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Edward E. Gatz Dennis C. Russell Marvin J. Frank Earl R. Willats Jack Shelley, James J. And Patricia Phalen Marlene W. Hechtman Vale H. Sorensen Larry E. Haack Raymond G. And Dorothy Alvine, William Chapman, Glenn A. Goodrich Allen E. Zencka Joseph Lynch Vincent Runco Larry L. Hald Donald D. Kerr Kermit A. Brashear, II Peter D. Knott Dennis D. Weiss William Wolfe Frank Cernik Frank Cernik, Trustee and Buckeye Pizza Corporation v. Southwest Bank of Omaha Packers National Bank Security National Bank of Omaha Bank of Millard U.S. National Bank of Omaha First West Side Bank the Omaha National Bank Northwestern National Bank First National Bank of Omaha Center Bank American National Bank Bank of the Midlands Ames Bank and First Westroad Bank v. The Federal Deposit Insurance Corporation, as Receiver of Penn Square Bank, N.A., Intervenor. Edward E. Gatz Dennis C. Russell Marvin J. Frank Earl R. Willats Jack Shelley James J. And Patricia Phalen Marlene W. Hechtman Vale H. Sorensen Larry E. Haack Raymond G. And Doroth

Citation: 836 F.2d 1089Docket: 87-1094

Court: Court of Appeals for the First Circuit; March 3, 1988; Federal Appellate Court

Narrative Opinion Summary

This case involves appeals by William Chapman and Norwest Bank Nebraska, N.A. against district court rulings related to a settlement agreement stemming from securities litigation. Chapman contested the enforcement of a settlement agreement with the FDIC and Continental Illinois National Bank and Trust Company (CINB), arguing it encompassed all his investments, while the court limited it to those listed in Exhibit A of the agreement. The court found the settlement agreement clear and enforceable, dismissing Chapman’s claims of unilateral mistake and misunderstanding of scope. Furthermore, the court upheld judgments in favor of CINB, a nonparty, by treating their involvement in the settlement enforcement as an intervention. Norwest Bank challenged an order requiring it to honor a letter of credit issued for Chapman, contending it was released by the settlement. However, the court ruled the letter of credit obligations were independent of the settlement, mandating Norwest to fulfill it. The district court's judgments were affirmed, with the court emphasizing the contract's clarity and the independence of obligations under the letter of credit.

Legal Issues Addressed

Enforcement of Settlement Agreements

Application: The district court enforced a settlement agreement that was deemed clear and unambiguous, thereby dismissing arguments related to subjective intent or unilateral mistake.

Reasoning: The court deems the settlement agreement enforceable as it is clear and unambiguous, with no significant factual disputes warranting a hearing.

Independence of Letter of Credit Obligations

Application: The court affirmed that obligations under a letter of credit are independent of the settlement agreement, requiring Norwest to honor it.

Reasoning: The court affirms that the letter of credit is a separate contract, making Norwest's lack of involvement in the settlement agreement irrelevant.

Judgment in Favor of Nonparty

Application: The court exercised discretion to treat a motion as an intervention, allowing judgment in favor of a nonparty actively involved in the settlement motion.

Reasoning: CINB was involved in the motion to enforce the settlement and was designated as the payee in the agreement, justifying the court’s discretion to treat the motion as an intervention.

Scope of Settlement Agreement

Application: The court found that the settlement agreement only covered investments listed in Exhibit A, rejecting claims that it extended to other investments.

Reasoning: The court found the language clear, noting that the agreement specifically pertained to the investments listed, which included only Chapman's investment in the 1980 PDP program.

Unilateral Mistake in Contract Enforcement

Application: A unilateral mistake does not invalidate a contract under Oklahoma law unless accompanied by fraud or misrepresentation, which Chapman did not establish.

Reasoning: Since Chapman has only alleged a unilateral mistake without asserting any inequitable conduct by the FDIC, he fails to establish a valid affirmative defense against the agreement's enforcement.