KRISTEL, INC. v. CENVEO CORPORATION, 3:16-cv-00181

Kristel, Inc. sued Cenveo for lease default and sought remedies under a commercial lease, including acceleration of all remaining rent and a confession-of-judgment clause.
While a motion to dismiss was pending, the parties mediated and executed a written Settlement Agreement on November 1, 2016, which (1) required they draft an Addendum to the lease, (2) set a graduated rent-penalty schedule, and (3) eliminated the confession-of-judgment clause.
The Settlement Agreement memorialized the graduated rent-penalty percentages and required replenishment of an escrow if penalties were deducted.
After settlement, parties exchanged drafts of the Addendum but disagreed whether the Settlement Agreement also eliminated the lease’s acceleration-of-rent provision.
Cenveo moved to enforce the Settlement Agreement, arguing elimination of confession of judgment necessarily eliminated acceleration; Kristel argued the two remedies are distinct and acceleration was not waived (Kristel agreed to defer acceleration until after the graduated-penalty period).
The court found the Settlement Agreement valid and enforceable, that it eliminated the confession-of-judgment clause, but did not eliminate the acceleration provision; the parties were ordered to finalize an Addendum consistent with those points and to specify that Kristel may not accelerate rent until after the graduated-penalty period.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the parties formed a valid, enforceable settlement agreement	Settlement is valid; it requires an Addendum and sets rent penalties and eliminates confession-of-judgment	Settlement is valid (disagreed on scope of terms)	Settlement agreement is valid and enforceable
Whether the Settlement Agreement eliminated the confession-of-judgment provision	Agreed it was eliminated	Agreed it was eliminated	Confession-of-judgment provision eliminated
Whether the Settlement Agreement also eliminated the lease acceleration-of-rent provision	Did not agree to eliminate acceleration; plaintiff intended to retain it (but agreed to delay use until after penalty period)	Argued acceleration is "inextricably intertwined" with confession-of-judgment and therefore was eliminated	Court held acceleration was not eliminated (no meeting of the minds to remove it)
Whether the court should enforce only mutually agreed terms or the entire proposed Addendum	Enforce mutually agreed terms; plaintiff proposed draft keeping acceleration	Defendant sought exclusion of acceleration from Addendum	Court enforced only the mutually agreed terms: Addendum must remove confession-of-judgment, retain acceleration, and state acceleration cannot be exercised until after graduated-penalty period

D.R. by MR. v. E. Brunswick Bd. of Educ., 109 F.3d 896 (3d Cir. 1997) (policy favoring settlements)
Wilcher v. City of Wilmington, 139 F.3d 366 (3d Cir. 1998) (settlement agreements are contracts governed by local law)
Mazzella v. Koken, 739 A.2d 531 (Pa. 1999) (settlement requires meeting of the minds; material terms must be agreed)
Williams v. Metzler, 132 F.3d 937 (3d Cir. 1997) (settlement agreements enforceable as contracts)
Tiernan v. Devoe, 923 F.2d 1024 (3d Cir. 1991) (movant must show no disputed material facts on enforceability; factual disputes may require an evidentiary hearing)
Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386 (5th Cir. 1984) (if material facts about existence/terms of settlement are disputed, evidentiary hearing required)
Corbesco, Inc. v. Local No. 542, Int'l Union of Operating Engineers, 620 F. Supp. 1239 (D. Del. 1985) (court may enforce parts of a settlement while refusing to enforce terms not discussed or agreed)