Joseph Soracco et al. v. William Scotsmand, Inc. (2009)

MEMORANDUM OF DECISION RE JOINT MOTION FOR JUDGMENT BASED ON SETTLEMENT AGREEMENT

The present Motion for Judgment arises out of the efforts of Hon. Robert L. Holzberg to mediate this personal injury matter in which the named plaintiff was injured while in the course of his employment with the intervening plaintiff, Manafort, Inc. Although Judge Holzberg was successful in that the plaintiff, the co-plaintiff (the named plaintiff's wife, who had brought a loss of consortium claim) and the defendant all agree on the sum of $750,000 to settle the case, he was not able to forge an agreement regarding the amount of money from that settlement that should be applied as a reimbursement to Manafort, which had already provided substantial workers' compensation benefits.

The plaintiffs and defendant had proposed a division that would allocate half of the total proposed settlement to the wife's loss of consortium claim.   The result of this arrangement would be that Manafort would be entitled to no reimbursement from the wife's portion of the settlement, and to approximately $250,000 from the husband's portion after attorneys fees and costs had been deducted.   At the time of the hearing before Judge Holzberg, however, Manafort's lien was already approaching $550,000.

Although the plaintiffs and defendant had agreed to this arrangement, Manafort had not.   Judge Holzberg then proposed that he listen to the arguments of counsel and make a determination of the appropriate split.   Once again, the plaintiffs and defendant agreed to this suggestion, but while the intervening plaintiff agreed to permit Judge Holzberg to try to come up with a mutually acceptable resolution, it also made it abundantly clear that it was not agreeing to be bound by Judge Holzberg's determination.   Its counsel stated on the record that it would appeal the division if it did not find it satisfactory.

All parties agree that they were acting under the belief that Judge Holzberg had the authority, as a part of the mediation process, to make such a determination and that Manafort would have the ability to challenge the determination on appeal.   They also agree that they believed that Manafort had the right to take an appeal from Judge Holzberg's allocation of the sums that would be subject to the workers' compensation lien.

After hearing arguments, including some confidential communications ¹ from the lawyers, Judge Holzberg concluded that Mrs. Soracco had suffered greatly as a result of her husband's injuries.   He agreed with the split proposed by the plaintiffs and the defendant and concluded that half of the $750,000 should go to the wife and the other $375,000 to the husband.

Manafort, as promised, appealed to the Appellate Court, claiming, inter alia, that the trial court improperly considered facts not in evidence in making its determination.   The Supreme Court, however, having transferred the case to itself, did not reach that question but rather concluded that, contrary to the parties' belief,

Ultimately, this appeal represents nothing more than a challenge to the voluntary and consensual division of the proceeds of a settlement reached by the plaintiffs and the defendant.   The employer's cause of action under these circumstances is a creature of statute, namely, § 31-293.   Its rights and remedies are fully and plainly set forth in that statute, which clearly indicates that all of these rights are left intact in the face of a settlement to which the intervening employer does not assent.   Because we conclude that none of Manafort's statutory interests was affected by the settlement between the plaintiffs and the defendant, we further conclude that it lacked standing to challenge the terms of that settlement, and, therefore, the trial court was without jurisdiction to consider Manafort's challenge to the allocation of the proceeds of that settlement.

Soracco v. Williams Scotsman, Inc., 292 Conn. 86, 98 (2009).   The Supreme Court thereupon vacated Judge Holzberg's order.

The posture of the case thus remains where it was before Judge Holzberg undertook to determine the split:  the defendant is prepared to pay a total of $750,000, allocated any way that the other parties can agree upon as long as the defendant is not called upon to pay any more than that to which it has already committed.   Manafort wants its full lien reimbursed, or at least something a lot closer to it than what it would have received under the “50-50” allocation proposed by the other parties and approved by Judge Holzberg.   The plaintiffs want the $750,000 settlement to be finalized, and they also want the 50-50 allocation suggested by Judge Holzberg to be approved by the court as a judgment.

The plaintiffs and defendant have therefore joined together to file the instant motion, claiming that they are entitled to have judgment enter in the total amount of $750,000, with each plaintiff received $375,000, because it was the product of an unambiguous settlement agreement to resolve litigation short of trial.   They argue that the court has the authority to enforce the agreement as a judgment pursuant to Audubon Parking Associates Limited Partnership v. Barclay and Stubbs, Inc., 225 Conn. 804 (1993).   Indeed, the Supreme Court, in its disposition of the appeal in the instant case appears, to agree that to the extent that the plaintiffs and defendant did enter into such an agreement, Manafort has no standing to undo it.

In the “be careful what you wish for” department, however, enforcement of what seems to be the unambiguous portion of the agreement (a payment of $750,000 by the defendant to the two plaintiffs, to be divided equally between husband and wife) leaves the defendant in an extremely vulnerable position, as the clear implication of the Supreme Court's decision in this case is that there is no impediment to the intervening plaintiffs continuing to pursue the defendant for any portion of its lien that it is unable to recover from the employee's share of the settlement.   Although the parties have not supplied this court with a specific number, the amount of the lien that would be unsatisfied by underlying settlement would certainly exceed $300,000.   The defendant has made it clear that this is not at all what it had in mind in joining the motion to enforce the settlement agreement;  if the employer is not also to be bound by the arrangement, the defendant wants no part of an order that commits it to pay $750,000 now and exposes itself to another $300,000 or more in the future.

Thus, on closer inspection, the “unambiguous agreement” on which the plaintiffs and defendant rely is not so unambiguous after all.   There is no dispute that the defendant's understanding and expectation in entering into an agreement to pay $750,000 to settle the claims against it were that it would be released from any further liability concerning this incident by all other parties, including Manafort.   When it agreed with the plaintiffs that Judge Holzberg could determine the “split” between the plaintiffs, it was with the implicit understanding that whatever Judge Holzberg determined, the defendant was not going to be required to pay any more than it had already offered.   By making it clear that it was not committing itself to be bound by Judge Holzberg's determination, however, Manafort essentially put all parties on notice that it was not part, and would not become part, of any global settlement agreement until and unless it was satisfied with the amount of money that it would recover out of that settlement as a reimbursement of its lien, a perfectly reasonable position for it to have taken.   Manafort was not satisfied then, and is not satisfied now.   This court finds thus that despite the efforts of Judge Holzberg and all the attorneys involved in this case to bring about a satisfactory global resolution, there is in fact no unambiguous settlement agreement on the part of all the parties to this litigation which the court may enforce in accordance with Audubon Parking Associates, supra.

At oral argument, the court and the parties raised a number of interesting issues which were subsequently briefed, including whether a Superior Court Judge may act as an “arbitrator” who may impose a settlement on the parties;  if not, whether that was the role undertaken by Judge Holzberg in this case;  and if so, whether his undertaking such a role renders enforcement of his determination inappropriate.   After reviewing the briefs and conducting its own research, the court concludes that it need not reach these concerns, as the fundamental issue before it is simply whether the parties all reached an unambiguous settlement agreement susceptible of enforcement by the court.   The defendant's consent to the agreement was contingent on its being released from further liability to any of the parties;  the plaintiffs' consent to the agreement was contingent on the imposition of a “split” that reduced the husband's obligation to reimburse the workers' compensation lien to about $250,000;  and Manafort's consent to the agreement was contingent on its being satisfied with the amount of its workers' compensation reimbursement.   These contingencies were never reconciled, and the court has therefore concluded that there is no unambiguous settlement agreement for it to enforce.²

The Motion for Judgment is therefore denied.   The Clerk is directed to schedule a pre-trial conference with the undersigned at the earliest practical date to determine whether a settlement is still possible, and, if not, to select a firm trial date.

E. Silbert, Judge

FOOTNOTES

FN1. The parties understood that some of what Judge Holzberg was considering had been submitted “off the record.”   He later “rectified” the appeal by providing the Supreme Court with copies of everything he had considered..  FN1. The parties understood that some of what Judge Holzberg was considering had been submitted “off the record.”   He later “rectified” the appeal by providing the Supreme Court with copies of everything he had considered.

FN2. The plaintiffs and defendant are still free to settle according to their own agreement, of course, but that would only terminate the plaintiffs' case.   The case against the defendant by the intervening plaintiff would continue..  FN2. The plaintiffs and defendant are still free to settle according to their own agreement, of course, but that would only terminate the plaintiffs' case.   The case against the defendant by the intervening plaintiff would continue.

Silbert, Jonathan E., J.