MedCapGroup, LLC v. Mesa Pharmacy, Inc.
2:14-cv-01864
| D. Nev. | Feb 13, 2017Background
- MedCapGroup purchased accounts receivable from Mesa (now Praxsyn) and later sued, alleging undisclosed pre-sale conduct made those accounts uncollectible.
- The parties reached a settlement at a magistrate-run conference: Mesa would pay $175,000 and act as MedCap’s collection agent; collections would reduce the payment obligation.
- Mesa alleges MedCap’s representative (Mazzara) expressly represented at the conference that liens had been filed on all accounts, which materially influenced Mesa’s agreement; MedCap denies any lien discussion.
- Magistrate Judge Foley recalled lien discussions, credited Mesa witness Greg Sundem’s testimony, and found MedCap’s post-conference conduct corroborated that the lien representation was material.
- The magistrate recommended denying enforcement of the settlement; the district judge conducted a de novo review, adopted the recommendation, denied MedCap’s motion to enforce the settlement, and remanded for another settlement conference.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a settlement agreement reached at a magistrate’s conference is enforceable | MedCap: No material misrepresentation; liens were filed on some accounts and collectibility was irrelevant | Mesa: MedCap represented all liens were filed; that misrepresentation was material and induced the settlement | Court: Mesa proved MedCap represented liens were filed and that was material; settlement not enforceable |
| Whether Mesa bore the risk of mistake by failing to verify lien status beforehand | MedCap: Mesa should have checked publicly available lien records and thus bears the risk | Mesa: It relied on an affirmative in-conference representation by MedCap, not mere hope or silence | Court: Mesa’s reliance on MedCap’s affirmative representation was reasonable; MedCap cannot shift risk |
| Whether the magistrate judge’s recollection can be credited in enforcement disputes | MedCap: Challenges magistrate’s factual findings | Mesa: Magistrate’s firsthand recall and testimony credibility are entitled to weight | Court: Credited magistrate’s recollection and witness testimony; de novo review affirmed findings |
| Remedy after finding inducement by misrepresentation at settlement conference | MedCap: Seek enforcement, sanctions, fees | Mesa: Rescind/decline enforcement and return to settlement conference | Court: Denied enforcement and related motions; referred parties back to magistrate for settlement |
Key Cases Cited
- Dacanay v. Mendoza, 573 F.2d 1075 (9th Cir. 1978) (federal courts have inherent power to enforce settlements)
- Adams v. Johns–Manville Corp., 876 F.2d 702 (9th Cir. 1989) (settlement enforcement treated as specific enforcement equitable action)
- May v. Anderson, 119 P.3d 1254 (Nev. 2005) (elements required for enforceable contract under Nevada law)
- Certified Fire Prot., Inc. v. Precision Constr., 283 P.3d 250 (Nev. 2012) (meeting of the minds and material terms analysis)
- Land Baron Invs. v. Bonnie Springs Family LP, 356 P.3d 511 (Nev. 2015) (allocation of risk of mistake when party failed to conduct due diligence)
- Anderson v. Sanchez, 373 P.3d 860 (Nev. 2016) (party bears risk where aware of facts and fails to pursue them)