Hardin v. Mendocino Coast District Hospital

Background

Ellen Hardin brought an employment case against her former employer, Mendocino Coast District Hospital (MCDH), and three individual defendants: Bob Edwards, MCDH’s chief executive officer; Steve Lund, the president of MCDH’s board of directors; and Wade Sturgeon, MCDH’s chief financial officer. Her claims included alleged retaliation under the federal False Claims Act.

The parties attended mediation on September 22, 2019. The mediator circulated a proposal that required a $2,750,000 payment for personal-injury damages and stated that the defendants would coordinate with a structured-annuity planner concerning the settlement’s tax language. The defendants later sent the mediator a revised memorandum of understanding. It required MCDH and/or BETA Healthcare Group to pay $2,750,000 by check payable to “Ellen Hardin and the Trust Account of the Law Office of Twila S. White.” It also stated that appropriate tax forms would be issued and that Hardin could choose to put all or part of the settlement into an annuity. The revised document did not require the defendants to coordinate with an annuity planner or take other steps to structure the settlement.

Hardin and her counsel signed the revised memorandum on October 11, 2019. The document stated that it would be treated as an enforceable, binding settlement until the parties signed a longer agreement. Hardin then moved to enforce the settlement and asked the court to require the defendants to participate in arranging the structured payments. The defendants argued that the settlement should be enforced without structured payments.

Court’s analysis

The court stated that the parties did not dispute signing the revised memorandum and that no evidentiary hearing was needed to determine whether an agreement existed or what its terms were. Applying California contract principles, the court examined the parties’ objective agreement and conduct.

The court concluded that the revised memorandum was an enforceable settlement. It also concluded that the agreement did not require the defendants to participate in structuring the settlement. The defendants had removed the mediator’s proposed coordination language, effectively making a counteroffer that preserved Hardin’s option to purchase an annuity but did not require the defendants to help arrange it. By signing the revised memorandum, Hardin agreed to those terms.

The court found the agreement unambiguous. It required payment by check payable to Hardin and the trust account of the Law Office of Twila S. White, while allowing Hardin to structure some or all of the proceeds into an annuity. The court rejected interpreting the agreement to require coordination with an annuity planner. It did not decide whether Hardin’s proposed structured settlement was allowed under the United States Tax Code.

Disposition

The court granted in part and denied in part Hardin’s motion to enforce the settlement agreement. It held that the parties had an enforceable settlement, but that the settlement required only payment of $2,750,000 by the specified check and did not require the defendants to participate in structuring the settlement.

The order stated that by January 31, 2019, the parties had to file either a stipulation of dismissal or a one-page joint statement explaining why they could not file one. It also set a case-management conference for February 11, 2020, which would be automatically canceled if a timely stipulation of dismissal was filed. All other deadlines and hearings were vacated.