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JM Agency, Inc. v. NAS Financial Services

August 3, 2007

JM AGENCY, INC., D/B/A THE SPANO AGENCY, PLAINTIFF-APPELLANT,
v.
NAS FINANCIAL SERVICES, INC.; AMERIHEALTH INS. CO. OF NJ, ON ITS OWN BEHALF AND AS AN AGENT FOR AMERIHEALTH HMO, INC., DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1541-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted July 17, 2007

Before Judges C.S. Fisher and Grall.

In this appeal, we conclude that the trial judge mistakenly granted defendants' motion to enforce a settlement by finding that a dispute about the terms of their alleged agreement --that is, whether defendants would admit liability -- was immaterial. The record reveals that this disputed term was an essential part of the bargain and, in light of the parties' inability to agree on that point, defendants' version of the alleged agreement should not have been enforced.

I.

Plaintiff commenced this action seeking the recovery of a monetary judgment based upon commissions it was not paid for having produced a client for defendants. After defendants' motion to dismiss certain aspects of plaintiff's complaint was granted, the parties engaged in mediation and appeared to have reached a settlement that was contingent upon being memorialized in a written agreement. When the parties could not agree on the terms of a written agreement, defendants moved to enforce what they believed to be the alleged settlement's terms. The trial judge granted that motion and this appeal followed.

Specifically, plaintiff appeals from the order of June 9, 2006, which enforced the settlement, as well as an earlier interlocutory order entered on January 9, 2006, which dismissed plaintiff's conversion claim and its demands for punitive damages and attorneys' fees. We find the arguments asserted by plaintiff concerning the January 9, 2006 order to be without sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E), and affirm that order. We reverse the order of June 9, 2006 for the following reasons.

There is no dispute that during mediation plaintiff demanded $5,000; in the alternative, plaintiff's counsel advised that plaintiff would accept the lesser amount of $2,297.15, which appears to have been the amount of commissions due, together with defendants' admission of liability. Defendants agreed to pay $2,297.15, but balked at admitting liability. According to his certification, plaintiff's attorney advised the mediator that plaintiff was agreeable to accepting the lesser amount but remained insistent upon receiving defendants' admission of liability. Defendants continued to refuse to admit liability, but counsel for defendant AmeriHealth suggested that a statement could be included in the settlement agreement, which would reflect that defendants had "reviewed the matter" and "determined that commissions were due." Plaintiff's counsel responded that "this might be acceptable" but that it was ultimately subject to plaintiff's approval.

A proposed settlement agreement was thereafter circulated. It contained a provision that the payment of the settlement funds was "not an admission of liability, but is made for the purpose of terminating all disputes and litigation between the parties." Plaintiff's counsel objected, advised that plaintiff was unwilling to further negotiate the terms of the agreement, and asserted that the matter ought to be returned to the active trial calendar. Defendants later forwarded a revised agreement, which -- in lieu of the language that the payment of the settlement funds was "not an admission of liability" -- stated: "[u]pon review of the coverage file . . . it was determined that $45,942.94 was received in premium payments, but no commissions were paid. Commissions in the amount of $2,297.15 would have been received by [plaintiff]." Plaintiff found that this statement insufficiently conveyed the admission of liability that plaintiff had bargained for. As a result, plaintiff refused to sign the agreement.

Defendants moved for enforcement of the alleged settlement. In granting the motion, the trial judge concluded that plaintiff had not "adequately explained . . . why it requires a stipulation of liability by the defendants rather than the language offered by the defendants." He also held that this disputed term was not material to the settlement agreement. Consequently, the judge entered an order on June 9, 2006 that enforced the alleged settlement agreement and mandated that plaintiff execute a stipulation of dismissal, the written settlement agreement, and a release in favor of defendants.

II.

"A settlement agreement between parties to a lawsuit is a contract." Nolan v. Lee Ho, 120 N.J. 465, 472 (1990). And a binding settlement agreement is formed only when the parties agree on all essential terms and manifest an intention to be bound. Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992). Thus, as a general matter, the common law rules governing when a binding contract has been formed apply in determining whether negotiations generated a binding settlement agreement.

In considering these rules to the facts presented by the record at hand, we conclude that the trial judge mistakenly (a) placed the burden of persuasion on plaintiff, (b) failed to recognize that plaintiff had never agreed on the point in dispute, and (c) ...


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