Xerox Financial v. Sterman

USCA1 Opinion









UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________

No. 94-1382
No. 94-1456
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, ET AL.,

Plaintiffs, Appellees,
v.

HIGH PLAINS LIMITED PARTNERSHIP, ALLIED FIRST CLASS PARTNERS, INC.,
ALLIED PROGRAMS CORPORATION, M.S. STERMAN & ASSOCIATES,
and THE MAYFLOWER GROUP, LTD., ET AL.,
Defendants, Appellees.

__________
MARSHALL S. STERMAN,

Defendant, Appellant.
____________________

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Rya W. Zobel, U.S. District Judge] ___________________
____________________

Before
Torruella, Chief Judge, ___________

Boudin, Circuit Judge, _____________
and Barbadoro,* District Judge. ______________

____________________

George W. Mykulak with whom Louis J. Scerra, Richard M. Gilbert __________________ ________________ __________________
and Goldstein & Manello, P.C. were on briefs for appellant. _________________________
J. Timothy Eaton with whom Michael W. Coffield, Theodore S. _________________ ____________________ ____________
Harman, Coffield Ungaretti & Harris, John J. Curtin, Jr., Patricia J. ______ ___________________________ ___________________ ___________
Hill, Daniel S. Savrin and Bingham, Dana & Gould were on brief for ____ _________________ ______________________
plaintiffs.


____________________

January 17, 1995
____________________

____________________

*Of the District of New Hampshire, sitting by designation.















BOUDIN, Circuit Judge. This appeal has its origin in a _____________

settlement agreement that purported to resolve the claims and

counterclaims of approximately a dozen corporations,

partnerships, and other business entities in at least four

separate lawsuits. The settlement went awry; and one side

sought to enforce consent judgments filed as part of the

settlement. The subject of those judgments sought to undo

them and now appeals from the district court's denial of his

efforts.

I. THE HISTORY

The appellant Marshall S. Sterman ("Sterman") and his

now- deceased partner Lester Grant owned or controlled a

number of business entities ("the Sterman entities") that

engaged in real estate development projects in a number of

states in the late 1980s and early 1990s. To finance these

projects, the Sterman entities entered into transactions with

appellee Xerox Financial Services Life Insurance Company and

appellee Van Kampen Merritt, Inc. and related companies

(collectively, "Xerox-VKM"). Xerox-VKM provided financing to

the Sterman entities in exchange for security interests in

the real estate and in bonds related to the development

projects.

The Sterman entities allegedly defaulted on certain of

their obligations relating to at least three projects, and a

succession of lawsuits began. The first suit was brought



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against the Sterman entities by Xerox-VKM in Illinois federal

district court on February 27, 1992, and related to a

Pennsylvania hotels development project.1 A second

transaction involved a hotel in Colorado; a Sterman entity

had agreed to repurchase bonds from Xerox-VKM and Sterman had

personally guaranteed the obligation. When the repurchase

did not occur, Xerox-VKM filed two lawsuits.

The first of those two lawsuits was brought against the

Sterman entities in the same Illinois court as the

Pennsylvania hotels lawsuit on March 13, 1992.2 The other

concerned Sterman's own guaranty which contained an

arbitration clause; Sterman was domiciled in Massachusetts

and, to compel arbitration, Xerox-VKM brought suit against

him personally in the federal district court in Massachusetts

on May 4, 1992.3 In this action Sterman failed to respond

to the complaint and the court entered a default order

against him.

The three suits just described are the centerpiece of

the present litigation but are not an exhaustive list of the

disputes between the parties. Xerox-VKM brought yet another


____________________

1Van Kampen Merritt, Inc. v. Pilgrim Financial Servs., _________________________ __________________________
Inc., No. 92-C-1476 (N.D. Ill.). ____

2Xerox Financial Servs. Life Ins. Co. v. Mayflower ________________________________________ _________
Group, Ltd., No. 92-C-1809 (N.D. Ill.). __________

3Xerox Financial Servs. Life Ins. Co. v. Sterman, No. ______________________________________ _______
92-11029-Z (D. Mass.).

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lawsuit against the Sterman entities in New Mexico relating

to a nursing home development in that state. In several of

the lawsuits, the Sterman entities filed counterclaims. In

addition, several other transactions between the parties had

gone wrong and were the subject of litigation- and workout-

related discussions between the parties.

Against this background, in May 1992 the parties

negotiated a global settlement agreement to resolve all

pending and a host of potential lawsuits. The agreement,

signed on May 19, 1993, was a lengthy document stipulating

that it would be governed by Illinois substantive law. The

parties agreed to execute mutual releases. The Sterman

entities agreed to transfer their interests in several

properties to Xerox-VKM; these were apparently properties in

which Xerox-VKM had security interests but for which they

wanted clear title. Sterman personally agreed to pay Xerox-

VKM $125,000 in 60 days--July 19, 1993--and to execute a note

for four more annual installments in the same amount.

In return, Xerox-VKM agreed that, in addition to

releasing the Sterman entities from various claims, Sterman

himself could within 60 days repurchase from Xerox-VKM

certain bonds he had originally sold them relating to a

development in Brush, Colorado ("the Brush bonds"). The

bonds were priced at nearly $5 million but Sterman apparently

calculated that he could buy them at the stipulated price and



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then resell them for a profit of more than $450,000. The

bond repurchase was proposed by Sterman as part of the

settlement but the terms were contained in a separate

agreement.

The settlement agreement contained a back-up enforcement

mechanism that is the center of this appeal. Sterman agreed

to the entry of a consent judgment against him personally in

one of the Illinois actions (concerning the Pennsylvania

hotels) and in the Massachusetts action (concerning the

Colorado hotel); but the settlement agreement provided that

Xerox-VKM would not enforce either judgment so long as

Sterman complied with his obligations under the settlement

agreement. Motions for entry of the consent judgments noted

this condition.

Pursuant to the settlement agreement, the parties made

the property transfers from the Sterman entities to Xerox-VKM

on May 19, 1993, coincident with the signing of the

agreement. On June 7, 1993, the consent judgment against

Sterman and in favor of Xerox-VKM was entered in the pending

Massachusetts case in the amount of about $2.3 million; and

on June 9, 1993, a similar judgment was entered in the amount

of about $3.5 million in the original Illinois action. On









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July 15, 1993, Xerox-VKM registered the Illinois judgment in

Massachusetts. 28 U.S.C. 1963.4

All that remained was for Sterman to purchase the Brush

bonds by the July 19 closing date and to make the $125,000

payment on that date, leaving Xerox-VKM with the note to

cover four more installments. Sterman was unable to purchase

the bonds or pay the first installment on July 19. It

appears that he had more difficulty arranging in advance to

resell the bonds than he had expected and that he had planned

to use the profits on the resale of the bonds to pay the

first installment. Xerox-VKM refused Sterman's request for a

delay of two months and began steps to collect on their

judgments in Massachusetts.

Although Sterman resided in Beverly, Massachusetts,

apparently there was a scarcity of assets held in his own

name. Xerox-VKM thus initiated so-called attachments on

trustee process directed at a number of business interests in

Massachusetts. This procedure is used under Massachusetts

state court rules primarily to attach interests in the hands

of a third party that are owed to or indirectly owned by a

judgment debtor; and the procedure is available to judgment

creditors in Massachusetts federal courts. See Fed. R. Civ. ___

P. 64; Mass. R. Civ. P. 4.2.


____________________

4Van Kampen Merritt, Inc. v. Sterman, No. 93-MC-10542 _________________________ _______
(D. Mass.).

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Xerox-VKM filed motions to initiate the attachments in

both the Massachusetts dockets: the original Massachusetts

consent judgment and the new docket that reflected the

registration of the Illinois consent judgment. Judge Zobel

presided over both cases and eventually consolidated them, so

we discuss the proceedings without differentiating between

the two dockets. The original motion to initiate the

attachments ex parte was filed on August 12, 1993, and _________

allowed almost immediately.

On October 20, 1993, Sterman filed a motion captioned as

one "to dissolve trustee process and for other equitable

relief." In substance, Sterman claimed that he had not

breached the settlement agreement, and that even if he had,

the fault lay with Xerox-VKM. Alternatively, he said that

Xerox-VKM had to give him credit for the value of the

properties transferred on May 19, 1993, and that it was an

impermissible penalty for Xerox-VKM to collect almost $6

million in judgments for Sterman's failure to pay a $125,000

debt. After briefing and argument, Judge Zobel denied the

motion. Sterman did not seek to appeal.

Proceedings continued to implement the attachments,

including discovery directed against the putative "trustees"

who Xerox-VKM thought owed money to Sterman or held interests

owned by him. Then on February 1, 1994, Sterman filed a new

motion captioned as one "to modify judgment amounts or for



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entry of satisfaction of judgment or for accounting and for

stay." This motion repeated in detail the penalty and

credit-for-previously-transferred-property claims made in the

November motion; in a footnote the new motion also sought to

incorporate the old one by reference. After briefing and

argument, Judge Zobel denied the motion on February 25, 1994.



In a memorandum and order Judge Zobel said that Sterman

had breached the settlement agreement by failing to make the

promised $125,000 payment and Xerox-VKM was therefore

entitled to enforce the judgments. Further, Judge Zobel

concluded that Sterman "has used a variety of means to

obstruct collection of this debt"; and for this reason Judge

Zobel granted Xerox-VKM's recently filed "emergency motion

for further injunctive relief" under Fed. R. Civ. P. 65(b).

The order enjoined Sterman, and others under his control or

in concert with him, from concealing or otherwise disposing

of any interest held by or due to Sterman.

Sterman filed a timely notice of appeal from the new

order, entered February 25, 1994, and it is that appeal that

is now before us. Judge Zobel's order also provided that

discovery should be completed by the end of May 1994 and a

further conference was scheduled for June 1994. However, the

briefs are silent as to what developments, if any, have





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occurred in the district court since the order now sought to

be appealed.

II. THE ISSUES

1. The first question concerns our jurisdiction, and a

related claim of waiver raised by Xerox-VKM. The district

court's order was in part an explicit preliminary injunction;

such injunctions can be appealed immediately, 28 U.S.C.

1292(a)(1), and Sterman's appeal was filed within the

requisite period. But, argues Xerox-VKM, this should not

give Sterman a right to relitigate issues on appeal that he

raised by motion in October 1993, lost in the district court,

and chose then not to appeal. According to Xerox-VKM,

Sterman has "waived" his right to review of the district

court's rejection of his attacks on the judgments. These, of

course, are the only issues that Sterman wants to litigate on

this appeal.

We regard both of Sterman's motions in the district

court as in substance motions under Fed. R. Civ. P. 60(b) to

set aside final judgments. In form the consent judgments

were both final judgments; the principal relief sought in

Sterman's two motions was effectively to set aside the

judgments; and the arguments made in the motions concerned

the validity and enforceability of the judgments rather than

the technicalities of trustee process. Apparently both sides

share this view.



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Ordinarily the denial of a Rule 60(b) motion is

immediately appealable since there is nothing left to do in

the district court. See, e.g., FDIC v. Ramirez Rivera, 869 ___ ____ ____ _______________

F.2d 624, 626 (1st Cir. 1989). Here neither denial of Rule

60(b) relief ended the proceedings; they were ongoing at the

time of both orders and so far as we know continue today.

This raises interesting questions about the appealability of

a Rule 60(b) denial in the context of an ongoing district

court proceeding. See 15B C. Wright & A. Miller, Federal ___ _______

Practice and Procedure 3916, at 363 (2d ed. 1992) ________________________

("[Appeal] may be denied if the motion seems bound up with

other proceedings that remain to be concluded.").

In our view it is sufficient that as part of its

February order the district court entered a preliminary

injunction in aid of enforcement of the judgments. The

preliminary injunction is immediately appealable and is

itself colorably dependent on the denial of motions to vacate

the judgments. "Our jurisdiction embraces a consideration of

such questions as are basic to and underlie the order

supporting the appeal." Alloyd Gen. Corp. v. Building __________________ ________

Leasing Corp., 361 F.2d 359, 363 (1st Cir. 1966). Certainly ______________

the district court would not have continued the enforcement

proceedings if it had agreed that the judgments deserved to

be set aside.





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This brings us to Xerox-VKM's waiver argument. The

analogy it offers is to one who, having suffered an adverse

judgment, seeks to set it aside under Rule 60(b); fails; does

not appeal; and then, when the time for appealing has passed,

renews the very same arguments in a new motion under Rule

60(b) and then seeks to appeal the new denial. In Burnside ________

v. Eastern Airlines, 519 F.2d 1127 (5th Cir. 1975), cited to ________________

us by Xerox-VKM, the court held that the moving party could

not effectively pursue an out of time appeal by the expedient

of renewing the same motion later on.

The difficulty with the analogy is that even if the

October and February motions are treated as raising the same

arguments, although with different emphases, it is by no

means clear that Sterman could have appealed the denial of

the October motion. At that time, there was no grant of a

preliminary injunction as the vehicle for an immediate

appeal. Xerox-VKM gives us no reason or precedent to show

that such an appeal was possible. If an appeal was not

possible, the waiver argument is pretty lame.

In these somewhat unusual circumstances, we think that

the proper course is to reject the waiver argument and to

treat Sterman's claims as sufficiently related to the clearly

appealable injunction to justify our consideration of them on

the merits. Since we think that the claims fail on the

merits, it is enough to assume arguendo that the waiver and ________



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relatedness points are resolved in Sterman's favor. See, ___

e.g., Rhode Island Hosp. Trust Nat'l Bank v. Howard ____ __________________________________________ ______

Communications Corp., 980 F.2d 823, 829 (1st Cir. 1992) _____________________

(avoiding difficult jurisdictional issue to resolve merits of

interlocutory appeal).

2. We turn now to the main arguments raised in

Sterman's February motion under Rule 60(b). The consent

judgments are on their face unqualified final judgments

against Sterman, totally almost $6 million. Still, under the

settlement agreement the enforcement of the final judgments

was made contingent on Sterman's breach of the agreement.

Had Sterman complied with the agreement, Sterman would be

entitled to some form of protection--we need not decide what

kind. But despite Sterman's original claim to have complied,

it is undisputed that he did not pay the $125,000 promised by

July 19 as provided in the written agreement.

Sterman might still obtain relief by an affirmative

showing of grounds sufficient to persuade a district court to

exercise its authority under Rule 60(b) to set aside the

judgments.5 Rule 60(b) needs to be emphasized because,

while Rule 60(b) relief is not wholly a matter of discretion,

____________________

5How far the Massachusetts district court had authority
to set aside the Illinois judgment is a debatable point, see ___
Carteret Sav. & Loan Ass'n v. Jackson, 812 F.2d 36, 39 (1st ___________________________ _______
Cir. 1987); Indian Head Nat'l Bank v. Brunelle, 689 F.2d 245, ______________________ ________
249-51 (1st Cir. 1982); see also 11 Wright & Miller, supra, ________ _____
2865, at 224 (1st ed. 1973), but one that need not be
resolved in view of our disposition of the merits.

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relief from a final judgment is "extraordinary"; discretion

plays a role; and neither the grounds nor the procedures are

as rigidly prescribed as those that would attend an ordinary

lawsuit seeking a judgment in the first instance. Vasapolli _________

v. Rostoff, 39 F.3d 27, 37 n.8 (1st Cir. 1994). _______

Against this background, we consider first Sterman's

argument that the judgments represent a contract "penalty"

forbidden by Illinois law, in view of the supposed

disproportion between the $125,000 immediately owed and the

almost $6 million sought to be collected under the judgments.

The parties appear to treat Illinois law as controlling on

this point because of the stipulation in the settlement

agreement. They are arguably mistaken (for reasons explained

below) but state law is pertinent by analogy and Illinois is

a perfectly good example.

Illinois does refuse to enforce penalties in contracts,

see, e.g., Lake River Corp. v. Carborundum Co., 769 F.2d ___ ____ _________________ ________________

1284, 1288-91 (7th Cir. 1985); Bauer v. Sawyer, 134 N.E.2d _____ ______

329, 333-34 (Ill. 1956), but the rule may have little to do

with final judgments. Indeed, even a contract agreeing to

settle a pending or threatened suit--technically, a contract

of "accord" --may be enforceable despite claims that it

constitutes a penalty. Williston says that the penalty

defense is not available in such cases; and the sparse case

law is divided, weighted slightly in favor of Williston. See ___



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generally 5 Williston, Contracts 780, at 700-01 (3d ed. _________ _________

1961).6

The rationale for the rule against enforcing penalties

in contract cases is not crystal clear. But it is not hard

to imagine why a court might be loath to enforce a contract

provision specifying a disproportionately large sum--which

courts call a penalty--for breach of the contract. The

parties may make such an agreement far in advance of the

dispute and may not appreciate the full impact if the

unlikely breach does occur. Contract damages, broadly

speaking, aim at compensation, not at punishment. Finally,

courts do not like results that appear unjust. See Lake ___ ____

River, 769 F.2d at 1288-91. _____

The force of such concerns is lessened where one is

dealing with a contract of accord that is entered into after _____

the dispute has arisen. At this point, the parties are

focusing on the strength of the claims, the likely damages

and the costs of litigating. If the defendant, or potential

defendant, now consents to judgment in a specific amount, it

____________________

6Compare Resolution Trust Corp. v. Avon Ctr. Holdings, _______ ______________________ ___________________
Inc., 832 P.2d 1073, 1075 (Colo. Ct. App. 1992) (holding that ____
the penalty analysis is inappropriate); (Crosby Forrest _______________
Products, Inc. v. Byers, 623 So.2d 565, 568 (Fla. Dist. Ct. ______________ _____
App. 1993) (same); Security Pacific Nat'l Bank v. Roulette, ____________________________ ________
492 N.E.2d 438, 441 (Ohio 1986) (same), with Sybron Corp. v. ____ ____________
Clark Hosp. Supply Corp., 143 Cal. Rptr. 306, 310 (Cal. Ct. ________________________
App. 1978) (finding an unenforceable penalty); Aubrey v. ______
Angel Enters., Inc., 717 P.2d 313, 315 (Wash. Ct. App. 1986) ____________________
(same). See generally 5 Williston, Contracts 780, at 700- _____________ _________
01 (3d ed. 1961).

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is ordinarily done with eyes wide open, and in large matters

usually with legal advice. These attitudes seem to underlie

the Williston view that the defendant should be constrained

in attacking his own settlement.

Courts that share this view may also feel that the

plaintiff, who in settlement often accepts less than is

claimed, ought not then be forced to litigate anew about the

propriety of the discounted amount. After all, the

settlement may be attractive just because it assures that

litigation about liability and amounts is over. If this view

is taken of a contract in accord, one would expect the same

considerations to apply several times over to insulate from

penalty defenses a court-entered consent judgment, which is

one step further down the line (and a very important step).

The present case is somewhat different from an ordinary

consent judgment since Sterman's consent judgments, although

final in form, were contingent as to enforcement on a default

by Sterman. In that sense the analogy to a contract in

accord may be a good one. We have found no Illinois state

decisions on whether the penalty defense applies to contracts

of accord.7 To the extent we were forced to guess at what

____________________

7Two federal decisions cited to us assume without
discussion that Illinois would apply its penalty analysis to
a settlement agreement. Justine Realty Co. v. American Nat. ___________________ _____________
Can Co., 976 F.2d 385 (8th Cir. 1992), Yockey v. Horn, 880 ________ ______ ____
F.2d 945 (7th Cir. 1989). But neither decision considers the
possible distinction between ordinary contracts and contracts
of accord.

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Illinois law might be, we would incline toward following the

Williston view that something far more than a showing of

"penalty" is needed to defeat an obligation expressly assumed

to settle a pending or threatened law suit.

What is more, we are not concerned here directly with a

contract suit governed by Illinois law but with a motion to

reopen a federal judgment under Rule 60(b). While state law

on contracts is very instructive--that is why we have

discussed it--"[t]he grounds and the procedure for setting

aside a federal judgment are entirely a matter of federal

law, on which state law may be disregarded." 11 Wright &

Miller, supra, 2353, at 147-48; see also Johnson Chemical _____ _________ ________________

Co. v. Condado Center, Inc., 453 F.2d 1044, 1046 (1st Cir. ___ ____________________

1972). Even if Illinois did regard a contract in accord as

subject to a penalty defense, it is debatable whether the

district court would have been forced to use the same

standard in deciding whether to reopen.

In all events, there is no showing that enforcement of

the judgments involves a penalty. This case does not involve

in isolation the collection of $6 million for failure to pay

a $125,000 debt. Any judgment about disproportion would

depend on the reasonable magnitude of all of the claims

settled by the May 19 settlement and all of the benefits


____________________




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received by Xerox-VKM. The settlement covered four lawsuits,

three projects, and a substantial number of claims and

counterclaims. Xerox-VKM may well receive less than it was

originally entitled to even if it collects the $6 million in

judgments and keeps or collects everything else that it was ___

given or promised under the settlement.

Even if the penalty defense were available, it was

Sterman's burden to make a colorable showing of overall

disproportion through affidavits before the district court

needed even consider taking the claim seriously. His jumble

of assertions and conclusions does not even begin to make

such a showing. Xerox-VKM appears to assert that even

collection of the full judgment will not make them whole but

this is beside the point. What they bargained for in the

settlement included the right not to have to prove the actual ___

amount of their claims. Instead, Sterman now has them

arguing about the matter.

This discussion also disposes of Sterman's related claim

that he ought to receive "credit" against the judgments for

the value of assets transferred on May 19. At first glance,

this might seem to be a straightforward suggestion that the

defendant suffered a judgment, paid part of it, and should

naturally be held to owe only the unpaid balance. When one

understands what Sterman is actually saying, his claim is





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seen to depend on the same kind of false comparison as his

penalty argument.

Nothing in the settlement agreement suggests that the

amounts specified in the consent judgments are to be reduced

by the assets transferred on the same day as the agreement

was signed and well before the judgments were even entered.

So far as we know, the transfers may themselves may be

nothing more than the clearing of title to assets already

held by Xerox-VKM as security. And while such security if

realized would probably reduce liability, Sterman has (as

noted) provided us with nothing to suggest that Xerox-VKM has

or ever will collect as much as they might have done if the

Sterman entities had compliedwith their original commitments.

3. This disposes of the arguments made by Sterman in

his February motion, but he also seeks to brief in this court

additional arguments made in his October motion.

Pertinently, he claims that parol agreements, both before and

after the May 19 agreement, made Sterman's payment of the

$125,000 contingent on his ability to resell the Brush bonds

and provided that the July 19 closing date would be extended

upon Sterman's request. For reasons already set forth, we

think that these claims have arguably been preserved.

At the oral argument on the October motion, Judge Zobel

brushed aside the Sterman's claim that Xerox-VKM had from the

outset orally agreed to such a linkage or a right of Sterman



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to extend at will. Her ruling was understandable: the May

19 agreement was a complex, lawyer-crafted, written document

and it made no mention of any such linkage or right; on the

contrary, it said that time was of the essence, adding only

that the parties could agree to extend the closing date. _____

Under parol evidence rules, followed in Illinois as

elsewhere, evidence of an alleged "prior or contemporaneous

agreement[]" is inadmissible if "it would have been normal

for the parties to incorporate [such an agreement] in the

written instrument . . . ." Roth v. Meeker, 389 N.E.2d ____ ______

1248, 1256 (Ill. App. Ct.. 1979). In this case, the parol

evidence rule applies with full force. Once again, it does

not matter whether Illinois law governs the decision under

Rule 60(b) whether to reopen the judgments, for it is at

least instructive by analogy.

But the parol evidence rule generally governs only prior

or contemporaneous agreements. Thus:

[I]t does not bar evidence of subsequent
negotiations to show modification of the contract.
Even a completely integrated agreement can
therefore be modified or rescinded orally, subject,
of course, to the doctrine of consideration and the
statute of frauds. In a few states, legislation
requires a writing for the modification or
rescission of a written instrument.

A. Farnsworth, Contracts 7.6, at 492 (1990) (footnotes

omitted); accord A.W. Wendell & Sons, Inc. v. Oazi, 626 ______ ___________________________ ____

N.E.2d 280, 287 (Ill. 1994) ("Under Illinois law, parties to




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a written contract may alter or modify its terms by a

subsequent oral agreement . . . .").

Xerox-VKM has not troubled to address Sterman's

modification claim (except by asserting that the claim has

been waived). Still, "[t]he court need not hold a hearing on

a motion for relief from judgment if the motion is clearly

without substance . . . ." 11 Wright & Miller, supra, _____

2865, at 227. We think that there is more than enough in the

record to make clear that Sterman's claim is without merit

and that no evidentiary hearing was needed to establish this

point (it was the subject of oral argument).

A close reading of Sterman's affidavits--one from him

and another from his broker--show that neither provides any

basis for believing that the parties reached an agreement,

after the original May 19 document was signed, purporting to _____

extend the closing date or to condition the closing on

Sterman's resale of the Brush bonds. Further, between May 19

and the scheduled closing date, Xerox-VKM twice wrote to

Sterman to reconfirm his remaining obligations; neither

letter evidenced any flexibility on the date and one

explicitly reminded Sterman that he would be in default if he

failed to fulfill his obligations by July 19.

Finally, on July 19 Sterman himself faxed a letter to a

Xerox-VKM representative requesting an extension of the

closing date. He made no claim that Xerox-VKM had agreed to



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extend the closing date or that he had any unilateral right

to an extension. Far from granting an extension, Xerox-VKM

wrote to Sterman the next day informing him that he had

defaulted on his payment obligation, that the judgments

against him could now be executed, and that his opportunity

to purchase the Brush bonds had now expired. Three days

later Sterman again sought an extension, and Xerox-VKM

immediately refused.

In sum, despite references in his brief to a supposed

post-May 19 modification in the settlement agreement, there

is no substantial basis for such a claim, and it is

contradicted by Sterman's own correspondence. Under these

circumstances, we think that there is no reason to take the

claim seriously.

Xerox-VKM's motion to supplement the record by inclusion

of a previously omitted exhibit page is granted. The _______

judgment is affirmed. ________



















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