United States District Court, N.D. Ohio, Western Division
JEFFREY J. HELMICK UNITED STATES DISTRICT JUDGE.
April 22, 2013, the government initiated this forfeiture
action involving a $1, 264, 000.00 in cash seized from Ohio
Scrap Corporation, located in Delta, Ohio. Todd Zappone and
Carrie Zappone are the owners and operators of Ohio Scrap
Corporation. The currency allegedly was the subject of
“structuring” by the owners of Ohio Scrap
Corporation in violation of 31 U.S.C. § 5324(a)(3). The
claimants in this case include Ohio Scrap Corporation, their
owners, and The Farmers & Merchants State Bank, which
holds a perfected security interest in the business assets
was not the only litigation involving the Zappones. There
were multiple cases involving all of the claimants in the
Fulton County Common Pleas Court as well as the Bankruptcy
Court in the Northern District of Ohio. Additionally, the
Zappones initiated a Bivens action against the
United States and numerous other individuals in this Court.
See Todd N. Zappone, et al. v. Richard Dailey, et
al., Case No. 3:15-cv-2135 (N.D. Ohio).
December 2013, the parties in this litigation entered into a
partial settlement agreement whereby $500, 000 of the
currency was disbursed, with $400, 000 applied to the amount
owed to Farmers and $100, 000 applied to the Zappones'
2013 income tax liability. (Doc. No. 31-1). In return,
Farmers agreed to subordinate its security interest in the
balance of the currency with the understanding the balance
would be applied to the Zappones' tax obligations for
2009 through 2012. Farmers also agreed to enter into a
forebearance agreement to allow the Zappones a window of
opportunity to liquidate their business free from collection
efforts as well as consenting to dismissal of Ohio
Scrap's Chapter 11 bankruptcy proceeding. (Id.)
February 2014, a forebearance and loan modification agreement
was entered into among Ohio Scrap, Superior 24 Hr. Towing
& Road Service, the Zappones, and Farmers. (Doc. No.
96-2). The forebearance agreement “set forth the
Bank's commitment to hold off on collection efforts for
six months while the Zappones tried to sell their
business.” (Doc. No. 94 at p. 14).
parties appeared before the Honorable David A. Katz on
September 21, 2015, in an attempt to resolve the remaining
claims in the forfeiture action. (Non-document entry dated
October 13, 2015). Judge Katz placed the terms of the
settlement on the record. The entry following the conference
noted the case was settled and a dismissal entry was due by
November 30, 2015. (Id.)
December 2015, I extended the deadline for dismissal or a
status report to February 15, 2016. (Doc. No. 63). In late
February 2016, the Plaintiff advised the Court the Zappones
had retained new counsel and were not inclined to sign the
written settlement agreement circulated to all parties
regarding the September mediation. (Doc. No. 64). Unable to
resolve the dispute, Farmers moved to enforce the settlement
agreement. Following briefing, I held an evidentiary hearing
on July 19, 2016.
the matter is before me on Claimant Farmers & Merchants
State Bank's motion to enforce the settlement agreement.
(Doc. No. 86). Responsive pleadings to this motion include a
response by Dunn Counsel PLC (Doc. No. 88), and those of
Claimants Ohio Scrap Corporation, Carrie Zappone, and Todd
Zappone. (Doc. No. 92). Following the evidentiary hearing,
post-hearing briefing was filed by the Claimant lenders (Doc.
No. 96 and 100), as well as the Claimant borrowers (Do. No.
98). Also pending on the docket are the Zappones' and
Ohio Scrap's motion for summary judgment (Doc. No. 58),
filed prior to the mediation, and motions for charging liens.
(Doc. Nos. 69 and 89).
Applicable Legal Standard
Sixth Circuit “has long recognized the broad, inherent
authority and equitable power of a district court to enforce
an agreement in settlement of litigation pending before
it” “ ‘even if that agreement has not been
reduced to writing.' ” Therma-Scan, Inc. v.
Thermoscan, Inc., 217 F.3d 414, 419 (6th Cir.
2000) (quoting Bostick Foundry Co. v. Lindberg, 797
F.2d 280, 282-83 (6th Cir. 1986) and Brock v.
Scheuner Corp., 841 F.2d 151, 154 (6th Cir.
validity of a settlement agreement was addressed by the Sixth
Circuit in RE/MAX International, Inc. v. Realty One,
Inc., 271 F.3d 633, 645-46 (6th Cir. 2001):
Before enforcing a settlement, a district court must conclude
that agreement has been reached on all material terms.
Brock v. Scheuner Corp., 841 F.2d 151, 154
(6thCir. 1988). Ordinarily an evidentiary hearing
is required where facts material to an agreement are
disputed. Kukla v. Nat'l Distillers Prods. Co.,
483 F.2d 619, 622 (6th Cir. 1973); Aro
Corp., 531 F.2d at 1372. . . . .
The existence of a valid agreement is not diminished by the
fact that the parties have yet to memorialize the agreement.
When parties have agreed on essential terms of a settlement,
and all that remains is to memorialize the agreement in
writing, the parties are bound by the terms of the oral
agreement. Brock, 841 F.2d at 154; Kukla,
483 F.2d 15 621 (observing that the power of the trial court
to enforce a settlement agreement has been upheld even where
the agreement has not been arrived at in the presence of the
court nor reduced to writing).
agreements are governed by contract law and Ohio requires
contracts be interpreted according to the “law of the
place of the contract's making.” The Glidden
Co. v. Kinsella, 386 Fed.Appx. 535, 540 (6th
Cir. 2010), citing Bamerilease Capital Corp. v.
Nearburg, 958 F.2d 150, 152 (6th Cir. 1992).
“To constitute a valid settlement agreement, the terms
of the agreement must be reasonably certain and clear.”
Rulli v. Fan Co., 79 Ohio St.3d 374, 376 (1997).
Katz conducted a mediation on September 21, 2015. At the
evidentiary hearing, Kenneth Baker, counsel for Farmers
testified as to what transpired prior to placing the terms of
the settlement on the record:
Katz early on informed me that the Zappones not only wanted
to try to settle this case, but to wrap up the entire
proceedings, settle the entire case. I told Judge Katz I
would not do that, that I did not come prepared for that, and
that was the purpose of the mediation.
met with Mr. Rojas, and the Zappones had consented to finally
telling me the tax liability, so I then knew that I was
getting approximately $90, 000 as part of the settlement. I
would waive my claim to the attorney's fees. And then
once the settlement agreement had been signed, the parties
would then try to work out settlement of the remaining parts
of those claims.
No. 94 at pp. 18-19).
conclusion of the mediation, Judge Katz read the following
into the record with counsel for all parties present:
Court: The matters were resolved on the following basis.
1. The government has agreed to pay and the claimants have
agreed to accept in full and complete settlement of their
claims for ...