264 DISMISSED
23
AGEE, Circuit Judge, concurring in the judgment:
I concur in the judgment of the majority, but write
separately to express the very narrow reasoning under which I
would affirm the district court’s enforcement of the settlement
agreement between Prospect and ASA.
First and foremost in this case, the Court must conclude
whether Prospect and ASA reached a binding settlement agreement
during their settlement negotiations. Under North Carolina law, 1
the formation of a settlement agreement is considered according
to the established rules of ordinary contract law. Harris v. Ray
Johnson Constr. Co., 534 S.E.2d 653, 654–55 (N.C. Ct. App.
2000). Prospect does not dispute that the elements of a contract
are present in this case—Prospect made an offer of settlement to
ASA, ASA accepted that offer, and the offer included mutual
promises, i.e., consideration. See Normile v. Miller, 326 S.E.2d
11, 18 (N.C. 1985). Instead, Prospect argues that ASA’s
acceptance of its offer of settlement was not effective because
the parties intended that the settlement agreement not be
binding until both parties signed a written settlement
agreement.
1
The parties agree that the laws of North Carolina govern
the Court’s consideration of whether the parties formed an
enforceable contract, and we therefore apply North Carolina law.
See Smith v. McDonald, 895 F.2d 147, 148 (4th Cir. 1990).
24
Prospect’s argument fails, however, because the reviewing
court owes deference to the district court’s finding that the
parties reached agreement on the material terms of a settlement
prior to Prospect’s expression of intent not to be bound absent
a signed writing. Prospect offers no evidence that it expressed
such an intent during the November 22, 2011 phone conversation.
In the absence of evidence contradicting the district court’s
finding that the parties agreed to the material terms of
settlement on November 22, 2011 without any expression of intent
that additional, binding formalities were required, I cannot say
that the district court’s finding was in clear error. N.C. Nat’l
Bank v. Wallens, 217 S.E.2d 12, 15 (N.C. 1975) (holding that
contracting parties’ contemplation of “a more ‘complete’
document does not necessarily indicate that material portions of
the agreement have been left open for further negotiation”); see
also Warren v. Halstead Indus., Inc., 802 F.2d 746, 752 (4th
Cir. 1986) (“It is only when the reviewing court, on the entire
evidence, is left with a definite and firm conviction that a
mistake has been committed that an appellate court may
reverse.”).
Furthermore, as the majority opinion correctly points out,
Prospect conceded before the district court that the issue of
whether a valid settlement was reached was an issue of witness
credibility. “Absent extraordinary circumstances, we will not
25
disturb a factfinder’s credibility determinations.” Columbus-Am.
Discovery Grp. v. Atlantic Mut. Ins. Co., 56 F.3d 556, 567 (4th
Cir. 1995) (citing Fed. R. Civ. P. 52(a)). Prospect demonstrates
no such extraordinary circumstances here, and, thus, has not met
its burden on appeal. 2
I therefore concur in the majority’s decision to affirm the
judgment of the district court, but do so based upon this
court’s standard of review and Prospect’s failure to submit
evidence contradicting the district court’s findings so as to
meet that standard on appeal.
2
The majority opinion further concludes that Prospect
failed to demonstrate that collateral estoppel applied in this
case. I agree with that determination based solely on Prospect’s
failure to demonstrate privity between ASA and CBH.
26