859 F.3d 558
8th Cir.2017Background
- Class representatives appeal district court denial of motion to enforce settlement and motion to alter or amend; defendants move to dismiss the appeal.
- Settlement arose from Missouri Securities Act claims related to a failed City of Moberly bond issue; Morgan Keegan underwrote the Bonds and sold on secondary market.
- Class certified in Sept. 2014; many opted out, leaving $8,455,000 par value in play.
- Stipulation of Settlement filed March 11, 2015, with a Gross Settlement Amount up to $8,250,000 and a Net Settlement Fund up to $5,185,317.
- Stipulation established a six-group allocation and a two-step calculation for payments, including a formula contingent on bond tender and claims.
- Court-approved final approval occurred Oct. 2, 2015; settlement funds distributed with releases; this appeal concerns an additional $380,954 allegedly due under Step 1/Step 2 calculations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal is moot due to distribution of settlement funds. | Mootness should not bar review since district court can remedy the alleged shortfall. | Distribution and releases render the dispute moot and bar review. | Not moot; live controversy remains for enforcement of the Stipulation. |
| What is the proper meaning of 'Bonds currently held' in Step 1. | 'Bonds currently held' equals par value held by Groups 1 and 2 minus Groups 5 and 6 losses ($8,455,000 reduced by $880,000). | 'Bonds currently held' is a fixed $8,455,000 per Table 1. | Unambiguous; fixed $8,455,000 is controlling. |
| Whether the district court could incorporate prior statements into the Stipulation. | Transcript of settlement discussions should be incorporated. | Merger clause and four-corners approach preclude incorporation of prior statements. | No incorporation; court did not err in excluding prior statements. |
| Whether the court’s construction yields an unreasonable result. | Recovery could be zero if all tendered bonds and subsequent purchasers behaved unfavorably. | Parties anticipated conditional tender; slight shortfall is acceptable. | Not unreasonable; reflects the parties’ bargain and contingent tender. |
| Who bears the burden of proof on construction of the Stipulation. | Defendants should bear burden for asserting a 'special meaning' of unambiguous terms. | Stipulation unambiguous; burden not shifted. | No error; district court correctly treated the Stipulation as unambiguous. |
Key Cases Cited
- Life Inv’rs Co. of Am. v. Fed. City Region, Inc., 687 F.3d 1117 (8th Cir. 2012) (mootness in Article III cases; ongoing jurisdiction to provide relief)
- Ali v. Cangemi, 419 F.3d 722 (8th Cir. 2005) (en banc; standard for mootness)
- Vidacak v. Okla. Farmers Union Mut. Ins., 274 S.W.3d 487 (Mo. Ct. App. 2008) (contracts; releases are governed by contract law)
- Health Care Found. of Greater Kan. City, 507 S.W.3d 646 (Mo. Ct. App. 2017) (unambiguous contract interpretation and language control)
- Precision Inv., LLC v. Cornerstone Propane, LP, 220 S.W.3d 301 (Mo. 2007) (burden of proof for specific performance; clear, convincing evidence)
- McFarland v. O’Gorman, 814 S.W.2d 692 (Mo. Ct. App. 1991) (unambiguous contract cannot be avoided by differing intent)
- State ex rel. Hewitt v. Kerr, 461 S.W.3d 798 (Mo. 2015) (incorporation and merger clause significance)