MARK McVAY, Individually and as a General Partner of U.S. TEXTILE Plaintiff,
MELINDA E. LAUCKS; U.S. TEXTILE, INC. Defendants.
Providence County Superior Court
For Plaintiff: John D. Deacon, Esq.
For Defendant: Melinda E. Laucks, pro so
Special Masters: W. Mark Russo, Esq. John Dorsey, Esq.
Before this Court are cross Motions to Enforce, or in the alternative, to Nullify the Joint Release and Settlement Agreement (Release Agreement) executed by the disputed owners of U.S. Textile, Inc. (U.S. Textile), Mark McVay (Plaintiff or Mr. McVay) and Melinda Laucks (Defendant or Ms. Laucks). This Court held a two-day evidentiary hearing on December 10 and 15, 2014, whereby evidence was adduced by both parties regarding the validity of the Release Agreement. Evidence was also submitted regarding the Second Settlement Agreement (the Second Settlement Agreement) and whether it nullifies the Release Agreement. Jurisdiction is pursuant to G.L. 1956 § 8-2-14.
Standard of Review
A party may seek enforcement of a settlement agreement when there has been a breach of the agreement's terms. Malave v. Carney Hosp., 170 F.3d 217, 220 (1st Cir. 1999). "[A] trial court may not summarily enforce a purported settlement agreement if there is a genuinely disputed question of material fact regarding the existence or terms of that agreement." See id.; see also Bamerilease Capital Corp. v. Nearburg, 958 F.2d 150, 152 (6th Cir. 1992). The Court must hold an evidentiary hearing if there is a dispute regarding the existence or validity of a settlement agreement. Graley v. Yellow Freight Sys, Inc., 221 F.2d 1334 (6th Cir. 2000). "In order to enforce the agreement, the court must find that the parties have agreed on all material terms of the settlement." See id. This court is not permitted to alter the terms of the agreement, but must enforce the settlement as agreed to by the parties. See id. Therefore, if the settlement "collapses before the original suit is dismissed, the party seeking to enforce the agreement may file a motion with the [Court]." Fid. and Guar. Ins. Co. v. Star Equip. Corp., 541 F.3d 1, 5 (1st Cir. 2008) (citing Malave, 170 F.3d at 220).
Findings of Fact
Before reaching the merits of the instant Motions, this Court will preliminarily decide whether the Release Agreement signed by the parties is void or should be enforced. Having reviewed and considered all the evidence presented by the parties, this Court makes the following findings of fact.
The Plaintiff and Defendant were involved, as general partners, in running a business going by the name of U.S. Textile. Although the business was successful, disputes arose between the parties leading to an untenable working relationship. As dissidence grew between the Plaintiff and the Defendant, control over U.S. Textile became a hotly-contested issue. When the Plaintiff lost his ownership interest, he initiated the current litigation alleging the Defendant breached her fiduciary duty by unlawfully removing his ownership interest in U.S. Textile and further sought return of this interest, among other allegations.
With a dispute between the Plaintiff and Defendant as to the ownership of U.S. Textile, managing the business became more onerous. As a result, the Court deemed it necessary to appoint a Special Master to assist in operating and managing U.S. Textile. The Court determined that the Special Master would remain in place while the ownership dispute was ongoing. The Special Master, acting under the authority granted by the Court, hired Seth Schalow (Schalow), a consultant, who was to aid in running U.S. Textile while the litigation continued.
On March 3, 2014, the Defendant sent an e-mail to the Special Master wishing to be absolved from all legal and financial liability relating to U.S. Textile. In her e-mail, the Defendant stated that she no longer wished to have any involvement with the Plaintiff under any circumstances. On April 22, 2014, the parties, under order of the Court, attended mediation in an attempt to resolve their ownership dispute. The court-ordered mediation resulted in the parties reaching a preliminary settlement, which aimed to resolve the long-running dispute between the parties. On April 24, 2014, the Special Master drafted the Release Agreement, memorializing the settlement, and circulated it to the parties for signing.
On May 27, 2014, the Defendant informed the Special Master that she wanted to execute the Release Agreement in order to take a position out of state with another automotive parts supplier. However, the Defendant also requested that paragraph nine of the Release Agreement be removed from the settlement by the Special Master. See Pl.'s Ex. 11. On May 29, 2014, following her e-mail, the Defendant again informed the Special Master of her desire to settle the case immediately. Again, the Defendant objected to the non-compete clause in the Release Agreement. The Defendant stated that the non-compete clause would prevent her from taking another position in the field since any automotive supplier she would be working for already buys and sells Kolon's and Kolon's competitors' materials. See Pl.'s Ex. 12.
On May 30, 2014 at 10:38 a.m., the Plaintiff responded to the Defendant's requests regarding the removal of paragraph nine. In an e-mail to the Special Master, the Plaintiff's attorney stated that the Plaintiff was unwilling to remove the non-solicitation provision. Further, the Plaintiff informed the parties of the Defendant's violation of a Court order preventing her from having any communication with any tier one or tier two suppliers to GM, and as a result, ...