United States District Court, S.D. Indiana, Indianapolis Division
GREGORY S. FEHRIBACH Trustee for the Bankruptcy Estate of BRIYIN BUTGEREIT, Plaintiffs,
FEDEX CORPORATE SERVICES, INC, Defendant.
GREGORY S FEHRIBACH, Plaintiff, represented by Craig M.
Williams, FOX WILLIAMS & SINK LLC.
GREGORY S FEHRIBACH, Plaintiff, represented by Ryan C. Fox,
FOX WILLIAMS & SINK LLC.
CORPORATE SERVICES, INC, Defendant, represented by Carl K.
Morrison, FEDERAL EXPRESS CORPORATION, pro hac vice,
Elizabeth Low, FEDERAL EXPRESS CORPORATION, M. Kimberly
Hodges, FEDEX LEGAL DEPARTMENT, pro hac vice & Pamela A.
Paige, PLUNKETT COONEY, PC.
REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION
TO ENFORCE SETTLEMENT AGREEMENT
BAKER, Magistrate Judge.
Gregory S. Fehribach, Trustee for the Bankruptcy Estate of
Briyin Butgereit, has filed a motion to enforce settlement
agreement. [Filing No. 52.] The existence of a signed
settlement agreement is not in dispute. The only issue
presented by this motion is whether a part of the agreed
settlement amount is subject to employment tax withholdings.
The Magistrate Judge finds it is not. For the reasons
explained below, Plaintiff's motion should be granted.
April 23, 2016, the parties agreed to settle this case. The
signed settlement agreement states, in its entirety:
"Subject to Bankruptcy court approval, the parties agree
to settle Cause No. 1:15-cv-0055-SEB-TAB for payment of $30,
000 to Gregory S. Fehribach, trustee for the Bankruptcy
Estate of Briyin Butgereit." [Filing No. 52-1.] The
bankruptcy court subsequently approved the settlement.
[Filing No. 52-2.] However, Defendant FedEx has yet to make
the settlement payment. As a result, Fehribach asks this
Court to enforce the settlement agreement.
explaining its failure to pay the settlement proceeds, FedEx
asserts that Butgereit's complaint makes a claim for
wages. FedEx maintains that during settlement negotiations it
accordingly allocated 20% of the settlement amount for wages.
As a result, FedEx argues that 20% of the $30, 000 settlement
amount, or $6, 000, should be subject to employment tax.
[Filing No. 53, at ECF p. 3.] Fehribach contends this was not
part of the agreement and that FedEx must pay the full $30,
000 to Fehribach in one check.
settlement agreement is enforceable if there was a meeting of
the minds or mutual assent to all material terms."
Beverly v. Abbott Labs., 817 F.3d 328, 333 (7th Cir.
2016). Material terms are "sufficiently definite and
certain" when a court is able to ascertain "what
the parties agreed to do." Id.
settlement agreement sufficiently defines the parties'
intention that the settlement proceeds are to be paid in one
check, without wage allocation. The material terms in the
agreement clearly provide that Fehribach agreed to settle
this case-voluntarily dismiss the claims between Butgereit
and FedEx-in exchange for FedEx's payment of $30, 000 to
Fehribach. The material terms also provide that the
bankruptcy court must approve the settlement. Both parties
and their respective attorneys signed the agreement,
demonstrating their intent to be bound by these terms. There
are no terms in this agreement that suggest the parties
mutually agreed to allocate a portion of the payment as
wages. The only definite and certain material terms are
payment of $30, 000 in exchange for settlement of the case,
upon the bankruptcy court's approval. Thus, these are the
enforceable terms of the settlement agreement.
appears that FedEx unilaterally allocated 20% of the
settlement payment to wages. The settlement agreement does
not specify a wage allocation and the parties recall the
discussion about it differently. Fehribach recalls that FedEx
agreed to pay the entire settlement amount in "one
check, not paid as wages and with no taxes withheld."
[Filing No. 52, at ECF p. 2.] FedEx disagrees, recalling that
a concurrence on the allocation of the settlement payment to
wages was never reached by the parties. [Filing No. 53, at
ECF p. 2.] The undersigned conducted the settlement
conference that resulted in the settlement agreement, and
Fehribach made it crystal clear that he would not settle the
case by apportioning a percentage of the proceeds as taxable
wages. The parties did not mutually agree to allocate any
part of the payment as wages. Therefore, doing so is
unenforceable by the settlement agreement.
overcomplicates the issue by looking to the Bankruptcy Code
for guidance. FedEx points to Â§ 1115 of the Bankruptcy Code
as support for its desire to allocate a portion of the
payment as wages. However, Butgereit filed for Chapter 7
liquidation and Â§ 1115 only applies to a Chapter 11
reorganization. As Fehribach points out, this case is a part
of Butgereit's Chapter 7 bankruptcy estate and no part of
the settlement payment will go to her or any other FedEx
employee. If a portion of the settlement proceeds are
reported as wages, Fehribach, who has never worked for FedEx,
would presumably receive a W-2 or 1099 for that amount. This
is unnecessary, unworkable, and nonsensical. FedEx agreed to
pay $30, 000 in exchange for Fehribach's dismissal of the
case. The Bankruptcy Code does not dictate that any part of
this payment should be reported as wages.
refusal to pay the full settlement amount of $30, 000 to
Fehribach breaches the enforceable terms of the settlement
agreement. Accordingly, Fehribach's motion [Filing No.
52] should be granted. Any objections to the Magistrate
Judge's Report and Recommendation shall be filed with the
Clerk in accordance with 28 U.S.C. Â§ 636(b)(1). Failure to
file timely objections within fourteen ...