ARBORETUM GARDENS LANDSCAPING LLC v. JOSEPH AND CHRISTINE GLAZER (2010)

Defendants, Joseph and Christine Glazer, appeal from the denial of their application for counsel fees after they prevailed in their motion to enforce a settlement agreement reached with plaintiff, Arboretum Gardens & Landscaping, LLC. We reverse.

Plaintiff, a landscaping company, contracted with defendants to perform landscaping work on their home.   Defendants withheld the balance of payment due, claiming that the work had not been properly completed in accordance with the contract.   Plaintiff sued for the outstanding balance, and defendants cross-claimed, alleging breach of contract and violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20.   The parties entered into a settlement agreement that resolved all outstanding issues.   Under the agreement, plaintiff agreed to perform further landscaping.   A key provision of the contract provided:

In the event that the Arboretum Defendants breach this Agreement and the Glazers file an action as a result of such breach, the Glazers shall be entitled to recover all costs and reasonable attorneys' fees on any application resulting in an [o]rder providing them with relief or damages against the Arboretum Defendants.

The project did not go forward as planned due to Arboretum's claimed confusion over whether the drainage materials had to be custom-made and its failure to obtain an estimate of the cost of the drainage materials.   On September 3, 2008, the Glazers' counsel sent a letter to counsel for Arboretum stating that “[y]our clients have not begun work to date and there is no evidence that they intend to start work on any date certain in the future.   This constitutes a breach of the terms of the [s]ettlement [a]greement.”   The letter also advised that “if your clients have not commenced work by 9:00 a.m. on September 8, 2008, my clients will file the appropriate application seeking enforcement of the [s]ettlement [a]greement and will seek relief including the award of attorneys' fees.”

On September 4, 2008, counsel for Arboretum sent a letter to counsel for the Glazers stating that “[t]here is no enforceable agreement in place as Carrie Stanker [the landscape designer] has not endorsed the agreement” and that “both my client and myself never expected that excavation of the backyard would be necessary to complete the work as required by the contract.”   According to Arboretum, the excavation would increase the “cost of settlement ․ more than $20,000[,]” and Arboretum considered this increase in price along with the increase in price of the drainage materials a mutual mistake of fact.   Arboretum's attorney encouraged the Glazers to make “a demand for settlement on a monetary basis.”

The Glazers subsequently moved to enforce the settlement agreement and for attorneys' fees related to the motion.   In an oral decision, the motion judge enforced the settlement agreement, finding Arboretum's claims of mutual mistake or unilateral mistake unpersuasive.   The judge reserved the issue of attorneys' fees and later, in a second oral decision, denied the Glazers' counsel fee application, finding that the dispute over the terms of the settlement agreement did not amount to a breach of the agreement, and that the “attorney's fees and costs breach provision did not contemplate that the provision would be effectuated where the parties had a legitimate dispute over an interpretation of the terms of the settlement agreement.”   The court entered an order memorializing its decision on June 2, 2009, and the present appeal followed.

On appeal, the Glazers contend they were entitled to counsel fees because the terms of the settlement agreement were clear, and even if an analysis of the terms of the agreement required consideration of factors beyond the “four corners of the settlement agreement,” the motion judge should have granted their counsel fee application.   Because we agree that the terms of the agreement were clear, we need not address whether analysis beyond the four corners of the agreement was warranted.   See Schor v. FMS Financial Corp., 357 N.J.Super. 185, 191-92 (App.Div.2002).

Public policy in New Jersey favors the settlement of litigation, and a settlement agreement is a contract that should be enforced by the courts like other types of contracts.  Pascarella v. Bruck, 190 N.J.Super. 118, 124-25 (App.Div.), certif. denied, 94 N.J. 600 (1983).   Since the “[s]ettlement of litigation ranks high in our public policy,” Jannarone v. W.T. Co., 65 N.J.Super. 472, 476 (App.Div.), certif. denied, 35 N.J. 61 (1961), settlement agreements resolving litigation will be enforced “absent a demonstration of ‘fraud or other compelling circumstances[.]’ ”  Pascarella, supra, 190 N.J.Super. at 125 (citations omitted).   Moreover, where the terms and conditions of a settlement agreement are clear and unambiguous, the non-breaching party is entitled to enforcement.  Schor, supra, 357 N.J.Super. at 191-92.   Finally, the interpretation and construction of a contract is a matter of law for the court subject to de novo review.  Kaur v. Assured Lending Corp., 405 N.J.Super. 468, 474 (App.Div.2009) (reviewing the enforcement of a settlement agreement de novo);  see also Sealed Air v. Corp. Royal Indem.   Co., 404 N.J.Super. 363, 375 (App.Div.) (interpreting a pollution exclusion in an insurance contract under the de novo standard of review), certif. denied, 196 N.J. 601 (2008);  Lobiondo v. O'Callaghan, 357 N.J.Super. 488, 494-95 (App.Div.), certif. denied, 177 N.J. 224 (2003) (applying a de novo standard of review in deciding whether to enforce an oral contract).

Here, the attorneys' fee provision in the settlement agreement clearly states that attorneys' fees are recoverable where Arboretum breaches the agreement and enforcement of the agreement is sought:

In the event that the Arboretum Defendants breach this Agreement and the Glazers file an action as a result of such breach, the Glazers shall be entitled to recover all costs and reasonable attorneys' fees on any application resulting in an [o]rder providing them with relief or damages against the Arboretum Defendants.

The motion judge found that Arboretum did not breach the settlement agreement, but rather that Arboretum failed to perform since it made a unilateral mistake that engendered a “legitimate dispute over an interpretation of the terms of the settlement agreement.”   We disagree with this reasoning.

Arboretum argued it “never expected that excavation of the backyard would be necessary to complete the work as required by the contract.”   This argument evidences Arboretum's failure to understand the scope of its obligations, rather than a misunderstanding caused by the language in the settlement agreement or a mutual mistake of fact.   Apart from the fact that emails exchanged between the parties' counsel during negotiations demonstrate that Arboretum knew that grading and excavation would be involved, had Arboretum made a unilateral mistake, such a mistake would not negate the breach.   Intertech Assocs. v. City of Paterson, 255 N.J.Super. 52, 59 (App.Div.1992) (noting that a “unilateral mistake of fact unknown to the other party is not ordinarily grounds for avoidance of a contract.”).

In addition, assuming, although not argued, that Arboretum believed there was some ambiguity in the contract, it never sought clarification.   Consequently, once the motion judge rejected Arboretum's claim that it was excused from performing because of the expense of excavation or because it did not think that excavation would be necessary in order to perform its obligations under the settlement agreement, the Glazers were entitled to an award of counsel fees and costs.

Although declining to award counsel fees, the motion judge reviewed the counsel fees and costs submitted and concluded:

The Glazers have incurred $15,357 in attorney's fees and $1,272.75 in costs in connection with the motion-or the application that they made to enforce the settlement agreement.   There were two attorney[ ]s that appeared on those invoices and they were charged rates consistent with the settlement agreement.   There is no dispute as to the reasonableness of the hourly rate in the settlement agreement.

We defer to these findings by the motion judge.  Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).

Reversed and remanded for the entry of judgment awarding $15,357 in counsel fees and $1,272.75 in costs to the Glazers.   We do not retain jurisdiction.

PER CURIAM