FILED
United States Court of Appeals
Tenth Circuit
September 8, 2010
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
PAMELA L. McKISSICK, an
individual,
Plaintiff/Counter-Defendant-
Appellant,
v.
HENRY C. YUEN, an individual;
ELSIE M. LEUNG, an individual,
Nos. 08-5151 & 09-5078
Defendants-Appellees,
and
GEMSTAR-TV GUIDE
INTERNATIONAL, INC.,
Defendant/Counter-Claimant-
Appellee.
Appeal from the United States District Court
for the Northern District of Oklahoma
(D.C. No. 4:04-CV–00262-JHP-SAJ)
Donald R. Bradford of Seeger Weiss LLP, Tulsa, Oklahoma, for
Plaintiff/Counter-Defendant-Appellant.
Brian E. Maas of Frankfurt Kurnit Klein & Selz P.C., New York, New York
(Jessie F. Beeber, Patrick J. Boyle, and Amelia K. Seewann of Frankfurt Kurnit
Klein & Selz P.C., New York, New York; and Joseph R. Farris and Paula J.
Quillin of Feldman, Franden, Woodard & Farris, Tulsa, Oklahoma, with him on
the briefs), for Defendants-Appellees Henry C. Yuen and Elsie M. Leung.
John E. Dowdell (Jo Lynn Jeter and Steven M. Ruby, with him on the briefs),
Norman Wohlgemuth Chandler & Dowdell, Tulsa, Oklahoma, for
Defendant/Counter-Claimant-Appellee Gemstar-TV Guide International, Inc.
Before HARTZ, HOLLOWAY, and GORSUCH, Circuit Judges.
GORSUCH, Circuit Judge.
Pamela McKissick, a former Gemstar executive, sued the company and two
of its former officers, accusing them of perpetrating a fraud that rendered her
stock options in the company worthless. The district court granted summary
judgment to the defendants, holding that Ms. McKissick released her claims long
ago when she signed a separation agreement at the end of her employment. Based
on another provision in that same agreement, the district court also awarded
attorney fees to both Gemstar and its former officers. Ms. McKissick now
appeals all these determinations.
We agree with the district court that the separation agreement
unambiguously bars Ms. McKissick’s claims and affirm summary judgment for
the defendants on that score. Although we also agree with the district court that
the separation agreement entitles Gemstar to recoup the attorney fees it incurred
in defending Ms. McKissick’s suit, the agreement doesn’t permit the company to
recover the fees it incurred in prosecuting a counterclaim against Ms. McKissick.
We thus vacate the district court’s fee award to Gemstar, and remand the matter
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for recalculation of an appropriate award. As for the former officers, we conclude
the separation agreement doesn’t entitle them to attorney fees at all. Accordingly,
we reverse their fee award.
I
A
This case began on the eve of a merger between Gemstar and TV Guide in
July 2000. In the deal, Gemstar, a technology company, was slated to take
control of TV Guide, the longtime publisher of television programming guides.
At the time, Ms. McKissick served as President and Chief Operating Officer of a
TV Guide subsidiary. Ms. McKissick apparently worried about the merger and
what it might mean for her options to purchase 200,000 shares of TV Guide
common stock. If she exercised those options before the merger, and many were
slated to vest by that point, Ms. McKissick was confident that their value would
allow her to fulfill her longtime dream of owning a horse ranch in Oklahoma. In
the end, however, she didn’t exercise the options, and this lawsuit is all about
why.
According to Ms. McKissick, Henry Yuen and Elsie Leung, executives for
Gemstar, lobbied her to stick with the new company and hold on to her options.
They told her it would be bad for the merger if senior TV Guide executives were
seen selling, a signal to investors that they lacked faith in TV Guide’s new parent
company. Better, they said, to wait, convert the TV Guide options into Gemstar
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options, and exercise them later. The merger, they said, would be nothing but
good for Ms. McKissick and her stock options. The options’ value was sure to
rise. If only she would wait three years, she could “retire on the beach.”
Ms. McKissick waited. The merger occurred in July 2000 and Ms.
McKissick retained both her position within the newly merged company and most
of her stock options. Even so, she went ahead with her ranch plans, purchasing a
number of Icelandic horses and eighty acres near Tulsa. Ms. McKissick depended
on her salary to stay current with the financing for the ranch, and she shared this
fact with Gemstar higher-ups. They, in turn, assured her that her job was safe.
Things turned out differently. Gemstar’s share price fell significantly by
early 2003, to the point where Ms. McKissick believed her stock options virtually
worthless. According to Ms. McKissick, the responsible parties for all this were
Mr. Yuen and Ms. Leung, who fraudulently reported Gemstar’s finances in
connection with and following the merger. Once discovered, Ms. McKissick
alleges, this misconduct caused the company’s value to tumble, and eventually
contributed to the company’s decision to terminate Mr. Yuen’s and Ms. Leung’s
employment in April 2003.
As it happened, Ms. McKissick, too, was soon to leave Gemstar. An at-will
employee, she learned of Gemstar’s plans to fire her in July 2003, and soon
afterward met with a human resources representative to discuss a severance
agreement. Ms. McKissick sought eighteen months’ salary and health coverage, a
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temporary consulting position, and a guarantee she would be reimbursed for any
expenses she might incur should her cooperation be needed in litigation against
the company. The Separation Agreement and Release (“Agreement”) Gemstar
ultimately offered, and which Ms. McKissick ultimately accepted, included some
but not all of these requests. The Agreement afforded Ms. McKissick $345,000
severance (equivalent to a year’s salary), an $80,000 “bonus” for her “cooperation
in the transition of her duties,” reimbursement for expenses incurred in
cooperating with the company in litigation, and eighteen months’ health
insurance, but the Agreement did not include the consulting arrangement she
sought.
The Agreement also included two provisions concerning claims Ms.
McKissick might seek to bring against Gemstar or other parties. Though lengthy,
these provisions are the focus of the dispute before us and so we offer them here,
in full. The first, the “Release,” said:
6. Released Actions/General Release. Employee (on behalf of
herself and all her heirs, assigns, legal representatives, successors in
interest, or any person claiming through her) hereby irrevocably and
unconditionally releases and forever discharges the Company, its
divisions, units, subsidiaries, parents, and all other affiliated entities,
and each of their current and former employees, officers, directors,
representatives, agents, shareholders, attorneys, accountants, partners,
insurers, advisors, partnerships, assigns, successors, heirs, predecessors
in interest, joint ventures, and affiliated persons (collectively “Released
Parties”) from any and all liabilities, causes of action, charges,
complaints, suits, claims, obligations, costs, losses, damages, injuries,
rights, judgments, attorney’s fees, expenses, bonds, bills, penalties,
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fines, liens, and all other legal responsibilities of any form or nature
whatsoever, whether known or unknown, suspected or unsuspected,
fixed or contingent, which she has or had or may claim to have by
reason of any and all matters from the beginning of time through the
Effective Date (hereinafter collectively “Released Actions”) including,
but not limited to, those arising from or in connection with Employee’s
employment with the Company or the termination of such employment
relationship or under any federal, state or local employment laws,
regulations, orders or other requirements, including, without limitation,
any and all claims related to race, color, ancestry, national origin, sex,
disability, medical condition, religion, age, sexual orientation or marital
status discrimination in employment under Title VII of the 1964 Civil
Rights Act, the Age Discrimination in Employment Act, the Fair
Employment and Housing Act, the Workers Adjustment and Retraining
Notification Act, the Equal Pay Act, the Americans with Disabilities
Act, the Fair Labor Standards Act, any Oklahoma state law, statute,
rule, regulation or ordinance pertaining to labor, employment,
discrimination or benefits, or any other law, regulation, or ordinance
that may have arisen from Employee’s employment with the Company
and/or as a result of, or in connection with, the termination of her
employment relationship with the Company.
In short, Employee (on behalf of herself and the others described
above) hereby knowingly and voluntarily releases any and all
claims she has or may have against the Company and/or the other
Released Parties.
Separation Agreement and Release ¶ 6, Aplt. App. Vol. I at 144 (emphasis in
original). 1
The second relevant provision, the “No Actions Clause,” added this:
17. No Actions. Employee represents and warrants that she has not
filed any complaints or charges or lawsuits against the Company with
any governmental agency or any court, and has not assigned any cause
of action to any third party, and that she will not file lawsuits against
1
All citations to the Appellant’s Appendix and briefs refer to documents
filed in Appeal No. 08-5151.
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the Company for claims arising up to and including the Effective Date
at any time hereafter; provided, however, that nothing in this
Agreement shall be deemed to limit Employee from filing an action for
the sole purpose of enforcing her rights under this Agreement. If
Employee violates the Agreement by bringing or maintaining any
charges, claims, grievances, or lawsuits contrary to this provision, she
will pay all costs and expenses of the Company and/or related persons
in defending against such charges, claims or actions brought by her or
on her behalf, including reasonable attorney’s fees, and will be required
to refund, at the Company’s sole discretion, the value of any amount
paid by the Company in exchange for this Agreement.
Separation Agreement and Release ¶ 17, Aplt. App. Vol. I at 146.
After the Agreement was signed, Ms. McKissick left the company in
August 2003.
B
This, however, was only the beginning of things. In March 2004, Ms.
McKissick brought this lawsuit seeking damages from Gemstar, Mr. Yuen, and
Ms. Leung. She asserted, among other things, that Mr. Yuen and Ms. Leung (the
“Individual Defendants”) made false and misleading statements overstating the
company’s revenues, which then led to an artificial inflation in Gemstar’s share
price. All that, together with the Individual Defendants’ entreaties not to sell
company stock, induced Ms. McKissick to hold on to her stock options (and
convert them from TV Guide to Gemstar), rather than exercise them as she’d
planned. Once Gemstar’s true financial landscape was discovered, its share price
plummeted, destroying the value of Ms. McKissick’s options. And this, Ms.
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McKissick alleged, constituted fraud, negligent misrepresentation, and a violation
of the federal Securities Exchange Act.
Gemstar responded to Ms. McKissick’s complaint with a motion for
summary judgment and a counterclaim of its own. In seeking summary judgment
on Ms. McKissick’s claims, Gemstar asserted that the Release served to bar “any
and all” claims she might have against the company. The company’s
counterclaim, meanwhile, relied on the No Actions Clause. In that clause, Ms.
McKissick covenanted not to sue the company — a covenant, Gemstar
maintained, she breached by bringing her suit. As damages for Ms. McKissick’s
alleged breach, Gemstar sought not just the costs it incurred in defending against
Ms. McKissick’s claims, including attorney fees, but also the return of all money
Ms. McKissick received under the Agreement.
For her part, Ms. McKissick opposed Gemstar’s motion for summary
judgment, asserting that in the Agreement she released only claims arising out of
her employment with the company — and that the claims in her lawsuit focused
solely on her stock options, not her employment. Ms. McKissick also alluded to
various other possible defenses — including duress — that, she suggested, could
render the Agreement unenforceable, but she never explained how this might be
so.
In the end, the district court held the Agreement unambiguously barred Ms.
McKissick’s claims. The court also granted Gemstar summary judgment on its
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counterclaim, awarding the company its attorney fees in defending against Ms.
McKissick’s claims, as well as the attorney fees it incurred litigating its
counterclaim. The district court denied, however, Gemstar’s request for return of
Ms. McKissick’s payment under the Agreement, believing that would be
excessively punitive.
Having achieved these victories, Gemstar moved the district court to certify
the summary judgment decisions in its favor as a final judgment pursuant to Fed.
R. Civ. P. 54(b). The court denied that request, however, noting that Ms.
McKissick’s claims against the Individual Defendants remained unresolved.
Because those claims and the Gemstar claims involved common issues, the
district court concluded, an appeal should wait until the entire action reached
final judgment.
There was a reason why the claims against the Individual Defendants
remained unresolved. Apparently, getting a hold of Mr. Yuen and Ms. Leung
wasn’t easy: they weren’t served with the complaint until more than four months
after Gemstar, and then only by publication. As a result, Ms. McKissick’s case
against the Individual Defendants proceeded on a distinct procedural track from
her case against the company. At the end of the day, though, the result was much
the same. After discovery, the district court concluded that the Agreement barred
Ms. McKissick’s claims against the Individual Defendants, and at last entered a
final judgment on all the claims before it. Ms. McKissick promptly appealed.
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After Ms. McKissick filed her appeal, the Individual Defendants moved the
district court for attorney fees. Like Gemstar, they argued that the No Actions
Clause guaranteed them as much. Ms. McKissick opposed the motion, claiming
the district court lacked jurisdiction to entertain the Individual Defendants’ fee
request because she had already appealed its final judgment. In any event, she
argued, the Individual Defendants were not entitled to a fee award under the terms
of the No Actions Clause. The district court rejected these arguments, concluded
it retained jurisdiction to deal with what it considered to be a collateral fee issue,
and awarded the Individual Defendants attorney fees as “related persons” under
the No Actions Clause. Ms. McKissick then appealed this determination, too.
In approaching Ms. McKissick’s challenges to the district court’s various
rulings, we address first the district court’s disposition of her claims against
Gemstar (Section II) and Gemstar’s counterclaim against her (Section III), before
turning to consider the district court’s resolution of Ms. McKissick’s claims
against the Individual Defendants (Section IV) and their motion for attorney fees
(Section V).
II
We begin by asking whether the Agreement between Gemstar and Ms.
McKissick bars the claims Ms. McKissick seeks to bring against the company. In
concluding it does, we address three essential considerations: (A) the plain
meaning of the Release; (B) Ms. McKissick’s competing interpretation; and (C)
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alleged factual disputes that might preclude summary judgment. Perhaps needless
to say, we assess the propriety of the district court’s grant of summary judgment
to the company de novo, while viewing the facts in the light most favorable to
Ms. McKissick, as the non-movant; because this case reaches us through the
district court’s diversity jurisdiction and the parties’ contract specifies that
Oklahoma law governs their agreement, we analyze the substantive legal
questions associated with their dispute under, and in light of, that state’s law.
A
When asked to interpret a contract, our task may be stated simply: to
determine and “give effect to the mutual intention of the parties, as it existed at
the time of contracting, so far as the same is ascertainable and lawful.” 15 Okla.
Stat. § 152. That charge, however, doesn’t give us a commission to plumb the
minds of the parties for whatever hidden, subjective intentions we might find
there. Where, as here, we have a written contract, the parties’ “intention . . . is to
be ascertained from the writing alone, if possible.” 15 Okla. Stat. § 155. In
ascertaining the parties’ meaning, we must consider “[t]he whole of [the]
contract,” and seek “to give effect to every part.” 15 Okla. Stat. § 157. If, taken
as a whole, “the language of a contract is clear and without ambiguity, the Court
is to interpret it as a matter of law.” Corbett v. Combined Commc’ns Corp. of
Okla., 654 P.2d 616, 617 (Okla. 1982); 15 Okla Stat. § 154. Whether an
ambiguity exists in a contract, and so sanctions resort to and consideration of
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extrinsic evidence, is also a question of law for the court to decide. See Corbett,
654 P.2d at 617.
Applying these principles, we are confident the district court properly
granted Gemstar summary judgment on Ms. McKissick’s claims. As the parties
agree, Gemstar’s entitlement to summary judgment depends, at least in the first
instance, on whether her claims qualify as “Released Actions” under the Release
provision of the Agreement. The answer to that critical question is,
unambiguously, “yes.” In the Release, Ms. McKissick absolved Gemstar from
“any and all” claims “of any form or nature whatsoever,” that she might have had
against the company “by reason of any and all matters from the beginning of time
through the Effective Date.” Separation Agreement and Release ¶ 6, Aplt. App.
Vol. I at 144 (emphasis added). Capping this off is a succinct, one-sentence
summary of what the Release effects, which the parties took care to ensure even a
careless reader would find difficult to miss, bolding and underlining its terms:
“In short, Employee (on behalf of herself and the others described above)
hereby knowingly and voluntarily releases any and all claims she has or may
have against the Company and/or the other Released Parties.” Id.
It is hard to conceive of terms that might evince a more sweeping — or
emphatic — release. The only limitation the Release abides is, as Gemstar notes,
a temporal one: to be barred, the asserted claims must have existed by reason of
“matters” that occurred on or before the Agreement’s Effective Date. Yet, Ms.
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McKissick doesn’t dispute that all of her claims arise from matters within the
covered time period. Accordingly, we cannot help but conclude that, as a matter
of the parties’ plain contractual language, Ms. McKissick released her claims
against Gemstar when she signed the Agreement, and so she cannot now pursue
them in court.
B
Ms. McKissick, of course, presents a very different reading of the
Agreement and she offers four reasons for it. None of this, however, persuades us
that the Release means anything other than what it says.
1
Ms. McKissick begins by drawing our attention to the final clause of the
Release (apart from the separate, bolded and underlined summary sentence) —
namely, the phrase “that may have arisen from Employee’s employment with the
Company and/or as a result of, or in connection with, the termination of her
employment relationship with the Company.” These words, she says, serve to
limit the scope of the entire preceding Release so that it encompasses only claims
arising from her employment (or termination). And, she says, her stock-option
claims don’t arise from her employment with Gemstar.
Even assuming that Ms. McKissick’s stock option claims don’t arise out of
her employment with Gemstar — an assumption Gemstar hotly disputes — this
hardly means her claims weren’t released. That is because the phrase in the
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Release discussing claims arising from Ms. McKissick’s employment and
termination appears within an “including but not limited to” clause. In this way,
the phrase’s role is to serve as an example, an illustration, a representation of
what’s encompassed within the Release — not to crab or limit its plain language
indicating the parties’ intent to discharge “any and all” claims Ms. McKissick
might have against Gemstar “from the beginning of time through the Effective
Date” of the Agreement. The phrase Ms. McKissick points to was obviously
meant to put illustrative meat on the Release’s bones, not to grind those bones to
dust. See, e.g., Eck v. Godbout, 831 N.E.2d 296, 301 (Mass. 2005) (claims listed
within “including but not limited to” clause are “not intended to limit the
generality of any prior, broad description of the full extent of claims being
released”); Black’s Law Dictionary 777-78 (8th ed. 2004) (“including but not
limited to” “typically indicates a partial list” (emphasis added)). Yet, Ms.
McKissick would have us lift the language referring to employment-related claims
from its humble station as one illustration of the sort of claims she released to a
new and exalted prominence as the central governing principle of the whole
Release. Her interpretation would go so far as effectively to read out of the
contract and render a nullity the parties’ agreement that Ms. McKissick would
discharge “any and all” claims against Gemstar arising “by reason of any and all
matters” — and do so in irreconcilable tension with our usual duty “to give effect
to every part [of the contract], if reasonably practicable.” 15 Okla. Stat. § 157.
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In this way, her interpretation risks making nonsense of the Release; as she would
have it, the provision would read something like this: “Employee releases the
Company from any and all claims that may have arisen from Employee’s
employment with the Company, including but not limited to, those arising from or
in connection with Employee’s employment with the Company . . . .” Surely we
should be wary of concluding such sophisticated parties crafted such an extensive
release to so little effect. 2
2
Ms. McKissick next points to a prefatory clause in the Agreement that, she
says, confirms her view that she released only claims arising out of her
employment. That clause reads: “WHEREAS, Employee and the Company desire
to resolve any claims or potential claims the Employee may have against the
2
Ms. McKissick also suggests that the Release’s final clause might instead
modify the phrase “any and all claims related to race, color, ancestry, [or other]
discrimination.” On this reading, the Release would read (again, greatly
simplified), “Employee releases the Company from any and all claims including,
but not limited to, those arising from Employee’s employment or under any
employment laws, including, without limitation, any and all claims that may have
arisen from Employee’s employment with the Company related to race, color,
ancestry, or other discrimination under Title VII and other laws and regulations.”
This may well be the appropriate place to hang the italicized modifier. But even
if we assume Ms. McKissick is correct on this score, it does her no good. The
final clause remains no less nestled within the “including but not limited to”
clause, and does nothing to limit the Release’s discharge of “any and all claims,”
known or unknown to the parties. Indeed, on this interpretation, the italicized
clause does even less to help Ms. McKissick’s cause, doing nothing more than
serving to modify another illustrative example within the “including but not
limited to” clause rather than acting as such an example itself.
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Company arising from her employment relationship or the termination thereof.”
Separation Agreement and Release, Aplt. App. Vol. I at 143. This language, Ms.
McKissick says, evinces an intention to release only employment-related claims,
not all possible claims.
It does not. “As a general rule, recitals in a contract will not control the
operative clauses thereof unless the latter are ambiguous; but they may be looked
to in determining the proper construction of the contract and the parties’
intention.” Ferrell Constr. Co. v. Russell Creek Coal Co., 645 P.2d 1005, 1009
(Okla. 1982) (internal quotation marks omitted). And, as we’ve discussed, there’s
no ambiguity in the operative clause in this Release that might allow resort to a
recital. No doubt resolution of potential claims arising from Ms. McKissick’s
employment and termination supplied an important, perhaps even primary, reason
motivating the parties’ agreement. But the Release itself makes pellucidly clear
that its effect is “not limited to” those kinds of claims. Separation Agreement and
Release ¶ 6, Aplt. App. Vol. I at 144 (emphasis added). The “Whereas” clause
can do nothing to change that fact.
3
Ms. McKissick further argues that the Agreement allocated the
consideration she received entirely to employment-related claims, leaving no
consideration for her present, putatively non-employment-related claims. From
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this, she concludes, it is apparent the parties must’ve intended to release only
employment-related claims.
This proves too much. Ms. McKissick bases her argument entirely on a
provision specifying that the “Employee agrees and acknowledges that additional
consideration has been paid or will be paid by the Company (beyond that which
would have otherwise been paid) in order to effect a valid waiver of Employee’s
claims under age discrimination laws.” Separation Agreement and Release ¶ 7,
Aplt. App. Vol. I at 144. This clause, of course, speaks only about consideration
paid for waiver of age discrimination claims. Yet, Ms. McKissick doesn’t dispute
— indeed, she insists — that she also released a host of other kinds of
(employment-related) claims, such as for other kinds of discrimination and
violations of the Fair Labor Standards Act. Even so, no provision specifically
allocates consideration for the release of those claims.
The conclusion to be drawn from all this is not that Ms. McKissick released
only age discrimination claims, or only claims related to her employment.
Rather, viewing the Agreement as a whole, the only plausible explanation is that
the document’s explicit allocation of consideration to (only) age discrimination
claims is an effort to comply with the strictures of the Older Workers Benefit
Protection Act, under which such recitations are essential to a valid waiver of
claims arising under the Age Discrimination in Employment Act. See Kruchowski
v. Weyerhaeuser Co., 446 F.3d 1090, 1092-93 (10th Cir. 2006). That Gemstar
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sought to comply with a particular statutory directive doesn’t suggest it didn’t
also bargain for the release of “any and all” claims between the parties.
4
Finally, even if the Release does purport to cover “non-employment-related
claims,” Ms. McKissick contends the Agreement itself carved out from the
Release claims, like those before us, concerning her stock options. In pursuing
this line of argument, Ms. McKissick relies on the “Stock Option Plan” clause in
the Agreement, which states: “The acceptance of this Agreement will have no
effect whatsoever on any rights Employee has or may have in the future to any
portion of any non-qualified stock options vested and unexercised as of the
Separation Date.” Separation Agreement and Release ¶ 5, Aplt. App. Vol. I at
144. Ms. McKissick says this proviso is broad enough to permit her to bring suit
“for damages related to the loss of value of the options, which right is incident to
ownership of the options.” Opening Br. at 22.
Not so. As the district court explained, the Stock Option Plan language
“simply works to ensure [Ms. McKissick] the right to exercise her stock options
that she had previously accrued from her work for the company.” D. Ct. Order of
Sept. 22, 2004, Aplt. App. Vol. I at 214. Far from being a carve-out from the
Release (which appears in a separate paragraph after it), the Stock Option Plan
clause is itself an exception from an earlier provision of the Agreement. An
appreciation of the Agreement’s structure is important here. Paragraph 2 of the
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Agreement ends with the statement that “Employee also acknowledges that after
the Separation Date, she is not eligible for or entitled to any of the benefits that
the Company provides its employees, other than as expressly provided for
herein.” Separation Agreement and Release ¶ 2, Aplt. App. Vol. I at 143. The
next three paragraphs — titled “Severance Benefits,” “401(k) Plan,” and “Stock
Option Plan” — proceed to enumerate particular benefits Ms. McKissick is
entitled to after her termination. Only after all this is said and done does the
Agreement then turn to the question of what claims Ms. McKissick has released.
Viewed in the context of the whole document, it’s clear the Stock Option Plan
clause is an assurance that Ms. McKissick retains stock options the Agreement
might otherwise appear to strip from her. It is not a mousehole through which she
is entitled to squeeze any elephant of a lawsuit somehow related to those options.
C
Even if we do not adopt her view that the Agreement unambiguously
permits her claims, Ms. McKissick suggests that lingering factual questions
nonetheless precluded entry of summary judgment for Gemstar. She offers three
essential arguments why this is so. First, she maintains the Agreement is at least
ambiguous on the crucial question what claims it releases, necessitating factual
findings beyond the purview of the district court at summary judgment. Second,
she faults the district court for failing to consider her asserted defenses to the
enforcement of the Release, most notably economic duress. Finally, and at the
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least, she says, she should’ve been given more time in discovery to develop her
defenses. We consider each of these arguments in its turn.
1
Ms. McKissick begins by urging us to find that the Agreement, though
seemingly clear on its face, harbors beneath its surface a latent ambiguity. That
ambiguity, she submits, requires resort to extrinsic evidence to determine the true
meaning of the contract. And that fact, she says, means summary judgment was
improperly granted here.
A latent ambiguity arises when, despite a contract’s facially unambiguous
terms, “some extrinsic fact creates a necessity for interpretation or a choice
between two or more possible meanings.” Cox v. Kaiser-Francis Oil Co., 152
P.3d 274, 278 (Okla. Civ. App. 2006). The extrinsic fact Ms. McKissick says
does this here is the asserted value of her present claims — several million
dollars. The $345,000 she received under the Agreement, she says, “would be
absurdly low” consideration if it were intended to effect a release of those
multimillion-dollar claims. Opening Br. at 28. Accordingly, she says, we must
look at outside evidence to decide whether the Release’s reference to “any and
all” claims really means “any and all” claims.
We decline to join Ms. McKissick on this venture. As the district court
noted in rejecting this same argument when Ms. McKissick raised it against the
Individual Defendants’ motion for summary judgment, the well-known costs,
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risks, delays, and uncertainties of litigation mean parties “routinely settle cases
for less money than what they might receive from a jury upon successful
prosecution of [a] case.” D. Ct. Order of Sept. 18, 2008 at 19, Aplt. App. Vol. II
at 614. The disparity Ms. McKissick identifies simply gives us no reason to think
anything more than this was going on.
Our conclusion is confirmed by Cassity v. Pitts, 839 P.2d 192, 195 (Okla.
1992). There, the Oklahoma Supreme Court weighed whether an agreement that
“released forever any and all claims of whatsoever nature” against the defendant
served to release claims for fraud that occurred before the agreement was signed,
though the fraud wasn’t discovered until after the document’s execution. The
court held “such broad language clearly contemplates some possible liability or
possible future claim in addition to that under discussion by the parties at the time
the release was executed.” Id. (internal quotation marks and emphasis omitted).
Much as here, the plaintiff there protested that the court should reform the
contract to exclude the putatively unanticipated fraud claims because only $100
had been given as consideration for the release. But the Oklahoma court rejected
this plea, holding that “[e]ven gross inadequacy of consideration” wouldn’t justify
departing from the plain terms of the contract. Id. (internal quotation marks and
emphasis omitted). Though Ms. McKissick frames her consideration arguments
- 21 -
in slightly different terms than did the plaintiff in Cassity, we do not see how a
different result in her case might be plausibly justified. 3
2
Ms. McKissick maintains summary judgment for Gemstar on her claims
was inappropriate for the additional reason that she had certain defenses to the
Agreement’s enforcement — chief among them, economic duress — that the
district court failed to address. The problem is that, when Gemstar moved for
summary judgment, Ms. McKissick never argued the Agreement was
unenforceable on these grounds. She mentioned the defenses only in a footnote in
her opposition brief and offered no argument how or why they precluded entry of
summary judgment.
3
Ms. McKissick cites us other Oklahoma authority she believes supports
her position. But it is unavailing. Haco Drilling Co. v. Hammer, 426 P.2d 689,
694 (Okla. 1967), dealt with the prerequisites for a release of future damages —
that is, damages arising after execution of the release. In such cases, the question
is “whether the consideration paid . . . was for damages already sustained or to
exempt defendant from any future damages” as well. Id. But the court’s analysis
didn’t turn on its view whether the consideration was “enough” to cover future
claims — rather, it considered whether the release was “clear, definite, and
unambiguous” as to show the parties contemplated those damages when
contracting. Id. And on this question the Oklahoma court concluded the release
was, within its own four corners, “at least ambiguous.” Id. at 695. Haco
Drilling, then, tells us little about an unambiguous release of potential claims that
preceded its execution. Ms. McKissick also offers Safety Cab Co. v. Fair, 74
P.2d 607 (Okla. 1937) (concerning release of tortfeasors not named in settlement
agreement), and Vitkus v. Beatrice Co., 11 F.3d 1535 (10th Cir. 1993) (concerning
different meanings of a term in release and severance agreement it was meant to
implement), in support of her cause, but, as the parenthetical summaries illustrate,
these are even further afield than Haco Drilling.
- 22 -
Ms. McKissick’s failure to develop her arguments adequately in the district
court either forfeited (if her failure was unintentional) or waived (if her failure
was intentional) them in that court. Which it is, however, we cannot tell. No
doubt, Ms. McKissick would prefer forfeiture, where at least plain error appellate
review is possible, rather than waiver where appellate review may be lost
altogether. See United States v. Cruz-Rodriguez, 570 F.3d 1179, 1183-84 (10th
Cir. 2009). But her opening appellate brief neither identifies which standard of
review she thinks pertains to her argument nor provides any defense of that
standard’s application. This despite our longstanding rules requiring parties to
identify where in the record they raised the point of error they seek to correct on
appeal, 10th Cir. R. 28.2(C)(2), to state what standard of review they think
applies to our review of that point of error, Fed. R. App. P. 28(a)(9)(B), and to
develop any argument for reversal in their opening appellate brief or risk having
it held waived, see Hill v. Kemp, 478 F.3d 1236, 1250-51 (10th Cir. 2007);
Headrick v. Rockwell Int’l Corp., 24 F.3d 1272, 1277-78 (10th Cir. 1994) (White,
J., sitting by designation).
In these circumstances, even if Ms. McKissick’s duress arguments were
merely forfeited before the district court, her failure to explain in her opening
appellate brief why this is so and how they survive the plain error standard waives
the arguments in this court. A party cannot count on us to pick out, argue for, and
apply a standard of review for it on our own initiative, without the benefit of the
- 23 -
adversarial process, and without any opportunity for the adversely affected party
to be heard on the question. See Herrera v. City of Albuquerque, 589 F.3d 1064,
1075 (10th Cir. 2009); United States v. Solomon, 399 F.3d 1231, 1238 (10th Cir.
2005); cf. Hill, 478 F.3d at 1251 (noting that, when left without briefing from the
parties, courts “run the risk of an improvident or ill-advised opinion, given our
dependence as an Article III court on the adversarial process” (internal quotation
marks omitted)).
3
Ms. McKissick argues that the district court should have, at the very least,
granted her more time to conduct discovery to develop evidence in aid of her
defense. A party may, of course, seek to forestall summary judgment in favor of
additional discovery if she submits an affidavit to the district court pursuant to
Fed. R. Civ. P. 56(f) “explain[ing] why facts precluding summary judgment
cannot be presented.” Price ex rel. Price v. W. Res., Inc., 232 F.3d 779, 783
(10th Cir. 2000) (internal quotation marks omitted); see also id. (further
explaining requirements for Fed. R. Civ. P. 56(f) affidavit). The difficulty in this
case is that Ms. McKissick failed to comply with Rule 56(f)’s commands. Rather
than submit the affidavit the Rule expressly requires, she requested leave to
conduct discovery in the body of her summary judgment opposition brief — and
then only in a footnote. Ms. McKissick’s failure to follow the process proscribed
by Rule 56(f) is problematic for her under our precedents: “[O]ur cases make it
- 24 -
clear that where a party opposing summary judgment and seeking a continuance
pending completion of discovery fails to take advantage of the shelter provided by
Rule 56(f) by filing an affidavit, there is no abuse of discretion in granting
summary judgment if it is otherwise appropriate.” Id. 783-84 (internal quotation
marks and alteration omitted). Put differently, the district court didn’t abuse its
discretion by denying a request that didn’t conform to the express form
requirements of the federal rules.
Perhaps realizing the infirmity of her discovery request during the district
court’s summary judgment proceedings, Ms. McKissick later filed an affidavit
seeking discovery after the court issued its summary judgment order. The district
court denied this request and in doing so again did not abuse its discretion. The
plain language of “Rule 56(f) grants the district court the power to either deny a
summary judgment motion or order a continuance; it does not grant the power to
vacate a prior grant of summary judgment so that additional discovery can be
conducted.” Hackworth v. Progressive Cas. Ins. Co., 468 F.3d 722, 732-33 (10th
Cir. 2006). If a party wants to stave off summary judgment in favor of additional
discovery, she must file a Rule 56(f)-compliant affidavit before, not after, the
court’s decision. Of course, this isn’t to say that the district court was powerless
to revisit or reopen its summary judgment decision, but it is to say that it surely
- 25 -
didn’t abuse its discretion in denying her additional time for discovery at this late
stage. 4
III
Having resolved Ms. McKissick’s claims against Gemstar, we turn to the
company’s counterclaim against her. The district court granted summary
judgment in the company’s favor on its counterclaim, awarding Gemstar “its
attorney fees and costs incurred in defending Plaintiff’s claims against it, and in
obtaining summary judgment on its counterclaim.” D. Ct. Order of Jan. 27, 2006,
at 7, Aplt. App. Vol. II at 502 (emphasis added). At the same time, the court
denied Gemstar the additional relief it sought – specifically, the return of all the
money it paid to Ms. McKissick under the Agreement.
Before us, Gemstar doesn’t challenge the disposition of its counterclaim,
but Ms. McKissick does, in part. Though she doesn’t dispute that the No Actions
4
Ms. McKissick suggests her failure timely to raise her defenses should
somehow have been excused because, by the time she filed her belated Rule 56(f)
motion, she had (properly) raised those defenses and sought discovery in response
to the Individual Defendants’ then-pending motion to dismiss her claims.
Because the question of enforceability of the Agreement was, in her view,
identical with respect to both Gemstar and the Individual Defendants, had the
court later ruled favorably on her defenses asserted against the Individual
Defendants it would have had to reopen its still non-final summary judgment in
Gemstar’s favor. We are not so sure. Ms. McKissick cites us no authority
holding that a litigant may resurrect an untimely argument against one party by
dint of its later timely appearance with respect to another party. Moreover, and in
any event, the district court eventually rejected Ms. McKissick’s defenses against
the Individual Defendants on the merits. Because we affirm that conclusion, see
infra Section IV.A, we do not see how the district court might have erred in
declining to reverse course with respect to Gemstar.
- 26 -
Clause permits Gemstar to recover any fees and costs it incurred in defending
contractually barred claims, she argues that the Clause makes no provision for
expenses incurred by the company in prosecuting its own counterclaims. So, in
her view, the italicized portion of the district court’s ruling quoted above was in
error. 5
With this, we agree. Gemstar stakes its claim to attorney fees entirely on
the language of the No Actions Clause, which provides that if Ms. McKissick
brings barred claims against Gemstar, “she will pay all costs and expenses of the
Company and/or related persons in defending against such charges, claims or
actions brought by her or on her behalf, including reasonable attorney’s fees.”
Separation Agreement and Release ¶ 17, Aplt. App. Vol. I at 146 (emphasis
added). The plain language of the Agreement makes no mention of costs
associated with prosecuting claims, only defending them. And to “defend” a
claim is to “ward off, avert, repel, restrain, prevent” it. IV Oxford English
Dictionary 376 (2d ed. 1989). It is not to pursue, prosecute, or push a
(counter)claim. Neither has Gemstar supplied any reason why we should deny
5
Ms. McKissick also and again argues her alleged defenses, including
duress, made the No Actions Clause unenforceable. The district court declined to
consider this argument, which came only after the court had already enforced the
Agreement in granting summary judgment for Gemstar. This was not an abuse of
discretion. See Elephant Butte Irr. Dist. of N.M. v. U.S. Dep’t of Interior, 538
F.3d 1299, 1303 (10th Cir. 2008) (“A district court does not abuse its discretion
in refusing to consider a theory raised for the first time at an advanced stage of
litigation.”).
- 27 -
effect to the ordinary and popular meaning of the contractual terms the company
itself chose. The parties were, of course, free to define their terms as they
wished. And they were free to provide for recoupment of costs incurred in
connection with counterclaims or the litigation generally. But this they didn’t do.
The part of the district court’s order awarding Gemstar fees for “obtaining
summary judgment on its counterclaim” simply doesn’t find support in the
express terms of the parties’ agreement. And our job is to give voice to and
enforce the autonomous will of the parties, as expressed in the plain language of
their deal, not to rewrite or perfect that deal.
Neither are the terms of the No Actions Clause entirely surprising. While
Gemstar’s counterclaim won it only attorney fees associated with defending Ms.
McKissick’s underlying suit, counterclaims can of course be used to seek
damages well beyond that. And Gemstar’s did. When filing its counterclaim,
Gemstar also sought a refund of everything it had paid to Ms. McKissick under
the Agreement. And, though ultimately unsuccessful, Gemstar surely incurred
fees in pursuing this relief — fees the district court held Ms. McKissick must
reimburse. It is hardly nonsensical to think that Ms. McKissick might’ve agreed
to repay the company’s costs in defending a barred suit but not to underwrite
claims like this seeking affirmative relief against her. 6
6
At this point, we imagine one might well ask: What if Gemstar hadn’t
sought to collect its fees in a counterclaim but instead pursued them in a motion
(continued...)
- 28 -
In its brief and in a supplemental filing pursuant to Fed. R. App. P. 28(j),
Gemstar cites a number of decisions that, it asserts, awarded fees in comparable
circumstances. But that’s not quite so. While some of these cases indicate that
attorney fees awards for litigating attorney fees issues are sometimes appropriate
under various statutes and other authorities, none addresses the pertinent question
whether language of the sort found in the parties’ No Actions Clause, language
which speaks only about attorney fees for defending against barred claims, also
authorizes a fee award for the separate endeavor of prosecuting a counterclaim
seeking those fees. 7 In the absence of any authority to the contrary, we conclude
6
(...continued)
within Ms. McKissick’s own suit? Could it have at least recovered the costs of
pursuing such a motion, along with its costs in defending Ms. McKissick’s suit?
In this way, might it have effectively achieved much the same result it now seeks
if only it had followed a different procedural tack? These are nice questions, but
ones we need not decide. It’s hardly unknown for a tactical choice to pursue this
rather than that procedural option to affect the outcome of a case: every lawyer
knows (or thinks he can hazard an educated guess), for example, how a choice of
forum can affect the outcome of a lawsuit. In the case before us, Gemstar chose
to pursue a counterclaim, not a motion in Ms. McKissick’s suit; the parties chose
the language of their contract; and that language permits Gemstar to recover only
fees incurred in defending claims. We are no more free to undo Gemstar’s
tactical choices than we are to rewrite the terms of the parties’ deal.
7
See Cummins v. Campbell, 44 F.3d 847, 855 (10th Cir. 1994) (awarding
fees under 42 U.S.C. § 1988, which permits a fee award “[i]n any action or
proceeding to enforce” various civil rights laws); Glass v. Pfeffer, 849 F.2d 1261,
1264-66 (10th Cir. 1988) (affirming award of fees under “district court’s inherent
power” to impose sanctions); Lubrizol Corp. v. Exxon Corp., 957 F.2d 1302, 1308
(5th Cir. 1992) (same); Oral Roberts Univ. v. Anderson, 11 F. Supp. 2d 1336,
1337 (N.D. Okla. 1997) (“In the event of litigation, the prevailing party shall be
entitled to recover its reasonable attorney’s fees.” (quoting parties’ agreement)
(continued...)
- 29 -
the provision means what it says and so does not permit such an award.
Accordingly, we vacate the award of attorney fees to Gemstar and remand for the
district court to recalculate it using only fees incurred defending against Ms.
McKissick’s claims.
IV
Having resolved Ms. McKissick’s disputes with Gemstar, we must address
the district court’s rulings concerning the Individual Defendants’ liability. Ms.
McKissick asks us to hold the district court’s entry of summary judgment for the
Individual Defendants on her claims improper, because either (A) the Release
doesn’t specifically identify the Individual Defendants as Released Parties, or (B)
her asserted defenses to the Agreement’s enforcement precluded judgment in their
favor. This we cannot do.
A
In the Release, Ms. McKissick pledged to release “any and all claims” she
might have had against Gemstar or its “current and former employees, officers,
directors, representatives, agents, shareholders, attorneys, accountants, partners,
insurers, advisors, partnerships, assigns, successors, heirs, predecessors in
interest, joint ventures, and affiliated persons (collectively “Released Parties”).”
7
(...continued)
(emphasis omitted)); Estate of Bell v. Olmstead, 13 P.3d 86, 89-90 (Okla. Civ.
App. 2000) (awarding fees under 12 Okla. Stat. § 936, which permits a fee award
“[i]n any civil action to recover for labor or services rendered”).
- 30 -
Separation Agreement and Release ¶ 6, Aplt. App. Vol. I at 144. For reasons that
we’ve already explored, there’s no doubt that Ms. McKissick’s claims against the
Individual Defendants, identical to those against the company, fall within the
ambit of the Release’s extermination of “any and all claims.” It’s also undisputed
that the Individual Defendants are former Gemstar officers and directors, and so
apparently among the parties Ms. McKissick released. What is disputed is
whether the Agreement’s listing of released parties is sufficient to establish an
effective release of Mr. Yuen and Ms. Leung, or whether instead the names
“Henry Yuen” and “Elsie Leung” had to appear in the Release for them to enjoy
its protection.
Oklahoma follows what is sometimes, if somewhat beguilingly, called the
“specific identity” approach to the release of joint tortfeasors. When a potential
claimant contracts to release her claims against one party, others who might also
be liable to her on those claims aren’t released unless they are “designated by
name or otherwise specifically identified.” Moss v. City of Oklahoma City, 897
P.2d 280, 288 (Okla. 1995); see also 12 Okla. Stat. § 832(H)(1). 8 The specific
8
Moss interpreted a previous version of 12 Okla. Stat. § 832(H)(1), which
provided that a release did not discharge other tortfeasors from liability “unless
its terms so provide.” Moss, 897 P.2d at 284. The same day Moss was decided,
the Oklahoma legislature amended that language in § 832(H)(1) to read “unless
the other tort-feasor is specifically named.” Ms. McKissick contends this means
Moss is no longer good law, because the amendment omitted the alternative of
“otherwise specifically identif[ying]” released tortfeasors, thus establishing a
more restrictive standard. The result, she says, is that a joint tortfeasor may be
(continued...)
- 31 -
identity rule is designed to prevent the release of all potential tortfeasors upon the
release of one by means of boilerplate, “generalized broad language which, in
essence, . . . purports to release the entire world from any and all claims.” Moss,
897 P.2d at 282 (emphasis added). So, for example, the contractual language
Moss disapproved claimed to release not just the tortfeasor signing the contract
but also “any other person, firm or corporation.” Id. (emphasis added).
Like most rules, however, this one has its limits. When it adopted the
specific identity rule, Oklahoma not only declined to give effect to the broad
release before it (the so-called “complete bar” rule), but also the even more
restrictive view that a party identified in a release should be released only if
evidence demonstrates the parties really intended it (the so-called “intent” rule).
Id. at 286. The court rejected the intent rule, explaining that it would carve out
8
(...continued)
released only if he or she is listed by name in the release. We cannot agree. At
the time Moss was decided (and § 832(H)(1) amended), there were three
competing views of the proper interpretation of “unless its terms so provide”: the
“specific identity” rule Moss adopted; the “complete bar” rule (under which broad
language releasing “all other persons, firms or corporations” “operates as a
complete bar to a plaintiff seeking to bring an action against an unnamed
tortfeasor”); and the “intent” rule (which permits use of parol evidence to
ascertain who the parties intended to release). Moss, 897 P.2d at 285-86. It
would seem, then, that the “specifically named” language of the amendment to
§ 832(H)(1) was most likely an effort to adopt and codify the specific identity
rule, rather than to stake out a unique, fourth position in this debate. Cf. Lackey
v. McDowell, 415 S.E.2d 902, 903 n.3 (Ga. 1992) (defining “named” as
“identified either by proper name or such other description as leaves no question
of the identity of the party released”). In any event, given the absence of any
authority suggesting that Moss has been abrogated, we apply it as describing the
proper standard under § 832(H)(1) as amended.
- 32 -
an unlikely exception to the parol evidence rule. Id. at 288. So it is that the
specific identity rule doesn’t ask us to divine the parties’ secret intentions.
Similarly, the rule does not require that every released party be identified by
name in some voluminous appendix dwarfing the release itself. Rather, the rule
merely “require[s] some semblance of specificity” in the contractual language
“before a non-settling tortfeasor [is] discharged.” Id. 286. This is because the
evil the specific identity rule aims to prevent is the “unwitting discharge of
[other] tortfeasors,” id. at 285; it isn’t about enforcing parsimonious exactitude
for its own sake.
The parties’ Release complies with these principles. It doesn’t purport to
discharge any and all potential tortfeasors, as the Moss release did. Rather, the
challenged portion of the Release simply discharges claims against Gemstar’s
employees, agents, and officers. These are all people for whom Gemstar might
very well bear vicarious liability in some cases — and thus in this language the
company still seeks, in a sense, to release itself. The class of persons covered by
this language, moreover, was discernible to the parties in advance; they could tell
the covered class before signing the Release; and, in this way, the Release can’t
be said to fall prey to the evil of effecting an unwitting discharge of unknown
parties.
It would, as well, be quite a thing to read the specific identity rule to forbid
language covering employees, agents, and officers, language widely employed in
- 33 -
commercial settings and regularly depended on for its efficacy. Were we to hold
such language ineffective, the settled expectations shared by parties to a great
many commercial releases would be shaken. Although no Oklahoma courts
appear to have squarely dealt with the question, we very much doubt they would
go so far. A number of other states have concluded that the use of categories
such as “employees,” “agents,” and “officers” doesn’t tread on the ground
forbidden by the specific identity rule, but rather suffices to identify, and so
release, persons falling within those categories. See, e.g., Aid Ins. Co. v. Davis
County, 426 N.W.2d 631, 633-34 (Iowa 1988) (stating that “such classes as
‘employees,’ ‘partners’ or ‘officers’” may specifically identify released parties),
cited with approval by Moss, 897 P.2d at 286; Pakulski v. Garber, 452 N.E.2d
1300, 1303 (Ohio 1983) (upholding release of named tortfeasor’s “agents” and
“employees”). And the Oklahoma Supreme Court itself has hinted that it would
distinguish such categories from the broad boilerplate language it’s held
unenforceable under the specific identity rule. See Carmichael v. Beller, 914
P.2d 1051, 1054 (Okla. 1996) (“[I]mmediately subsequent to the naming of the
school entities (and their agents, servants and employees) as the discharged
parties, the release did contain the following broad language purportedly also
discharging: any and all others . . . .” (internal quotation marks omitted)
(emphasis added)).
- 34 -
In light of all this, we conclude the Release’s inclusion of Gemstar’s former
officers and directors was sufficient under Oklahoma law to release Ms.
McKissick’s claims against the Individual Defendants.
B
Even if the terms of the Agreement purport to release her claims against the
Individual Defendants, Ms. McKissick maintains that the Agreement is
unenforceable because it was executed under economic duress. Unlike her duress
claim against Gemstar, this one Ms. McKissick pursued in the district court and
preserved in this court.
To avoid a contract on grounds of economic duress, Oklahoma law requires
a litigant to show:
A. The settlement was the result of a wrongful or unlawful act which
(1) was initiated by the coercing party,
(2) was committed with knowledge on the part of the coercing
party of the impact it would have,
(3) was made for the purpose of, and reasonably adequate to
secure coercion over the other, and
(4) resulted in obtaining undue advantage over the other.
B. The act or acts complained of in (A) must have deprived the coerced
party of its free will, leaving no adequate legal remedy nor reasonable
alternative available. In this respect it is not enough that the alleged
victim merely show, for example:
(1) its reluctance to settle,
(2) its financial embarrassment, or
(3) its business necessities.
C. Detriment to the complaining party caused thereby.
Centric Corp. v. Morrison-Knudsen Co., 731 P.2d 411, 417 (Okla. 1986).
- 35 -
Seeking to meet this standard, Ms. McKissick’s claim of duress proceeds in
this way. She incurred massive financial liabilities as she pursued her goal of
establishing a horse ranch. Gemstar knew this, and repeatedly assured her that
her job was secure. But the company nonetheless terminated her employment and
presented her with an offer it knew she couldn’t refuse: an attractive payout in
exchange for releasing her valuable claims against the company (and the
Individual Defendants). This shows the company unfairly exploited her desperate
financial situation to exact an exceedingly favorable deal for itself and the
Individual Defendants. And that, Ms. McKissick concludes, means neither
Gemstar nor the Individual Defendants may now seek to hold her to that sham of
a bargain.
The district court held that Ms. McKissick could not make out a claim of
economic duress against the Individual Defendants as a matter of law because she
couldn’t establish a wrongful act on the company’s part designed to secure
coercion over her. We agree. The district court considered Ms. McKissick’s
argument carefully and at length, and we do not think it necessary to repeat its
thoughtful analysis here. See D. Ct. Order of Sept. 18, 2008 at 22-29, Aplt. App.
Vol. II at 617-24. We do observe, though, that in addition to the explanation
given by the district court, Ms. McKissick’s duress claim fails for another
reason. Oklahoma law permits a party to rescind a contract executed under
duress. But that requires, among other things, that the party “restore to the other
- 36 -
party everything of value which [she] has received from [the other party] under
the contract; or . . . offer to restore the same.” 15 Okla. Stat. § 235(2). Ms.
McKissick hasn’t returned the benefits she received under the Agreement or
explained how she offered to do so. Given that failure, it is difficult indeed to see
how she could make out a colorable claim of duress. 9
V
Finally, we reach the district court’s award of attorney fees to the
Individual Defendants. Ms. McKissick contends the award should be vacated or
reversed for essentially two reasons: first, the district court lacked jurisdiction to
award such fees after she’d appealed the case to this court; second, the district
court erroneously concluded that the No Actions Clause entitles the Individual
Defendants to attorney fees. We reject the first of these arguments, but agree
with the second.
9
Ms. McKissick also contends the Agreement was executed under mistake,
because the parties didn’t intend to release any claims but those arising out of her
employment or termination, despite the Release’s language to the contrary. We
agree with the district court that she hasn’t shown that Gemstar made the mistake
she alleges, and that Ms. McKissick hasn’t demonstrated inequitable conduct by
Gemstar that would excuse her unilateral mistake on that point. See D. Ct. Order
of Sept. 18, 2008 at 20-22, Aplt. App. Vol. II at 615-17. Ms. McKissick also
repeats her arguments alleging ambiguity and lack of consideration in an effort to
defeat summary judgment for the Individual Defendants. For the same reasons
we gave with respect to summary judgment for Gemstar, we reject those
arguments. See supra Section II.C.1.
- 37 -
A
Beginning with Ms. McKissick’s jurisdictional challenge, it perhaps goes
without saying that “[e]very federal appellate court has a special obligation to
satisfy itself not only of its own jurisdiction, but also that of the lower courts in a
cause under review . . . . When the lower federal court lacks jurisdiction, we
have jurisdiction on appeal, not of the merits but merely for the purpose of
correcting the error of the lower court in entertaining the suit.” Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 94 (1998) (internal quotation marks
omitted). So it is that, before we may address the merits of the fee award to the
Individual Defendants, we must first assure ourselves that the district court
possessed jurisdiction to consider their motion for fees.
In Ms. McKissick’s view, the Individual Defendants’ motion for attorney
fees is properly viewed as a substantive contractual claim for breach of the
parties’ contract. For this reason, she says, they actually seek attorney fees as
part of their damages. And this, she contends, means the Individual Defendants’
fee request is inextricably interwoven with the merits of the appeal, and thus
outside the district court’s post-appeal jurisdiction. In support of her argument,
Ms. McKissick has filed and asks us to grant a motion to vacate the district
court’s attorney award.
This we cannot do. As Ms. McKissick observes, the general rule is that,
when a litigant files a notice of appeal, the district court loses jurisdiction over
- 38 -
the case, save for “collateral matters not involved in the appeal.” Lancaster v.
Indep. Sch. Dist. No. 5, 149 F.3d 1228, 1237 (10th Cir. 1998) (internal quotation
marks omitted). But an award of attorney fees for the case at issue is perhaps the
paradigmatic example of a collateral issue a district court may entertain after an
appeal has been taken to this court. Id. Accordingly, the Supreme Court has laid
down “a uniform rule that an unresolved issue of attorney’s fees for the litigation
in question” doesn’t prevent a district court judgment from being final and
appealable; rather, the district court retains jurisdiction over the fee issue while
the court of appeals has jurisdiction over the appeal. Budinich v. Becton
Dickinson & Co., 486 U.S. 196, 202 (1988) (emphasis added). This is so
regardless whether the fees are considered “‘merits’ or ‘nonmerits,’” and
regardless whether the claimant “specifically requested attorney’s fees as part of
the prayer in his complaint” or sought them by motion later — all the better to
provide a clear, workable rule for litigants in federal court. Id. at 201-02. The
critical consideration, in the Supreme Court’s view, is not the “preservation of
conceptual consistency in the status of a particular fee authorization as ‘merits’ or
‘nonmerits,’” but rather the administrative virtues of a predictable, bright-line
jurisdictional rule. Id. at 202; cf. Hertz Corp. v. Friend, --- U.S. ---, ---, 130 S.Ct.
1181, 1193, (2010) (explaining that “[s]imple jurisdictional rules . . . promote
greater predictability”). Under that bright-line rule, outstanding fee issues for the
litigation at hand are considered collateral to the final judgment, even “when the
- 39 -
statutory or decisional law authorizing them makes plain . . . that they are to be
part of the merits judgment.” Budinich, 486 U.S. at 201-02.
Ms. McKissick says our decisions in North American Specialty Insurance
Co. v. Corrections Medical Services, Inc., 527 F.3d 1033 (10th Cir. 2008), and
Lampkin v. International Union, 154 F.3d 1136 (10th Cir. 1998), require a
different result. But neither does any such thing. Those cases didn’t involve a
request for fees in the case at hand; instead, they both involved a claim for fees
incurred in prior litigation. And we said, simply and unsurprisingly, that in those
circumstances the fee question may have to be litigated at trial as a component of
the plaintiff’s damages, rather than ascertained in a post-judgment collateral
proceeding. So, for example, North American involved the question of attorney
fees an insured incurred in defending against an earlier lawsuit for which its
insurer refused to provide a defense, as required by the parties’ insurance policy.
527 F.3d at 1038-39. The fees at issue weren’t “attributable to the case” at issue,
Budinich, 486 U.S. at 203, but the result of a previous independent litigation.
Likewise in Lampkin: there, “the award of attorneys’ fees [was] an award of
compensatory damages for [the defendant union’s] breach of the duty of fair
representation [in earlier litigation against the plaintiff’s employer] . . . which
only incidentally happen[ed] to be measured . . . solely by the attorneys’ fees
incurred by the plaintiff.” 154 F.3d at 1140; see also id. (“This limitation of the
[Budinich] Court’s holding to attorneys’ fees requests for the ‘litigation at hand’
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is crucial to our resolution of the jurisdictional issue here.”). These cases, then,
give us no reason to disregard Budinich’s clear command: the question of
attorney fees for the litigation at hand is a collateral issue, one that remains
within the district court’s jurisdiction even after judgment is entered on the merits
and an appeal of that judgment is underway. 10
The vast majority of our sister circuits have come to this same conclusion.
See, e.g., O&G Indus., Inc. v. Nat’l R.R. Passenger Corp., 537 F.3d 153, 167-68
(2d Cir. 2008); Carolina Power & Light Co. v. Dynergy Mktg. & Trade, 415 F.3d
354, 362 (4th Cir. 2005) (noting that fee award at issue included fees beyond
merely those for litigation at hand); Gleason v. Norwest Mortgage, Inc., 243 F.3d
130, 137-38 (3d Cir. 2001); United States ex rel. Familian Nw., Inc. v. RB & B
Contractors, Inc., 21 F.3d 952, 955 (9th Cir. 1994); McGuire v. Russell Miller,
Inc., 1 F.3d 1306, 1315 (2d Cir. 1993) (discussing Budinich in context of right to
jury trial); id. at 1317 (Jacobs, J., concurring) (noting that case did not involve
“contractual indemnification for fees incurred in a separate litigation against a
third party”); Continental Bank, N.A. v. Everett, 964 F.2d 701, 702 (7th Cir.
1992); Vargas v. Hudson County Bd. of Elections, 949 F.2d 665, 669-70 (3d Cir.
10
None of this is to say a post-judgment motion for attorney fees claimed
pursuant to a contract will necessarily be procedurally proper. See Fed. R. Civ. P.
54(d)(2)(A) & Advisory Committee Notes to 1993 Amendments (motion for
attorney fees does not apply when “the substantive law requires those fees to be
proved at trial as an element of damages”). It is only to say that any defect there
might be in such a proceeding is not jurisdictional. Cf. Capital Asset Research
Corp. v. Finnegan, 216 F.3d 1268, 1269-70 (11th Cir. 2000) (per curiam).
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1991); First Nationwide Bank v. Summer House Joint Venture, 902 F.2d 1197,
1199-1200 (5th Cir. 1990); but see Brandon, Jones, Sandall, Zeide, Kohn, Chalal
& Musso, P.A. v. Medpartners, Inc., 312 F.3d 1349, 1355 (11th Cir. 2002). 11 And
we believe it best comports with the Supreme Court’s direction in Budinich,
which we are bound to obey.
B
Having determined the district court possessed jurisdiction to award the
Individual Defendants attorney fees, we next confront the question whether doing
so was proper.
The parties’ dispute here centers on the terms of the No Actions Clause. In
that provision, Ms. McKissick represented “that she will not file lawsuits against
the Company for claims arising up to and including the Effective Date.”
Separation Agreement and Release ¶ 17, Aplt. App. Vol. I at 146 (emphasis
added). If she breached that promise “by bringing or maintaining any charges,
claims, grievances, or lawsuits contrary to this provision,” the No Actions Clause
required her to “pay all costs and expenses of the Company and/or related person
11
The Eleventh Circuit has suggested that “a request for attorneys’ fees
pursuant to a contractual clause is considered a substantive issue,” even when the
fees are for the litigation at hand. Brandon, Jones, 312 F.3d at 1355. The court
based this conclusion, however, on pre-Budinich circuit case law, and didn’t even
consider what effect Budinich might have on the issue. See id. (citing Ierna v.
Arthur Murray Int’l, Inc., 833 F.2d 1472 (11th Cir. 1987)); see also Adeduntan v.
Hosp. Auth. of Clarke County, 249 F. App’x 151, 155 & n.1 (11th Cir. 2007)
(unpublished) (noting this fact). It thus provides little persuasive basis for us to
find for Ms. McKissick on her jurisdictional argument.
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in defending against such charges, claims or actions.” Separation Agreement and
Release ¶ 17, Aplt. App. Vol. I at 146 (emphasis added). The No Actions Clause,
then, is narrower than the language governing Ms. McKissick’s release of claims:
while the Release covers both Gemstar and a passel of other persons (including
former officers and directors such as the Individual Defendants), the No Actions
provision provides only that Ms. McKissick won’t sue Gemstar itself. Her suit
against the Individual Defendants thus doesn’t (and can’t) violate the No Actions
provision, let alone trigger that provision’s attorney fee guarantee. 12
The Individual Defendants acknowledge as much, so they seek to hang their
attorney fee hat on a different hook. Though Ms. McKissick could violate the No
Actions provision only by suing Gemstar, they argue, the obligation a violation of
that provision triggered was broader — requiring Ms. McKissick to pay not only
the company’s attorney fees, but also those of “related persons.” And, as former
Gemstar officers and directors, the Individual Defendants maintain they must be
“related persons.”
Maybe so. But this argument itself misses a crucial further limitation in the
language of the No Actions Clause. The Clause requires Ms. McKissick to pay
only the costs of “defending against such charges, claims or actions” — that is,
12
Like Gemstar, the Individual Defendants stake their claim to attorney
fees entirely on the No Actions Clause. Whether the Individual Defendants might
have been entitled to fees by dint of Ms. McKissick’s violation of the Release,
rather than the No Actions Clause, is a question the parties haven’t pursued and
so neither will we.
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the charges, claims, or actions against Gemstar she promised not to bring.
Separation Agreement and Release ¶ 17, Aplt. App. Vol. I at 146. It follows that
the only fees for related persons Ms. McKissick agreed to pay were fees related
persons incurred (perhaps as witnesses) in charges, claims, or actions she pursued
against Gemstar. The claims on which the Individual Defendants seek fees here,
however, are plainly not claims against Gemstar, but rather claims against the
Individual Defendants. As such, those claims do not fall within the scope of the
No Action Clause’s fee guarantee. Once again, one could well imagine a
different provision more generous than this to related persons. But our task is to
enforce the plain terms of the parties’ agreement, not to try to improve upon
them.
Seeking to avoid this result, the Individual Defendants suggest that,
because Ms. McKissick filed a single complaint alleging identical causes of
action against both Gemstar and the Individual Defendants, the claims against
them were in fact “such . . . claims.” Yet this, too, is an untenable reading of the
contract’s plain language. Ms. McKissick did bring the same causes of action
against both Gemstar and the Individual Defendants (for fraud, negligent
misrepresentation, and Exchange Act violations). But her claims against the
Individual Defendants had to stand or fall on their own. They became no less
claims against the Individual Defendants simply because of their inclusion in a
consolidated lawsuit involving claims against Gemstar. It is beyond cavil, for
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example, that the Individual Defendants might have sought, in appropriate
circumstances, to have had the claims against them transferred to a different
venue, tried at a different time, or (as happened here) assessed on a different
procedural track. The claims against them have always been distinct from —
even if based on the same legal theories and conduct and brought in the same
complaint as — the claims against Gemstar. Indeed, we doubt very much that, if
the shoe were on the other foot and Gemstar lost a verdict, the Individual
Defendants would gladly accept responsibility for the company’s judgment
because the claims were really against them, too.
* * *
At the end of it all, our essential holdings are these. We affirm the district
court’s grants of summary judgment to Gemstar and to the Individual Defendants
on Ms. McKissick’s claims against them. We vacate its grant of attorney fees to
Gemstar and remand to the district court to recalculate them in a manner
consistent with this opinion. We deny Ms. McKissick’s motion to vacate.
Finally, we reverse the judgment of the district court awarding attorney fees to
the Individual Defendants.
So ordered.
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McKissick v. Yuen
Court: Court of Appeals for the Tenth Circuit
Date filed: 2010-09-08
Citations: 618 F.3d 1177
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