Chancellor v. Select Portfolio Servicing, No. 16-2475 (7th Cir. 2017)

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The plaintiff reached an oral agreement to settle a litigation arising out of a home mortgage loan, but the defendants insisted that as part of the settlement he would have to release any claims he had against another bank, and against a trust company, neither of which had been a party to the litigation. The district judge agreed with the defendants’ position. The Seventh Circuit vacated and remanded for a factual inquiry, noting that it has not been proved that anyone had told the plaintiff during the settlement conference that by agreeing to the settlement he would also be releasing any claim he might have against the two nonparties to the litigation.

The court issued a subsequent related opinion or order on July 19, 2017.

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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 16-2475 TERENCE S. CHANCELLOR, Plaintiff-Appellant, v. SELECT PORTFOLIO SERVICING and JPMORGAN CHASE BANK, N.A., Defendants-Appellees. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 C 7712 — Sharon Johnson Coleman, Judge. ____________________ SUBMITTED JULY 5, 2017 — DECIDED JULY 19, 2017 ____________________ Before POSNER, KANNE, and SYKES, Circuit Judges. POSNER, Circuit Judge. The plaintiff reached an oral agreement to settle a litigation arising out of a home mortgage loan to him, but the defendants insisted that as part of the settlement he would have to release any claims he had against another bank, and also a trust company, neither of which had been a party to the litigation. Although the district judge agreed with the defendants’ position, it hasn’t been proved that anyone had told the plaintiff during the 2 No. 16-2475 settlement conference that by agreeing to the settlement he would also be releasing any claim he might have against the two nonparties to the litigation. Because there was no evidentiary proceeding, there was no basis for the judge’s deciding that the plaintiff had agreed to release the claims against the nonparties. The judgment must therefore be vacated and the case remanded for a factual inquiry into the parties’ disagreement.

Primary Holding

District judge erred in accepting defendants' position regarding settlement agreement without inquiring about the facts leading to a dispute about that agreement.

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