JAMES PATTERSON DEBRA PATTERSON v. GREEN CITIES ENERGY CPI SOLAR LLC (2013)

Defendant Joseph Polidoro appeals an order enforcing an alleged settlement of this lawsuit, arguing he did not consent to its terms.   Because the record was not sufficiently clear of doubt about whether defendant Polidoro had agreed to settle, we reverse the order under review and remand for further proceedings.

The following circumstances are not disputed.   Plaintiffs James and Debra Patterson commenced this action against defendants Polidoro and Green Cities Energy, LLC, alleging breach of contract, a violation of the Consumer Fraud Act, N.J.S.A. 56:8–1 to –195, and other causes of action, arising from defendants' sale of a solar panel system and windmill for installation at plaintiffs' residence in Elmer.   A law firm retained by defendants' insurance carrier appeared on defendants' behalf.

On May 22, 2012, the parties and their attorneys met to mediate a resolution of this matter.   Plaintiffs concede no agreement was reached at that time, but a document entitled “Settlement Agreement and General Release” was prepared by the law firm representing defendants and later forwarded to plaintiffs' counsel to which plaintiffs agreed.   Defendant Polidoro, however, refused to sign the agreement and asserted that he did not consent to the document's terms.

Thereafter, the law firm representing defendants moved to withdraw as counsel because “the insurance carrier” instructed “that the fees and costs of this law firm will no longer be paid ․ in connection with the defense of the [d]efendants.”   Plaintiffs filed a cross-motion for enforcement of the settlement agreement they believed had been fully accepted by all parties.   On the motions' return date, the trial judge viewed the dispute as “a close call,” but, without conducting an evidentiary hearing, decided to enforce the agreement.

Defendant Polidoro appeals, arguing, in a single point:

A SETTLEMENT AGREEMENT THAT IS BEING NEGOTIATED REQUIRES THE AGREEMENT OF THE PARTIES INVOLVED, THIS AGREEMENT WAS NEVER AGREED UPON OR SIGNED BY THE DEFENDANT, AND, THEREFORE, AN AGREEMENT DOES NOT EXIST.

We agree the trial judge could not resolve the factual disputes concerning the formation of a settlement agreement and, therefore, reverse.

As we explained in Amatuzzo v. Kozmiuk, 305 N.J.Super. 469, 474–75 (App.Div.1997), where a judge had enforced a settlement by resort to the moving and opposing papers, “a hearing is to be held to establish the facts unless the available competent evidence, considered in a light most favorable to the non-moving party, is insufficient to permit the judge, as a rational factfinder, to resolve the disputed factual issues in favor of the non-moving party.”   Here, viewing the factual assertions in the light most favorable to defendant, the trial judge was required to assume that any settlement was contingent upon the execution of a fully integrated writing.   Indeed, this does not seem to be disputed, since that understanding seems implicit in everything plaintiffs argued in support of their motion to enforce.   The judge was also required to assume that plaintiffs acknowledged that whatever terms the parties may have agreed to in the wake of the mediation was subject to defendant's desire to consult with his personal attorney.   In addition, it is true the law firm retained by defendants' insurance carrier forwarded a written settlement agreement to plaintiffs' counsel with the representation that it was acceptable to plaintiffs, and that an attorney with the law firm later represented to plaintiffs' counsel, by email, that he had “heard from our client's personal attorney, and he wanted to make certain the confidentiality/nondisparagement clause made explicit reference to issues of fraud and/or forgery”;  the email also stated that a revised settlement agreement was attached.

Defendant asserted in response to the motion to enforce that material terms remained unresolved and the law firm had no interest in resolving them because, in defendant's words, the law firm “was strictly concerned with our carrier's interests, and their potential payment, not our financial interests.”   Defendant stated in his certification that “[a]t no time was there any complete and final document that contained terms all parties unequivocally had agreed upon,” including those specifically mentioned in his certification,¹ and defendant remained interested in asserting a counterclaim, which the law firm had no interest in pressing.   Defendant also asserted in his certification that an attorney for the law firm acknowledged, on July 18, 2012, “that a settlement was not reached and that there was time to file our own counterclaim.”

To be sure, “[s]ettlement of litigation ranks high in our public policy.”   Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (quoting Jannarone v. W.T. Co., 65 N.J.Super. 472, 476 (App.Div.), certif. denied, 35 N.J. 61 (1961)).   But this policy favoring the settlement of litigation does not permit enforcing a settlement that never occurred.   Considering the evidential materials in the light most favorable to defendant required a denial of the motion.   To resolve whether a settlement agreement was formed from the parties' discussions and exchange of documents, the judge was required to conduct an evidentiary hearing.

A settlement agreement between parties to a lawsuit is a contract.   Pascarella v. Bruck, 190 N.J.Super. 118, 124–25 (App.Div.), certif. denied, 94 N.J. 600 (1983).   Such an agreement requires a party's voluntary consent and, contrary to plaintiffs' forceful argument, it is not alone sufficient that defendant's attorney consented to the terms of the proposed settlement.   An attorney's negotiations on behalf of a client are not binding “unless the client has expressly authorized the settlement or the client's voluntary act has placed the attorney in a situation wherein a person of ordinary prudence would be justified in presuming that the attorney had authority to enter into a settlement, not just negotiations, on behalf of the client.”  Amatuzzo, supra, 305 N.J.Super. at 475.  “[T]he attorney's words or acts alone are insufficient to cloak the attorney with apparent authority.”  Id. at 476.

In light of these general principles, we reject the argument that a binding settlement agreement could be found based on the statements attributed to defendants' former counsel.   As we have observed, the evidential material is to be viewed in the light most favorable to defendant as the opponent of the motion.  Id. at 475.   Defendant has asserted that the law firm retained by his insurance carrier was interested only in the carrier's interests, not his.   In addition, he claimed that the matter was not settled absent a complete and executed settlement agreement, and that the agreement forwarded by the insurance carrier's attorneys was neither complete nor acceptable and was certainly not executed.   In light of these circumstances, the trial judge mistakenly ruled in favor of plaintiffs.

To be clear, we do not hold that the parties failed to settle the lawsuit.   We hold only that the judge erred in concluding, without an evidentiary hearing, that the parties had settled.   We vacate the order under review and remand for an evidential hearing.

Vacated and remand for further proceedings in conformity with this opinion.   We do not retain jurisdiction.

FOOTNOTES

FN1. Defendant referred to as unresolved:  “whether or not defendant was to receive the return of the allegedly defective equipment,” “who was to remove the equipment from plaintiff[s'] property, since that could involve damaging plaintiff[s'] property, and who would be responsible for that damage,” and “who was to deliver the equipment to us, at who's cost.”.  FN1. Defendant referred to as unresolved:  “whether or not defendant was to receive the return of the allegedly defective equipment,” “who was to remove the equipment from plaintiff[s'] property, since that could involve damaging plaintiff[s'] property, and who would be responsible for that damage,” and “who was to deliver the equipment to us, at who's cost.”

PER CURIAM