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Passaic Beth Israel Hospital v. Perez


March 7, 2008


On appeal from the Superior Court, Law Division, Essex County, Docket No. L-1025-07 in Docket No. A-4595-06T2 and on appeal from the Division of Workers' Compensation, CP No. 98-13475 in Docket No. A-4806-06T3.

Per curiam.


Submitted February 25, 2008

Before Judges C.S. Fisher and C.L. Miniman.

In these appeals,*fn1 we primarily consider whether the Law Division judge correctly determined that a settlement agreement reached by the parties in a discrimination/wrongful termination action also encompassed a workers' compensation claim then pending. We conclude, after careful review of the record, that the settlement agreement is ambiguous in this regard and cannot be accurately interpreted without an evidentiary hearing.

The record on appeal reveals that Lorenzo Perez (Perez) was first employed by Passaic Beth Israel Hospital (the hospital) in 1981 as a staff mechanic. His employment was terminated on November 1, 1996. On October 22, 1997, Perez filed a complaint against the hospital in the Law Division in Essex County alleging he was terminated for discriminatory or retaliatory reasons. He also filed a claim petition in the Division of Workers' Compensation in Passaic County on April 21, 1998. These claims were filed on Perez's behalf by different attorneys; the hospital's responsive pleadings in these matters were also filed by different attorneys.

The record reveals that the Law Division action was settled by the execution of a document entitled "Negotiated Settlement Agreement and General Release" (hereafter "the settlement agreement") in February 2000. The settlement agreement expressly indicated the parties' desire "to avoid further proceedings with respect to certain claims that [Perez] has made against [the hospital] in the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-12016-97." The hospital promised to pay $35,000, and Perez:

-- agreed to "dismiss[], with prejudice and without an award of costs or attorneys' fees, . . . the complaint filed in the Litigation"*fn2;

-- "unconditionally and irrevocably discharge[d] and release[d] [the hospital] . . . of and from any and all claims, known or unknown, that [Perez], has or may have against [the hospital] as of the date of execution of [the settlement agreement], including, but not limited to those claims set forth in the Litigation, or otherwise arising out of his employment or termination of employment or any alleged violation" of a series of federal and state statutes that were set forth in the body of the settlement agreement*fn3;

-- agreed to waive and not seek employment with the hospital in the future;

-- "confirm[ed] that no claim, charge, complaint or action against [the hospital], other than the Litigation . . ., exists in any forum or form," and "[i]n the event that any such claim, charge, complaint or action is filed, [Perez] shall not be entitled to recover any relief or recovery therefrom, including costs and attorneys' fees."

Perez also acknowledged in the settlement agreement that he was "given a reasonable period of time to consider the terms of this

[a]greement," that he "reviewed the terms of this [a]greement . . . with legal counsel of his choosing," and that he "underst[ood] and agree[d] that this [a]greement settles, bars and waives any and all claims that he has or could possibly have against [the hospital]." The parties further stipulated that the settlement agreement contained "the entire agreement between the parties," that it could not be modified "except upon express written consent of both parties," and that it could be "specifically enforce[d]" by way of a civil suit.

The record on appeal does not reveal what occurred with the compensation action immediately after execution of the settlement agreement. The record does reveal, however, that the compensation matter was not then dismissed. Indeed, it remained on the docket, and a trial eventually began on December 8, 2005, well over five years after execution of the settlement agreement, without a discouraging word from the hospital. In addition, the existence of the settlement agreement appears not to have been brought to the compensation judge's attention until ten months after the trial started, as evidenced by the following colloquy during the trial on September 28, 2006:

[PEREZ]: Every time I signed a document, every time I signed the document I asked [my attorney] if I was going to give up these rights.

THE COURT: And he said to you no.

[PEREZ]: He said no to me.

THE COURT: That's what [Perez's attorney] told me in chambers.

It was not until four months later that the hospital moved for the action's dismissal. The compensation judge correctly concluded that whether the compensation claim remained viable required an interpretation of the settlement agreement, and he sensibly held that a claim for declaratory relief regarding the meaning of the settlement agreement was more properly pursued in the superior court. As a result, he denied the motion to dismiss and continued on with the trial.*fn4

As a result, the hospital filed a civil action in the Law Division, Passaic County; its argument regarding the scope of the settlement agreement was brought before the court by way of an order to show cause. Based on the language of the settlement agreement and the argument of counsel, the Law Division judge (hereafter "the motion judge") concluded that the compensation claim was encompassed by the broad language of the settlement agreement. Consequently, the motion judge entered an order on March 27, 2007, which barred Perez "from pursuing all claims against [the hospital] arising out of his employment, including his claim in the Division of Worker's Compensation that is presently pending." In the wake of that determination, the compensation judge entered an order on April 2, 2007, which dismissed Perez's compensation claim. Perez thereafter appealed the Law Division order of March 27, 2007 and the workers' compensation order of April 2, 2007.

We briefly consider the approach taken by the compensation judge. He concluded that the interpretation of the settlement agreement was a matter that rested solely within the jurisdiction of the superior court and refused to consider the merits of the hospital's first motion to dismiss. And, when an order was later entered by the motion judge as to the settlement agreement's meaning, the compensation judge adhered to that determination and dismissed the compensation petition. We need not survey the extent to which the compensation court may have had jurisdiction to determine the settlement agreement's impact on the matter before him. That question is far from clear. See, e.g., Perry v. Dep't of Law & Pub. Safety, 153 N.J. 249, 252 (1998). However, the particular circumstances of this case do not require that we outline where the jurisdiction of the compensation court ended or whether the compensation judge was permitted to consider the meaning of the settlement agreement insofar as it impacted on the viability of the compensation claim. Since the compensation judge relied upon the determination of the motion judge and never reached his own determination on the merits, we need only turn our attention to the motion judge's determination that the settlement agreement barred the compensation claim.

The hospital, in seeking an interpretation of the settlement agreement, filed what was labeled a "verified complaint." What is contained in the appendix, however, is a complaint that was not verified in the manner required by R. 1:4-7; the complaint was merely executed by counsel, who also appended only a certification pursuant to R. 4:5-1, but not a certification or affidavit from his client swearing to the truth of the complaint's allegations. And, although the appendix contains a certification submitted in support of the hospital's order to show cause, that certification was executed by the hospital's current attorney, who possessed no personal knowledge regarding the settlement agreement.

We observe that attorneys are not normally individuals possessing personal knowledge of relevant facts. See Gonzalez v. Ideal Tile Importing Co., Inc., 371 N.J. Super. 349, 358 (App. Div. 2004), aff'd, 184 N.J. 415 (2005), cert. denied, 546 U.S. 1092, 126 S.Ct. 1042, 163 L.Ed. 2d 857 (2006). Admittedly, there are times when attorneys may convey facts relevant to issues in dispute, usually relating to proceedings that occurred in court or the fact that particular papers were filed or served.*fn5 Here, in fact, there were matters solely within the knowledge of attorneys that bore on the issues raised by the order to show cause. Certainly, the attorneys who gave advice, who drafted, or who had input into the content of the settlement agreement would possess knowledge relevant to the settlement agreement's meaning. The problem is that those facts were possessed by attorneys other than the certifying attorney, who was not counsel to the hospital in the wrongful termination suit and was not involved in the negotiation or execution of the settlement agreement.

As a result, the record contains little more of substance about the scope of the February 2000 settlement beyond the settlement agreement itself. The parties did not submit the certifications of their clients as to their intentions in entering into the settlement agreement, nor, as we have mentioned, did the parties submit the certifications of any of the attorneys involved in the negotiation or drafting of the settlement agreement. Accordingly, the parties left it to the motion judge to ascertain the settlement agreement's meaning without extrinsic evidence about the agreement and the surrounding circumstances. As a result, in ruling in favor of the hospital, the motion judge provided his view of the scope and meaning of the settlement agreement based solely on his review of the settlement agreement itself. Those views are not entitled to any special deference. See Kas Oriental Rugs, Inc. v. Ellman, 394 N.J. Super. 278, 287 (App. Div.), certif. denied, 192 N.J. 74 (2007).

An examination of all that falls within the four corners of the settlement agreement inevitably leads to a conclusion that its impact on the workers' compensation claim is uncertain and ambiguous. As we have observed, the language used to describe those things that Perez released or waived is indeed broad, as the motion judge also concluded. But the absence of any reference to the compensation claim pending at that time generates an ambiguity that cannot be resolved in this record.

One fact of interest that was conclusively established was that the hospital was aware of the existence of the compensation claim prior to the settlement because it filed a motion to stay the wrongful termination case pending the completion of the workers' compensation claim.*fn6 As a result, the broad language in the settlement agreement, which might suggest that the compensation claim was being waived, is countered by the parties' failure to mention the compensation claim in the otherwise thorough settlement agreement.

In addition, insight into the parties' intentions in entering into an agreement may be gained by resort to their subsequent actions. See Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958) (holding that "[w]here ambiguity exists, the subsequent conduct of the parties in the performance of the agreement may serve to reveal their original understanding"). Here, the record does not contain any evidence of plaintiff's execution of a stipulation of dismissal of the compensation claim at the time the settlement agreement was executed. And, in fact, the compensation claim continued unabated until the hospital sought its dismissal based on the settlement agreement -- six years after the settlement -- in the midst of trial.

We conclude that the scope of the parties' undertaking in February 2000 could not be determined by resort only to the settlement agreement or the few other circumstances referenced in the papers submitted to the motion judge. The agreement is ambiguous since it does not mention -- as either released or preserved -- the compensation claim that the hospital knew was pending at the time. And it appears on the rather bald record that the parties thereafter acted as if the compensation claim remained viable despite execution of the settlement agreement. These factors place the scope of the settlement agreement in question and the motion judge could not have sufficiently resolved the parties' dispute without the illumination that could be provided by an evidentiary hearing.

For these reasons, we vacate the Law Division order of March 27, 2007 and remand for an evidentiary hearing directed toward the meaning of the settlement agreement. We affirm the workers' compensation order of April 2, 2007 insofar as the compensation judge held he was bound by the Law Division determination as to the meaning and scope of the settlement agreement. However, because we have vacated the Law Division order of March 27, 2007, we must also vacate the compensation judge's order of dismissal of April 2, 2007. The workers' compensation matter should remain in abeyance pending resolution of the dispute in the Law Division.

We do not retain jurisdiction.

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