December 21, 2007
JOBAR REALTY, INC. AND JOSEPH PONZIO, JR., PLAINTIFFS-APPELLANTS,
ROBERT RYAN, ELEANOR RYAN, D/B/A ROBERT'S CLEANERS, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Union County, Law Division, Docket No. L-1645-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 28, 2007
Before Judges Wefing, R. B. Coleman and Lyons.
The question presented in this case is whether the trial court's finding that the parties came to a binding and enforceable settlement of plaintiffs Jobar Realty, Inc. and Joseph Ponzio, Jr.'s claims against defendants Robert Ryan and Eleanor Ryan doing business as Robert's Cleaners was error. Because we find that the trial court's finding is supported by sufficient credible evidence and in accordance with the appropriate legal principles, we affirm.
The pertinent facts are as follows. Defendants leased premises from plaintiffs in 1988 to operate a dry cleaning business. They conducted their business on the plaintiffs' property until about 2001. In 2002, plaintiffs retained counsel in order to obtain a "no further action letter" from the New Jersey Department of Environmental Protection so as to be able to sell the property. Certain environmental remediation was required on the property, and plaintiffs incurred approximately $31,000 in remediation costs. Plaintiffs instructed counsel to pursue defendants for the costs of the remediation.
Plaintiffs' initial counsel, Thomas Aljian, therefore, contacted defendants' attorney, Carol Gross. Aljian had the impression from his initial conversations that defendants were uninsured, but at that time, Gross did not know whether there was insurance available and so informed Aljian. Gross and Aljian exchanged correspondence regarding settlement. Aljian demanded $21,000, while Gross counteroffered to settle the matter for $6200 in exchange for a full release and indemnification.
Aljian transferred the case to another lawyer in the office, Steven Tombalakian, in late 2003. In December 2003, Tombalakian wrote to Gross and provided her with documentation in support of plaintiffs' $21,000 settlement demand. The letter was copied to plaintiffs. In response, defendants raised their counteroffer to $14,510 in February 2004. Gross again indicated in the counteroffer letter that the settlement must include a full release and indemnification from plaintiffs. Tombalakian forwarded Gross's letter to Ponzio*fn1 via email. Consultations between Ponzio and Tombalakian continued with Ponzio insisting that Tombalakian not take less than $21,000.
In April 2004, Tombalakian emailed Ponzio to inform him that Gross was going to recommend that the defendants settle for $21,000. Ponzio replied that it was a fair settlement. On May 3, 2004, Tombalakian wrote to Gross to confirm defendants' acceptance of plaintiffs' settlement offer of $21,000 to completely settle the dispute and to request that Gross prepare a formal release. A copy of the letter from Tombalakian was sent to Ponzio. Ponzio replied the next day in an email stating "Great News! Thanks. Please make sure Carol Gross gets this done by May 20."
Later, Tombalakian sent Ponzio a draft of the written settlement documents, which included releases and indemnifications, and asked if Ponzio had any questions. Ponzio never replied. During the hearing, Gross testified that Tombalakian told her that Ponzio had no objection, as he had not replied. Tombalakian agreed that he had sent Ponzio the language and he had never objected to it.
Gross sent a final draft of the settlement agreement to Tombalakian on August 31, 2004. It contained language releasing defendants from any and all claims arising out of the operation of their dry cleaning business and its effect on plaintiffs' property, as well as on any adjacent land. The agreement also provided that plaintiffs indemnify defendants against any related claims. At some point after May 4, 2004, Gross advised Tombalakian that defendants had discovered they had some insurance coverage.
Ponzio never signed the settlement agreement on behalf of plaintiffs. Instead, he obtained new counsel and filed a complaint against defendants in May 2005. Defendants also obtained new counsel and filed their answer, which raised settlement as a defense. Defendants then moved to enforce the settlement agreement.
The trial court ordered a plenary hearing to be held to determine whether there was, in fact, a settlement. That hearing was held on October 13, 2006. At the hearing, plaintiffs' prior counsel Aljian and Tombalakian testified, as did Gross and Ponzio. Gross testified that she and Aljian discussed releases and indemnifications because finality was important to her clients. According to Gross's testimony, there were no negotiations over the release and indemnification terms, only regarding the amount of money to settle. Following the hearing, the trial court rendered a written opinion setting forth its findings of fact and conclusions of law.
The trial judge found that Ponzio had reviewed the February 2004 counteroffer made by Gross and insisted in continuing his $21,000 settlement demand. Ponzio made no comment regarding the provisions of Gross's February 24, 2004, letter which required, in addition to an agreement on the sum to be paid, that there must be a full release and indemnification from plaintiffs. The court also found that Ponzio was informed of the letter sent by Tombalakian to Gross confirming the $21,000 settlement and that Gross would draft the formal releases. The court found that Tombalakian believed that he had discussed with Ponzio that a release and an indemnity were part of the settlement in matters such as this. The trial court also found that Ponzio acknowledged that none of the documents, including his own emails, limited the $21,000 settlement demand to only past costs. The court observed that Ponzio testified that his concern was not really with the amount of the settlement but with the scope of the release.
The trial court concluded, following the plenary hearing, that Ponzio's testimony confirmed that, throughout the matter, he wanted to settle the case for $21,000. The court said that only now had he taken the position that the $21,000 was intended to cover only past costs and that none of his prior conversations or emails limited his attorneys' authority to settle for only past costs. The court, therefore, found that Ponzio expressly authorized the settlement at $21,000 and implicitly authorized the settlement of all claims, past as well as future. The trial court found that a person of ordinary prudence would be justified in presuming that Ponzio had given such authority to his attorneys, given the facts in this case. The court particularly focused on the fact that Gross's letters of July 15, 2003, and February 23, 2004, mentioned the full release and indemnification and that there was no objection raised by Ponzio. Accordingly, the trial court held that it would enforce the settlement, and it dismissed plaintiffs' action. This appeal ensued.
On appeal, plaintiff presents the following arguments for our consideration:
THERE WAS NEVER A SETTLEMENT BETWEEN THE PARTIES.
PLAINTIFF NEVER GAVE EXPRESS OR IMPLIED AUTHORITY TO HIS LAWYER TO SETTLE THE CASE.
THE FAILURE OF THE DEFENDANTS' ATTORNEY TO REVEAL INSURANCE COVERAGE FOR DEFENDANTS CREATED A UNILATERAL MISTAKE BY PLAINTIFFS WHICH COMPROMISED THEIR ABILITY TO NEGOTIATE WITH DEFENDANTS.
THE PROPOSED INDEMNIFICATION AGREEMENT IS NOT ENFORCEABLE SINCE IT VIOLATES N.J.S.A. 2A:62A-7.
We will address plaintiffs' points seriatim. Plaintiffs argue that there was no settlement between the parties because there had been no agreement as to the scope of the release and indemnification. The trial court disagreed based on its findings of fact and conclusions of law. When error in a fact finding of a judge is alleged, the scope of appellate review is limited. Close v. Kordulak Brothers, 44 N.J. 589, 599 (1965).
An appellate court will only decide whether the findings could reasonably have been reached on "substantial credible evidence present in the record," considering the "proofs as a whole." Ibid. Our court gives due regard to the ability of the fact finder to judge credibility. Ibid. "A trial court's interpretation of the law and the legal consequences that flow from established facts are not[, however,] entitled to any special deference." Manalapan Realty v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
The trial court's determination that there was a settlement is supported by substantial credible evidence. The court found that the parties agreed to settle the matter for $21,000, together with the exchange of releases and indemnifications which would cover any and all, past and future, claims between the parties. The court came to this determination after concluding that plaintiffs' attorneys were appropriately authorized on behalf of plaintiffs to assent to those terms on plaintiffs' behalf. We see no basis to disturb that finding.
On appeal, plaintiffs argue that Ponzio never gave express or implied authority to their lawyers to settle the case in the manner asserted by defendants. The facts in the record clearly indicate that Tombalakian was given express authority to settle the case for $21,000. With respect to the remaining settlement terms, the court found that a reasonable person would conclude that Tombalakian possessed implied authority.
We agree that Ponzio did not by words or conduct communicate to Gross or defendants that his attorney possessed authority to conclude the settlement because he never spoke to those parties. However, we agree with the trial court that Ponzio's actions or inactions in dealing with his own attorney vested that attorney with implied authority to settle on the terms asserted by defendants.
It is important to note that manifestation of a principal's consent to the agent acting with the principal's authority may be made by words or other conduct including acquiescence. Restatement (Second) Agency § 7 comment c (1958). See Sears Mortgage Corp. v. Rose, 134 N.J. 326, 338 (1993) (noting that implied authority may be inferred from "particular circumstances in the case"). Implied authority can be inferred from the words used by the principal, as well as from customs and from the relations of the parties. Sears, supra, 134 N.J. at 338. An agent's conduct is authorized if he is reasonable in drawing an inference that the principal intended him to so act even though that was not the principal's intent. See Restatement (Second) Agency, supra, § 7 comment b. In this matter, Ponzio was told by his counsel that a release and an indemnity for all claims would be required, and according to Tombalakian, that was well explained to him. Ponzio received letters regarding counteroffers from defendants which included those terms, and he failed to communicate to his own counsel or anyone else any objections to those terms until after an agreement had been reached. The extensive factual findings by the trial court support the conclusion that plaintiffs' counsel, Tombalakian, was vested with the appropriate authority on behalf of plaintiffs to enter into the settlement agreement at issue.
Plaintiffs next argue that the failure to disclose insurance coverage created a unilateral mistake which compromised plaintiffs' ability to negotiate with defendants. First of all, the issue of insurance coverage was discussed at the plenary hearing. Plaintiffs' counsel stated to the court that the question of insurance coverage was clearly not the issue, it was the scope of the release. Now on appeal, plaintiffs ascribe error in the court's decision for not finding that the failure to disclose insurance created a unilateral mistake. As this issue was not raised at trial, we would normally disregard it. See R. 2:10-2.
Moreover, we are unaware of any legal or ethical obligation in this particular factual setting which would require adversary counsel to inform her counterpart that there was insurance coverage. When initially asked if there was insurance, counsel stated she did not know. Only later did her client inform her of coverage. There were no outstanding discovery requests which would have mandated continuing disclosure. Plaintiffs' counsel, prior to the agreement to settle, did not seek a confirmation of the absence of coverage, nor did they insist on a warranty or representation that such coverage did not exist.
Even if we were to determine that there was an obligation that gave rise to a unilateral mistake of fact that, standing alone, would not be grounds for avoidance of the settlement. Center 48 Ltd. P'ship v. May Dep't Stores Co., 355 N.J. Super. 390, 412 (App. Div. 2002). Not only must there be a unilateral mistake, it must be of such a great consequence that it would be unconscionable to enforce the contract. Ibid. In this case, where the demand for a release and indemnification was present throughout the matter and, according to the findings of fact, discussed with plaintiffs, it would not be unconscionable to enforce the settlement contract.
Lastly, plaintiffs argue that N.J.S.A. 2A:62A-7 would render the settlement agreement unenforceable. N.J.S.A. 2A:62A-7 insulates from liability for civil damages an individual or business entity that renders care, assistance, or advice with respect to an incident creating a danger to persons, property, or the environment as a result of an imminent, potential, or actual hazardous environmental discharge. The statute is not aimed at protecting parties such as plaintiffs in this context. Rather, it is directed toward providing immunity to parties who take emergent action in the face of imminent environmental danger. We find this argument to be without sufficient merit to warrant discussion in a written opinion. See R. 2:11-3(e)(1)(E). Consequently, we affirm the decision of the trial court.