JOHNNIE SIMS-MADISON, Plaintiff-Appellant, v. INLAND PAPERBOARD AND PACKAGING, INC. (f/k/a INLAND CONTAINER CORP.), Defendant-Appellee.
No. 03-2752
United States Court of Appeals For the Seventh Circuit
Argued May 19, 2004—Decided August 11, 2004
CUDAHY, RIPPLE, and WILLIAMS, Circuit Judges.
Appeal from the United States District Court for the Southern District of Indiana, Evansville Division. No. EV 01-125-C-Y/H—Richard L. Young, Judge.
WILLIAMS, Circuit Judge. Johnnie Sims-Madison is an African-American woman who was employed at Inland Paperboard and Packaging’s Evansville, Indiana, plant until early 2000, when she was fired for fighting with another employee. Sims-Madison brought a
Sims-Madison and a co-worker, Mike Faver, were fired for fighting in January 2000. The Paper, Allied-Industrial, Chemical and Energy Workers International Union (the “Union”), which represented both employees under a сollective bargaining agreement, immediately filed grievances protesting their terminations. The following month, Sims-Madison filed a charge with the EEOC alleging racial and gender discrimination and retaliation by Inland. She also hired attorney Kevin Kinkade to represent her.
In Deсember 2000, while Sims-Madison and Inland were participating in the EEOC’s mediation program, Kinkade sent the mediator a letter. This letter, which is the settlement agreement,1 stated:
This letter serves to confirm that my client, Johnnie Sims Madison, has agreed to the following:
- She will give up arbitration of her termination;
- She will give up her EEOC Charge and nоt file any additional charges for any conduct which predates the Agreement;
- She will agree that she will not be reinstated and cannot apply for re-employment with the company; and
- She will execute a proper and appropriate relеase of claims.
In exchange, Kinkade wrote that Inland would pay Sims-Madison $30,000. William Hewett, an in-house attorney for Inland, also received a copy of the letter; on the letter below
Despite the first point of the agreеment that purported to drop Sims-Madison’s union grievance, the Union and Inland proceeded in February 2001 to arbitrate the grievances concerning Sims-Madison’s and Faver’s terminations. In May, the arbitrator reduced both terminations to 60-day suspensions and awarded both еmployees backpay and benefits dating back to January 2000 (with the exception of the suspension period). Inland reinstated both employees, but paid backpay and benefits only to Faver. In July 2001, Sims-Madison (who had returned to work) sued Inland for firing her in January 2000, alleging that the company’s actions were motivated by racial and gender discrimination and retaliation.
In its answer to Sims-Madison’s complaint, Inland pleaded the affirmative defense of accord and satisfaction. Inland later moved for summary judgment on a number of grounds, and in November 2002 the district court granted Inland’s motion solely based on accord and satisfaction, finding that a “valid, binding and enforceable settlement agreement was reached.” The court also stated that it “enforces those
Eight days after the district court issued its order, Inland fired Sims-Madison for a second time. Inland claims that the district court’s enforcement of the agreement, specifically its third point—which provided that Sims-Madison would not be rеinstated and could not apply for re-employment—authorized it to fire her. Sims-Madison’s second discharge prompted the Union to file a separate suit2 against Inland claiming that Inland illegally violated the arbitrator’s award by refusing to pay her the backpay and benefits, and by firing her for the same incident for which the arbitrator had ordered her reinstated. The Union’s lawsuit is not before us, and we express no opinion on its merits.
Sims-Madison then moved under
II. ANALYSIS
Sims-Madison appeals (1) the district court’s enforcement of the settlement agreement, (2) the grant of summary judgment for Inland, and (3) the denial of her
We review the grant of summary judgment de novo. Lang v. Ill. Dep‘t of Children & Fam. Servs., 361 F.3d 416, 418 (7th Cir. 2004). We review for an abuse of discretion both the enforcement of the settlement agreement, Hakim v. Payco-Gen. Am. Credits, Inc., 272 F.3d 932, 935 (7th Cir. 2001), and the denial of Sims-Madison’s
B. Enforcement of the Settlement Agreement
Sims-Madison argues that the district court erred by enforcing the settlement agreement because Inland never requested enforcement, either in its motion for summary judgment or at any other time during the proceedings in the district court. Issues regarding the formation, construction, аnd enforcement of settlement agreements are governed by state contract law. Pohl v. United Airlines, Inc., 213 F.3d 336, 338 (7th Cir. 2000). All of the pertinent events in this case occurred in Indiana, and the parties agree that Indiana law controls. In its motion for summary judgment, Inland asserted accord and satisfаction—an affirmative defense, Mominee v. King, 629 N.E.2d 1280, 1282 (Ind. Ct. App. 1994)—as one possible ground for granting the motion. But by enforcing the settlement agreement, the court ordered specific performance of the terms of the agreement, and specific performance is a contractual remedy rather than an affirmative defense. See Wagner v. Spurlock, 803 N.E.2d 1174, 1180 (Ind. Ct. App. 2004). Although Inland had referenced the agreement when it moved for summary judgment on the ground of accord and satisfaction, the only relief it ever requested in that motion was the dismissal of Sims-Madison’s
The district court acted sua sponte when it went beyond the relief Inland requested and ordered enforcement of the
In opposition to Inland’s motion for summary judgment, Sims-Madison argued that the agreement was not binding (and hence there was no accord and satisfaction) because she never authorized Kinkade to settle the union grievance. See Koval v. Simon Telelect, Inc., 693 N.E.2d 1299, 1301 (Ind. 1998) (attorney must be authorized to settle or act pursuant to inherent agency power before he can bind his client to a settlement agreement). She also argued that in any event she could not have authorized Kinkade to settle the grievance because the
But the district court’s resolution is insufficient because the third provision of the agreement prohibiting Sims-Madison’s reinstatement seеmingly conflicts with the arbitration award ordering her reinstatement. The existence of the arbitration award renders ambiguous the otherwise clear language of the third point of the agreement. Although a district court has the inherent authority to summarily enforce a settlement agreement, Carr v. Runyan, 89 F.3d 327, 331 (7th Cir. 1996); Wilson v. Wilson, 46 F.3d 660, 667 (7th Cir. 1995), when the existence or terms of a settlement agreement are in dispute, the district court should hold an evidentiary hearing to resolve the disputes or ambiguities, id. at 664. Here, the agreement’s term concerning Sims-Madison’s reinstatement is in tension with the arbitratоr’s award. The validity of the third point is further in doubt because federal courts generally must enforce an arbitration award that results from a proceeding pursuant to a collective bargaining agreement. Dean v. Sullivan, 118 F.3d 1170, 1171 (7th Cir. 1997). Challenges to an arbitrator’s award must be made within 90 days or they are waived. See
The district court, however, did not consider any of these issues because it enforced the settlement agreement sua sponte without giving Sims-Madison an opportunity to raise them before it issued its order. This was an abuse of discretion. As the district court оbserved, Sims-Madison
C. Accord and Satisfaction
Sims-Madison also challenges the grant of summary judgment in favor of Inland because she claims that there was never an accord and satisfaction. Accord and satisfaction is an affirmative defense that must be specifically рleaded and proven by the party raising it. Mominee, 629 N.E.2d at 1282. An “accord” is an express contract by which the parties agree to settle a dispute, and a “satisfaction” is the parties’ performance of their contractual obligations. Reed v. Dillon, 566 N.E.2d 585, 590 (Ind. Ct. App. 1991). To prove an accоrd and satisfaction, a party must establish that: (1) there is a good faith dispute, (2) the disputed sum is unliquidated, (3) there is consideration, (4) the parties had a meeting of the minds with the intent to settle the dispute, and (5) the contract was performed. Sedona Dev. Group, Inc. v. Merrillville Rd., LP, 801 N.E.2d 1274, 1278 n.1 (Ind. Ct. App. 2004). Inland must meet its burden of proof “on each of the elements of the defense.” Reed, 566 N.E.2d at 590 (emphasis added).
Furthermore, regardless of the deficiencies in Inland’s pleadings or any question about the validity of the agreement, the record makes сlear that Inland has never paid Sims-Madison anything, and accordingly it has not performed its obligations under the contract, as required to establish an accord and satisfaction. See Sedona Dev. Group, Inc., 801 N.E.2d at 1278 n.1. Inland responds with the misplaced argument that it was excused from tendering performance when Sims-Madison repudiated the agreement by refusing to sign the release. Although Inland was allowed to refuse performance once it knew that Sims-Madison had repudiated the contract, see Eden United, Inc. v. Short, 573 N.E.2d 920, 929 (Ind. Ct. App. 1991), its right to refuse performance is irrelevant to the question of whether an accord and satisfaction was reached. Inland could not establish satisfaction simply by promising to perform its obligations if Sims-Madison performed hers—it was required to prove that it did perform, see Chesak v. N. Ind. Bank & Trust Co., 551 N.E.2d 873, 875 (Ind. Ct. App. 1990), not simply that it was willing to perform.
Inland did not meet its burden to prove that there was an accord аnd satisfaction, and the grant of summary judgment in its favor is vacated.
Finally, Sims-Madison appeals the denial of her motion under
III. CONCLUSION
The order enforcing the settlement agreement, and the grant of summary judgment in Inland’s fаvor are VACATED, and this case is REMANDED to the district court for further proceedings consistent with this opinion.
A true Copy:
Teste:
Clerk of the United States Court of Appeals for the Seventh Circuit