United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
Lindsay United States District Judge
the court are Plaintiffs' Opposed Motion to Enforce
Mediated Settlement Agreement (“Motion”) (Doc.
100), filed December 15, 2015; Plaintiffs' Supplemental
Motion to Enforce Mediated Settlement Agreement
(“Supplemental Motion”) (Doc. 115), filed January
21, 2016; and Plaintiffs' Motion for Leave to File Under
Seal Plaintiffs' Reply in Support of Objections to
Findings, Conclusions, and Recommendation of the United
States Magistrate Judge (Doc. 158), filed September 7,
2016. In their Motion and Supplemental Motion
(collectively, “Motions”), Plaintiffs request
that the court require Defendants “to execute the
settlement documents which have been agreed upon, with the
previously agreed upon but unincorporated modifications,
including the Agreed Final Judgement proposed by Plaintiffs.
Alternatively, Plaintiffs respectfully request that the Court
enforce the mediated Settlement Agreement as written.”
Pls.' Mot. 7, Pls.' Supp. Mot. 5.
7, 2016, United States Magistrate Judge Paul D. Stickney
entered the Findings, Conclusions and Recommendation of the
United States Magistrate Judge (“Report”) (Doc.
140), recommending that the court grant in part and deny in
part Plaintiffs' Motions. Specifically, the magistrate
judge recommended that the court grant Plaintiffs'
request to enforce the mediated settlement agreement to the
extent set forth in the Report but deny Plaintiffs'
request for an award of attorney's fees and sanctions
MedVision, Inc. (“MedVision”); Medi-Tech Medical
Billing Services, Inc. (“Medi-Tech”); Phycom
Group, Inc. (“Phycom”); Kenneth S. Alston
(“Alston”); and Alexander Wang
(“Wang”) (collectively, “Plaintiffs”)
and Defendant Gregory Hackney (“Hackney”) filed
objections to the Report. Plaintiffs object to the magistrate
judge's recommendation regarding attorney's fees.
Plaintiffs also seek clarification or object to the extent
that the magistrate judge “did not recommend that the
District Court also Order the Defendants to execute the
Agreed Judgment and the Defendants' Notice of Dismissal
of Counterclaims with Prejudice which will be presented to
Defendants due to their uncured default.” Pls.'
Obj. 4. In addition, Plaintiffs object to the extent that the
magistrate judge did not address their request for the court
to retain jurisdiction “over this matter to ensure
compliance with the [MSA] and for purposes of enforcement of
the judgment.” Pls.' Obj. 4. Hackney objects to the
magistrate judge's recommendation requiring Defendants to
execute an agreed judgment and contends that the magistrate
judge correctly denied Plaintiffs' request for
attorney's fees and sanctions.
Motion for Leave to File Under Seal Plaintiffs' Reply in
Support of Objections to Findings, Conclusions, and
Recommendation of the United States Magistrate Judge (Doc.
158) is granted, and the clerk shall file under seal with a
file date of September 7, 2016, the reply brief and the
exhibits to the reply brief that are attached to the Motion
for Leave. After considering Plaintiffs' Motions to
enforce the parties' mediated settlement agreement
(“MSA”), Plaintiffs' Complaint, the
parties' briefs, the MSA, the documents that Plaintiffs
seek to have Defendants execute, Plaintiffs' evidence of
Defendants' default, and the Report, and conducting a de
novo review of the portions of the Report to which objection
was made, the court, for the reasons set forth herein,
accepts as herein modified the findings and conclusions of
the magistrate judge. Specifically, the court rejects the
magistrate judge's findings and conclusions regarding an
agreed judgment; accepts the magistrate judge's findings
and conclusions that Plaintiffs have not established an
uncured default by Defendants; and accepts the magistrate
judge's findings and conclusions regarding
Plaintiffs' request for attorney's fees and
sanctions. The court overrules Plaintiffs' objections,
sustains Hackney's objections to the extent that the
court concludes that Plaintiffs are not entitled to the
relief sought, and denies Plaintiffs' Motions (Docs. 100,
115). Additionally, Plaintiffs' request in their
objections to submit evidence in support of their request for
attorney's fees is denied.
Factual and Procedural Background
January 12, 2015, Plaintiffs brought this action against
Butani Capital Investment Fund II, LLC (“BCIF”);
Dinesh K. Butani (“Butani”) (collectively,
“Butani Defendants”); and Hackney. For purposes
of this order, the court refers collectively to the foregoing
parties as “Defendants.” Plaintiffs also sued
MediGain, LLC (“MediGain”), which was dismissed
from this action on December 21, 2015, pursuant to an agreed
motion. In their Second Amended Complaint
(“Complaint”), Plaintiffs allege that this
litigation pertains to certain Asset Purchase Agreements or
“APAs” whereby BCIF, as buyer, and MediGain, as
guarantor, agreed to purchase substantially all of the assets
of medical billing companies MedVision, MediTech, and Phycom.
Plaintiffs allege that Defendants, including Medigain,
breached the APAs by failing to make required scheduled
payments and fraudulently induced Plaintiffs to enter the
APAs. Plaintiffs' Complaint includes claims against
Defendants for breach of contract (BCIF); common law fraud
(BCIF, Hackney, Butani); statutory fraud (BCIF, Hackney,
Butani); negligent misrepresentation (BCIF, Hackney, Butani);
breach of guaranty (Hackney, Butani); conspiracy (BCIF,
Hackney, Butani); and breach of fiduciary duty (BCIF,
Hackney, Butani). Plaintiffs also requested relief against
BCIF under the equitable theories of money had and received,
restitution, and unjust enrichment, and sought to recover
economic damages, exemplary damages, an accounting, a
constructive trust, disgorgement of monies and profits
received by Defendants, attorney's fees, interest, and
November 4, 2015, Plaintiffs and Defendants participated in
mediation and reached what the parties refer to as a
“Mediated Settlement Agreement” or “MSA,
” which is signed by Plaintiffs and Defendants.
Pls.' App. 1-4 (Doc. 102). The MSA includes certain
standard typed settlement language, as well as handwritten
language regarding the specific terms of the parties'
agreement. The MSA provides in pertinent part as follows:
On this 4th day of November, 2015, [Plaintiffs and
Defendants] met in mediation in the matter of: MedVision,
Inc. et al. v. MediGain, LLC, et al., Case No.
3:15-CV-00077-L and settled all matters in controversy
between and among the parties whose signature appear below.
All parties acknowledge that: (1) they freely participated in
the mediation process; (2) they enter[ed] into this
settlement agreement in good faith; (3) they relied upon
their own good judgment and independent legal advice of their
own counsel and not on the representation, if any, of the
mediator; and (4) that no coercion, duress or undue influence
was used by any party, attorney, or mediator to obtain their
signature and consent to settle this matter on the following
1. Parties to request administrative closure of case within 3
days after final Settlement Agreement executed.
2. Settlement Payment made specifically for breach of
contract claims against [BCIF] and breach of guaranty claims
against . . . Hackney and . . . Butani. In consideration for
the Settlement Payment, and other good and valuable
consideration, the parties to this [MSA] release all claims
as set forth in Paragraph 7 below.
3. Total payment of $850, 000 (the “Settlement
Payment”) by [BCIF], . . . Hackney, and/or . . .
Butani, as follows:
(a) $50, 000 on or before Jan. 15, 2016;
(b) $50, 000 on or before May 15, 2016; and continuing $50,
000 per month on the 15th of each month thereafter for
sixteen months. . . ($80, 000 in total monthly payments).
This payment obligation by Defendants is joint and
4. Secured by an Agreed Judgment in favor of . . . Alston and
. . . Wang, individually, against BCIF, . . . Hackney, and .
. . Butani, jointly and severally, in the amount of $850, 000
less amounts paid, including interest at the state judgment
rate. Agreed Judgment will include statement that all five
Plaintiffs sued and it is agreed that the Agreed Judgment is
in favor of Alston and Wang.
5. Maximum of two notices of default and seven calendar day
opportunity to cure.
6. In the event of uncured default, Plaintiffs may present
Agreed Judgment for entry and Defendants' Notice of
Dismissal of Counterclaims with Prejudice. If all settlement
funds are paid, Plaintiffs shall file an Agreed Dismissal
with Prejudice and return the Agreed Judgment to counsel for
[BCIF], Butani, and Hackney.
7. Except for the payment obligations contained herein and
the Agreement Judgment, Plaintiffs/Counter-Defendants, on the
one hand, and Defendants, on the other hand, including
officers, directors, representative, etc. of each, fully and
completely mutually release the others (including officers,
directors, representatives, etc.) [f]rom any and all claims,
liabilities, causes of action, demands, and damages that they
have alleged or could have alleged against the other. This
includes release of obligations under the APAs and APA
8. Mutual [s]tandard confidentiality.
9. Mutual [n]o admission of liability.
10. Mutual [n]o assignment of claims.
11. All parties bear [their] own costs, and attorney's
fees, and expenses in connection with claims against each
12. Defendants to file Dismissal of Counterclaims Without
Prejudice within 3 business days of for[mal] signed final
13. Mutual standard knowing and voluntary agreement.
14. No unwritten representations, not induced to enter
Settlement Agreement by representations by the other
15. Governed by Texas law without regard to conflicts of law
16. Applies to successors in interest, purchasers, and
17. Standard severability provision.
18. Language of Settlement Agreement construed as a whole and
not for or against any party hereto.
This settlement agreement is intended to be a full and final
settlement agreement containing all material terms even
though the parties may prepare a more formal settlement
document, release language and dismissal papers, and it is
[an] otherwise valid and enforceable agreement. . . .
Butani's counsel will prepare release and dismissal
papers and send them to opposing counsel by Nov. 16, 2015.
Signed this 4th day of November, 2015.
Pls.' App. 1-4 (Doc. 102).
letter dated November 10, 2015, the mediator notified the
court that the case had settled, and it was the
mediator's understanding that agreed filings would be
submitted pursuant to the parties' settlement. The court,
therefore, administratively closed the case on November 12,
2015, and directed the parties to file a stipulation or
notice of dismissal or agreed motion to dismiss this action
by May 10, 2016.
the case was administratively closed, the parties, according
to Plaintiffs' Motion, undertook efforts through their
counsel to “finalize their settlement with formal
settlement documentation.” Pls.' Mot. 2. The
parties' efforts in this regard, however, were stymied
when they were unable to agree whether certain additional
language should be included in the final versions of the MSA
and, in particular, the “Agreed Judgment”
referenced in the MSA, based on the parties' respective
understandings of the MSA. Plaintiffs' Motions to enforce
the MSA (Docs. 100, 115) followed on December 31, 2015, and
January 21, 2016, respectively, and the Butani Defendants and
Hackney filed responses in opposition to the motions.
styled as Motions to enforce the MSA, the major issue of
contention is the parties' disagreement regarding the
scope and substance of the “Agreed Judgment”
referenced in the MSA, and whether the MSA required the
parties to execute an agreed judgment and other formal
documentation to finalize the parties' settlement. During
the course of the parties' briefing, Plaintiffs also
asserted that Defendants had failed to make payments as
required by the MSA. The briefing with respect to these
motions and related motions filed by the parties was
completed on September 20, 2016, including their briefing
regarding objections to the magistrate judge's findings
and recommendation. For the reasons herein explained, the
court concludes that Plaintiffs are not entitled to the
Plaintiffs' Motions and Requested Relief
Original Motion to Enforce MSA (Doc. 100)
their Motion, Plaintiffs contend that Defendants breached the
MSA by failing to finalize and execute “formal
settlement documents” and an agreed judgment in
accordance with the MSA. Pls.' Mot. 2-3. Plaintiffs
contend that the withdrawal of Defendants' counsel
“is yet another tactic by these Defendants to delay the
finalization of formal settlement documents and to delay the
required and agreed performance of these same Defendants
under the terms of their [MSA].” Id. at 3.
Plaintiffs, therefore, assert that they had no option but to
file their Motion to enforce the MSA, “as they have
worked diligently over a more than reasonable period of time
to get these Defendants to cooperate and finalize the
settlement consistent with the terms of the [MSA], to no
avail.” Id. In addition, Plaintiffs express
concern regarding deadlines included in the MSA for
Defendants' payment obligations:
Despite the passage of almost two months since mediation,
repeated and constant attempts by Plaintiffs' counsel to
secure the cooperation and attention of these Defendants and
their counsel to finalize their settlement with formal
settlement documentation, and rapidly approaching obligations
on the part of these Defendants, Defendants have now, at the
eleventh hour, inserted and insist upon language in an Agreed
Final Judgment which was not contemplated by the parties in
the mediated settlement agreement and which is not agreeable
Id. at 2. Plaintiffs request that the court enter an
order enforcing the MSA by requiring Defendants to:
execute the formal settlement documents which have been
agreed upon by these parties [App. 118-125; 174-204], as
modified by the additional previously agreed upon but
unincorporated changes as noted in Plaintiffs'
counsel's email of December 22, 2015 [App. 222] and that
the Court further Order these Defendants to execute the
Agreed Final Judgment proposed by Plaintiffs [App. 233-242]
or otherwise enter a Final Judgment consistent with the
mediated settlement agreement providing the relief to which
Plaintiffs are entitled and to which Defendants agreed.
Pls.' Mot. 3; Pls.' Reply in Support of Mot. 5 (Doc.
137). Plaintiffs contend that “Defendants misrepresent
that Plaintiffs seek to have the Court order Defendants to
sign an agreed judgment [that] would be a judgment on all
causes of action.” Pls.' Reply 4 (Doc. 137).
Plaintiffs assert that, although their proposed agreed
judgment lists all of the claims and counterclaims asserted
by the parties in this case, it “does not make a
specific finding as to any cause of action.”
Plaintiffs request that the court enforce the MSA as written.
Plaintiffs contend that Defendants should be required to
execute an agreed judgment at this time because “[a]n
Agreed Judgment was obviously agreed upon by the parties and
is a material part of the MSA.” Id. Plaintiffs
contend that an agreed judgment “was to be prepared
contemporaneously with the formal settlement documents since
it is the security for the settlement payments and [was ] to
be entered in the event of an uncured default.”
Id. Plaintiffs also request that the court
“extend the administrative closure of this case and
otherwise retain jurisdiction until ...