Universal Settlements International, Inc. v. National Viatical, Inc.
568 F. App'x 398
6th Cir.2014Background
- Days before trial National Viatical and Torchia and Universal Settlements placed a settlement on the record: NV/T to pay $1,000,000 in four installments and pledge collateral; mutual releases; $5,000,000 consent judgment stipulated if NV/T defaulted.
- Parties discussed a "standard mutual confidentiality" agreement but Universal Settlements had reporting obligations to a Canadian bankruptcy court; parties agreed limited disclosure on a need-to-know basis and to work in good faith to maintain confidentiality.
- Universal Settlements posted a "Notice of Settlement" on its public website and notified creditors/monitor, stating the settlement amount, payment structure, and possible sanctions on default, but did not allocate amounts between NV and Torchia or identify the consent-judgment amount or liable parties.
- NV/T refused to pay, alleging breach of confidentiality; Universal Settlements gave notice and an opportunity to cure, then moved for summary judgment and to enforce the $5M consent judgment after NV/T defaulted.
- The district court granted summary judgment for Universal Settlements on breach claims and entered the $5M consent judgment for enforcement; NV/T appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Universal Breach Confidentiality? | NV/T: Website posting disclosed confidential settlement terms and breached confidentiality. | Universal: Disclosures were limited, generic, and contemplated by the parties and Canadian court; reporting required. | No breach: disclosure was authorized/anticipated; summary judgment affirmed. |
| Was the confidentiality term ambiguous (latent ambiguity re: "website" and scope)? | NV/T: "Website" might mean PACER; confidentiality should have covered all terms not just the consent judgment. | Universal: Language and on-the-record statements show ordinary meaning and confidentiality was meant to protect the consent judgment only. | No latent ambiguity; objective record controls; confidentiality limited to consent judgment. |
| Did Universal's conduct excuse NV/T's performance? | NV/T: Alleged breach was substantial, excusing payment obligation. | Universal: Any disclosure did not destroy essential bargain or make performance impossible. | Performance not excused; benefits remained and payment obligation stood. |
| Is the $5M consent judgment unenforceable (premature notice, penalty/ liquidated damages, or set-aside under Rule 60)? | NV/T: Claimed lack of formal notice; judgment is punitive/penal; sought relief under Rule 60(b)(6). | Universal: Notice occurred and cure period elapsed; judgment is a bargained-for term and enforceable; no fraud/mutual mistake or extraordinary circumstances. | Judgment enforceable; notice adequate; not a penalty; no grounds under Rule 60(b)(6) to set aside. |
Key Cases Cited
- Cont'l Ins. Co. v. Adams, 438 F.3d 538 (6th Cir. 2006) (standard of review for summary judgment).
- Fed. Ins. Co. v. Hartford Steam Boiler Inspection & Ins. Co., 415 F.3d 487 (6th Cir. 2005) (contract ambiguity principles).
- Sault Ste. Marie Tribe of Chippewa Indians v. Granholm, 475 F.3d 805 (6th Cir. 2007) (latent ambiguity and use of extrinsic evidence).
- Meagher v. Wayne State Univ., 565 N.W.2d 401 (Mich. Ct. App. 1997) (test whether contract language admits only one interpretation).
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment evidence and drawing inferences).
- Scott v. Harris, 550 U.S. 372 (2007) (court need not adopt party's version of facts blatantly contradicted by record).
- Williams v. Vukovich, 720 F.2d 909 (6th Cir. 1983) (consent judgments are hybrid contract/judicial acts and should be strictly construed).
- Frew ex rel. Frew v. Hawkins, 540 U.S. 431 (2004) (consent decrees may be enforced by courts).