Zahn Law Firm, P.A., Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-1487

Zahn Law Firm, P.A.,
Respondent,

vs.

Ronald Baker,
Appellant.

Filed July 15, 2019
Affirmed
Johnson, Judge

Hennepin County District Court
File No. 27-CV-15-15345

Matthew R. Zahn, Zahn Law Firm, P.A., Minneapolis, Minnesota (for respondent)

John William Verant, Fridley, Minnesota (for appellant)

Considered and decided by Johnson, Presiding Judge; Reilly, Judge; and John P.
Smith, Judge.
U N P U B L I S H E D O P I N I O N
JOHNSON, Judge
The parties to this breach -of-contract case entered into a settlement agreement on
the day on which trial was scheduled to begin . The attorneys stated the terms of the

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant
to Minn. Const. art. VI, § 10.

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settlement agreement on the record in open court. The attorneys agreed to formalize the
settlement in writing within seven days. B ut they were unable to agree on a written
settlement agreement. The plaintiff moved to enforce the settlement agreement. T he
district court granted the motion. We affirm.
FACTS
In November 2012 , Ronald Stuart Baker retained the Zahn Law Firm, P.A.
(hereinafter ZLF), to represent hi m in a lawsuit against his former employer. Baker and
ZLF entered into a written agreement that provided for a combination of an hourly fee and
a contingent fee. Baker’s lawsuit against his former employer was resolved in his favor in
arbitration. Thereafter a dispute arose between Baker and ZLF about the amount of fees
that Baker owed to ZLF.
In August 2015, ZLF commenced this action against Baker, alleging claims of
breach of contract and account stated. In July 2016, ZLF moved for summary judgment.
In August 2016, Baker filed a bankruptcy petition under Chapter 13 of the United States
Bankruptcy Code and removed the dispute to the United States Bankruptcy Court for the
District of Minnesota. But at a hearing in May 2017, the bankruptcy court remanded the
dispute back to the district court. Near the conclusion of the hearing, the bankruptcy court
stated on the record, “The state court can make a determination on fact and legal issues and
any enforcement of those decisions would come back to this Court.”
In August 2017, ZLF renewed its motion for summary judgment. In November
2017, the district court rejected most of Baker’s counter-arguments and determined that
ZLF had established liability on its breach-of-contract claim, but the district court denied

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the motion with respect to that claim due to genuine issues of material fact on one narrow
issue: whether the contingent fee applies to certain commission payments that Baker
received from his former employer while he was represented by ZLF.
The district court scheduled a jury trial for April 9, 2018. On that date, the parties
and their attorneys appeared before the district court. ZLF, represented by its principal,
informed the district court that the parties had reached a settlement agreement. The district
court and the parties engaged in the following colloquy concerning the te rms of the
settlement agreement:
ZAHN: . . . . The parties have agreed to settle all claims
between them for the amount of $55,000, which would be Mr.
Baker’s obligation to Zahn Law Firm. The parties agree to
dismiss with prej udice this case as well as an adversary
proceeding that is presently before the U.S. District Court, the
Bankruptcy Court for the U .S. District of Minnesota. There
would be a global release of all claims that the parties have
against each other or could have against each other. The parties
will cooperate to effectuate the settlement terms such as by
signing the supplemental documents to the extent that is
necessary.

Now, because the defendant currently is in bankruptcy,
a Chapter 13 bankruptcy, we need to resolve how th e—
whether judgment is entered or whether the amount is simply
submitted to the bankruptcy court through the proof of claim
process. That is something Counsel will try to resolve in the
most efficient manner.

DISTRICT COURT: Okay.

ZAHN: But that is essentially the terms of the
settlement.

DISTRICT COURT: All right. Counsel.

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BAKER’S ATTORNEY: That’s correct. It’s all claims
in litigation between the parties. There is this action, and there
is the adversary proceeding in the United States Bankruptcy
Court for the District of Minnesota.

. . . .

DISTRICT COURT: . . . . [ Y]ou are going to be
agreeing on this, aren’t you?

BAKER’S ATTORNEY: Oh, yes.

DISTRICT COURT: [I]f I am going to call this trial
off, we are going to agree . . . consistent with what we put on
the record today.

BAKER’S ATTORNEY: Absolutely.

The district court asked Baker to personally state that he agrees to be bound by the terms
stated on the record, and he did so. The parties agreed to submit “paperwork” to the district
court to formalize the settlement and to dismiss the action by April 16, 2018. But on that
date, Baker’s attorney informed the district court by e-mail that the parties were unable to
agree on a written settlement agreement, and she asked the district court to again schedule
a jury trial.
In May 2018, ZLF filed a motion to enforce settlement agreement. The district court
conducted a motion hearing and, in August 2018, filed an order granting the motion. The
district court reasoned that the manner in which the parties would submit the agreed -upon
amount of the settlement to the bankruptcy court is not an essential term of the agreement.
The district court ordered entry of judgment in favor of ZLF in the amount of $55,000. The
district court’s order also provides, “Plaintiff shall collect the judgment from Defendant
through submission of Defendant’s obligation to the United Stat es Bankruptcy Court for

5
the District of Minnesota in Defendant’s Chapter 13 bankruptcy proceedings.” Baker
appeals.
D E C I S I O N
Baker argues that , for three reasons, the district court erred by granting ZLF’s
motion to enforce settlement agreement.
The supreme court has summarized the substantive and procedural law governing a
motion to enforce a settlement agreement as follows:
Settlement of claims is encouraged as a matter of public policy.
E.g., Minneapolis Star & Tribune Co. v. Schumacher , 392
N.W.2d 197, 205 (Minn. 1986). An agreement entered into as
compromise and settlement of a dispute is contractual in
nature. Mr. Steak, Inc. v. Sandquist Steaks, Inc. , 309 Minn.
408, 410, 245 N.W.2d 837, 838 (1976); Jallen v. Agre , 264
Minn. 369, 373, 119 N.W.2d 739, 743 (1963). As such, a
settlement agreement “can be enforced by an ordinary action
for breach of contract.” Mr. Steak , 309 Minn. at 410, 245
N.W.2d at 838. Generally speaking, settlement agreements
can also be enforced by motion in the origi nal lawsuit. Ryan
v. Ryan, 292 Minn. 52, 52-53, 193 N.W.2d 295, 296-97 (1971);
see Eliseuson v. Frayseth , 290 Minn. 282, 288, 187 N.W.2d
685, 688 (1971) (concluding that the trial court has discretion
to vacate a settlement through independent action or motion).

Voicestream Minneapolis, Inc. v. RPC Props., Inc., 743 N.W.2d 267, 271-72 (Minn. 2008).
“The party seeking to avoid a settlement has the burden of showing sufficient grounds for
its vacation.” Johnson v. St. Paul Ins. Co., 305 N.W.2d 571, 573 (Minn. 1981). This court
applies an abuse-of-discretion standard of review to a district court’s grant of a motion to
enforce settlement agreement. Id. at 573-74; Snesrud v. Elber s, 374 N.W.2d 830, 832
(Minn. App. 1985), review denied (Minn. Dec. 19, 1985).

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A.
Baker first argues that the district court erred on the ground that the parties did not
enter into an enforceable agreement because they did not agree on all essential terms . He
contends that the agreement is incomplete because the parties did not agree on the manner
in which the y would submit the agreed-upon amount of the settlement to the bankruptcy
court. In response, ZLF contends that the manner of submitting the settlement amount to
the bankruptcy court is not an essential term of the settlement agreement.
“A settlement agreement is a contract.” Dykes v. Sukup Mfg. Co., 781 N.W.2d 578,
581-82 (Minn. 2010). As in all contracts, “there must be a definite offer and acceptance
with a meeting of the minds on the essential terms of the agreement.” TNT Props., Ltd. v.
Tri-Star Developers LLC, 677 N.W.2d 94, 100-01 (Minn. App. 2004). “A binding contract
can exist despite the parties’ failure to agree on a term if the term is not essential or can be
supplied.” Id. at 101 (citing Restatement (Second) of Contracts § 201, cmt. d (1981)).
Furthermore, “an agreement should be upheld where, despite some incompleteness and
imperfection of expression, the court can reasonably find the parties’ intent by a pplying
the words as the parties must have understood them.” Id. (quotation omitted).
The district court resolved this issue by reasoning that the manner in which the
settlement is submitted to the bankruptcy court is not an essential term. The district court
stated in its order that “the parties treated said submission to the bankruptcy court as an
ancillary term.” This reasoning is supported by the transcript of the hearing at which the
parties orally stated the terms of the settlement agreement. Zahn stated the amount of
money that Baker would pay to ZLF, the parties’ agreement that all pending claims would

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be dismissed, the parties’ agreement to execute mutual “global release [s],” and their
agreement to “cooperate to effectuate the settlement terms such as by signing supplemental
documents to the extent that is necessary.” Zahn then mentioned an additional issue that
the parties “need to resolve,” specifically, “whether judgment is entered or whether the
amount is simply submitted to the bankruptcy c ourt through the proof of claim process.”
By expressly stating that one particular issue is unresolved, the parties essentially agreed
that it is not an essential term of their agreement. The district court surely would not have
canceled the jury trial if there was one essential term on which the parties had not yet
agreed and if the settlement agreement would not be final until that term had been resolved.
Thus, the district court did not err by reasoning that the manner in which the parties
would submit the settlement amount to the bankruptcy court is not an essential term of the
settlement agreement.
B.
Baker also argues that the district court erred by not conducting an evidentiary
hearing on ZLF’s motion.
The supreme court has identified the circumstances in which a district court must
conduct an evidentiary hearing on a motion to enforce settlement agreement:
As a general rule, the enforcement of a settlement
agreement requires a hear ing if the issues are sharply
conflicting and there are questions of fact for the fact finder to
decide. 15A C.J.S. Compromise and Settlement §§ 70, 74
(2002). “Trial courts have[] ‘the inherent power to summarily
enforce a settlement agreement as a matt er of law when the
terms of the agreement are clear and unambiguous.’” Lewis v.
Benjamin Moore & Co. , 574 N.W.2d 887, 888 (S.D. 1998
(emphasis omitted) (quoting Gatz v. Sw. Bank of Omaha , 836

8
F.2d 1089, 1095 (8th Cir. 1988)). If material facts are disputed,
an evidentiary hearing is required. Id.

Voicestream, 743 N.W.2d at 272.
In this case, Baker filed a memorandum of law in opposition to Z LF’s motion. In
its conclusion, Baker requested a jury trial on the merits of ZLF’s claims “or, in the
alternative, an evidentiary hearing” on ZLF’s motion to enforce. The memorandum
identified three potential witnesses: Baker, his attorney, and an expert in bankruptcy law.
Baker’s attorney also filed an affidavit to which she attached multiple exhibits , including
documents filed in the bankruptcy action and written correspondence between herself and
Zahn. At the hearing on ZLF’s motion to enforce, the district court indicated that it would
refer solely to the transcript of the hearing at which the parties orally agreed to settle the
case and that an evidentiary hearing would be unnecessary.
On appeal, Baker contends that an evidentiary hearing “would have informed the
district court about the importance of the treatment of the claim in Bankruptcy Court” and
“the essentiality” of that issue. Contrary to Baker’s contention, it was unnecessary for the
district court to consider any evidentiary materials other than the transcript of the hearing
at which the settlement agreement was placed on the record . It is irrelevant whether one
way or the other way is the best way to submit the settlement amount to the bankruptcy
court. T he pertinent question is whether the parties to this cas e actually considered that
issue to be an essential term of their settlement agreement. The agreement was expressed
orally in open court and is reflected in the transcript of the hearing. The essential terms of
the settlement agreement may be discerned by referring solely to the transcript. A district

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court may forgo an evidentiary hearing and “summarily enforce a settlement agreement as
a matter of law when the terms of the agreement are clear and unambiguous.” Id. (quotation
omitted).
Thus, the district court did not err by not conducting an evidentiary hearing on
ZLF’s motion.
C.
Baker last argues that the district court erred by entering a judgment in violation of
the automatic stay imposed by federal bankruptcy law and in violation of the terms of his
bankruptcy plan.
As a matter of federal law, the filing of a bankruptcy petition automatically stays all
non-bankruptcy judicial proceedings against the debtor who is the subject of the
bankruptcy action , subject to certain exceptions that are no t relevant to this appeal .
11 U.S.C. § 362(a)(1) (2012). As a consequence , a state district court lacks jurisdiction
over a dispute once the automatic stay has taken effect. Bernick v. Caboose Enters., Inc.,
395 N.W.2d 412, 414 (Minn. App. 1986). But a bankruptcy court may remand a cause of
action back to the state district court “on any equ itable ground.” 28 U.S.C. § 1452(b)
(2012); see also 28 U.S.C. § 1334 (2012).
In this case, the district court action was automatically stayed when Baker filed for
Chapter 13 bankruptcy protection. The bankruptcy court held a hearing on May 3, 2017
and remanded the case back to the district court for a resolution of ZLF’s claims against
Baker. The bankruptcy court expressly stated that the state district court, on remand, “can
make a determination on fact and legal issues and any enforcement of those decisions

10
would come back to this Court.” The district court resolved ZLF’s claims against Baker
by enforcing the parties’ settlement agreement. The district court’s order expressly referred
to the pending bankruptcy proceeding by stating, “Plaintiff shall collect the judgment from
Defendant through submission of Defendant’s obligation to the United States Bankruptcy
Court for the District of Minnesota in Defendant’s Chapter 13 bankruptcy proceedings.”
The district court’s actions are not in any way inconsistent with the bankruptcy court’s
remand order.
Baker nonetheless contends that the district court violated the automatic stay by
ordering the entry of judgment rather than simply granting ZLF’s motion and not ordering
the entry of judgment. Baker has not cited any authority clearly stat ing that a state court
violates an automatic stay by entering a judgment after a bankruptcy court has expressly
authorized the state court to resolve a claim against a debtor. Our independent research
indicates that the entry of a judgment in such circumstances does not violate an automatic
stay. See Rexnord Holdings, Inc. v. Bider mann, 21 F.3d 522, 527 -28 (2d Cir. 1994) ;
Marquis Yachts v. Allied Marine Grp., Inc., 2010 WL 1380137, at *3 n.1 (D. Minn. 2010)
(citing In re Soares, 107 F.3d 969, 973-74 (1st Cir. 1997)).
Baker contends further that the district court ’s entry of judgment violates the
bankruptcy court’s plan in his case by subjecting him to interest. The district court entered
judgment in the amount of $55,000 because that is the amount on which the parties agreed.
The district court’s judgment does not add interest to the amount on which the parties
agreed. There is nothing in the record to indicate that ZLF has attempted to collect interest
on the judgment debt.

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Thus, in light of the express permission previously granted by the bankruptcy court,
the district court did not violate federal bankruptcy law by granting ZLF’s motion to
enforce settlement agreement and by entering a judgment in favor of ZLF.
In sum, the district court did not err by granting ZLF’s motion to enforce settlement
agreement and by entering judgment in favor of ZLF in the amount of $55,000.
Affirmed.