July 19, 2010
ALVARO CORES, PLAINTIFF-APPELLANT, AND JENNY CORES, PLAINTIFF,
ATLANTIC CITY HIGH SCHOOL, ATLANTIC CITY BOARD OF EDUCATION, DR. THOMAS KIRSCHLING, PAUL SPINELLI, AND KENNETH FLOOD, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-419-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 14, 2010
Before Judges Miniman and Waugh.
Plaintiff Alvaro Cores appeals the Law Division's order directing him to execute an agreement to settle the lawsuit that he and his wife, plaintiff Jenny Cores, filed against defendants Atlantic City High School (ACHS), Atlantic City Board of Education (Board), Dr. Thomas Kirschling, Paul Spinelli, and Kenneth Flood. The order also required his counsel to sign a stipulation of dismissal. We affirm.
We discern the following factual and procedural background from the record.
In January 2008, plaintiffs*fn1 filed a complaint alleging that defendants engaged in race-based discrimination and harassment against them. Both plaintiffs were employed by ACHS, Alvaro as an assistant principal and Jenny as a secretary. According to their complaint, Alvaro was diagnosed with a stomach infection that caused recurring absences from work. Alvaro claims that, upon his return to work, Spinelli, a social studies teacher at ACHS, and Flood, another assistant principal, created four flyers and distributed them throughout ACHS. He further claims that the flyers mocked his race and Hispanic heritage. He also contends that Spinelli and Flood made harassing comments in a similar vein.
In his complaint, Alvaro alleged that his superiors at ACHS and members of the Board failed to take appropriate remedial action when he reported the alleged discriminatory conduct. He specifically contends that the principal failed to follow through with promises of an investigation to determine who distributed the flyers and that Kirschling, the assistant superintendent in charge of human resources, never responded to his request for a transfer to another position. The complaint also alleges that there were acts of discrimination and harassment against Jenny.
After the litigation was started, defendants retained a forensic computer investigator to examine the school-issued computers given to Alvaro, Flood and Spinelli. The investigators concluded that three of the offensive flyers had been transferred to Alvaro's computer from another source, and that one flyer had been created on his computer. Defendants forwarded the report to Alvaro's then attorney, David Zatuchni, and to Jenny, who was proceeding pro se at that time. Defendants included a letter dated October 22, 2008, demanding that the complaint be withdrawn and that plaintiffs reimburse defendants' legal fees and costs.
After plaintiffs and Zatuchni received the report, Jenny signed a stipulation of dismissal with prejudice. Zatuchni began settlement negotiations with defendants in an e-mail dated November 5, 2008, which stated that Alvaro was "willing to dismiss his claims with prejudice if the parties are responsible for all their own fees and costs." The next day, defense counsel responded that his clients would accept Alvaro's terms if he would agree to sign a general release of all claims. In a November 7 e-mail, Zatuchni replied: "This is acceptable. Please forward me the paperwork at your convenience by e-mail in Word format." Defense counsel sent a letter dated December 16, 2008, to confirm the settlement and attached a copy of the proposed settlement agreement.
Having received neither an objection to the form of the agreement nor an executed copy for over a month, defense counsel wrote to Zatuchni on February 12, 2009, stating that, if the settlement agreement was not returned, defendants would file a motion to enforce settlement. On February 16, 2009, Zatuchni responded that Alvaro would execute the agreement if the release of claims was mutual and if the agreement included a mutual nondisparagement clause. Zatuchni's response set forth specific language to be added to the agreement drafted by defense counsel and stated that, "[i]f acceptable, [Alvaro] will sign the written Settlement Agreement and we can conclude this matter." According to defense counsel, he notified Zatuchni on March 18, 2008, that his clients agreed to the additional terms.
At some point thereafter, Alvaro retained new counsel. Defendants received a letter dated March 30, 2009, with a substitution of attorney form executed by Zatuchni and Alvaro's new counsel, Clifford L. Van Syoc. Defendants forwarded the settlement agreement with Alvaro's requested amendments to Van Syoc a few days later. On May 12, 2009, after having received no response from Van Syoc, defendants filed a motion to enforce settlement.
Plaintiffs filed an opposition to the motion, in which Alvaro certified that he never "freely and voluntarily agreed to drop [his] case in return for nothing" and that he only had "initial discussions regarding settlement" with his former counsel. In the certification, Alvaro also denied having created the flyers and explained that he saved copies of the flyers on his school-issued computer after he found them at ACHS. He also certified that it was his understanding that Zatuchni, who had agreed to represent Alvaro on a contingent-fee basis and to advance all costs, could not afford an expert to refute the investigator's report. Alvaro asserted that the cost issues led to settlement discussions and motivated Zatuchni to act in his own financial interest. According to Alvaro, after having received a draft of the settlement agreement, he sought the advice of Van Syoc and decided to proceed with the litigation.
On June 12, 2009, Judge Steven P. Perskie, having considered the motion and opposition papers without oral argument, signed an order enforcing the settlement agreement. In his memorandum of decision, Judge Perskie held that
It is clear that the parties manifested the intention to enter into a settlement agreement. On February 16, 2009, Zatuchni sent an e-mail to Defendants advising Defendants that Alvaro would sign an agreement if the agreement included a mutual release of claims and a mutual nondisparagement clause. Zatuchni further wrote: "[i]f acceptable, [Alvaro] will sign the written Settlement Agreement and we can conclude this matter." (Emphasis added). Defendant then notified Zatuchni that they agreed to the additional terms and prepared the settlement agreement.
There is no issue regarding the Board's consent to the settlement agreement. Defendants' Counsel Gregory S. Hyman, Esq. (Hyman) acting with authority on behalf of the Board has certified that the Board agrees to settlement. Furthermore, there is nothing to suggest that Alvaro was not represented by an "independent counsel." There is no evidence that Zatuchni had a relationship with Defendants that would have interfered with his representation of Alvaro.
Alvaro agreed to the settlement while being represented by Zatuchni... and there has been no demonstration of fraud or other compelling circumstances that would preclude the court from enforcing the agreement. Accordingly, the court grants Defendants' motion to enforce a settlement agreement....
In the order, Judge Perskie required Alvaro to execute the settlement agreement and his counsel to execute a stipulation of dismissal with prejudice. On July 9, 2009, both documents were signed "under protest" by Alvaro and Van Syoc. This appeal followed.
Alvaro argues on appeal that the motion judge erred by failing to hold an evidentiary hearing to determine disputed issues of fact and by determining, on the record then before him, that he had agreed to the settlement.
We have considered defendant's arguments in light of the record and applicable law, and affirm substantially for the reasons expressed by Judge Perskie in his memorandum of decision. We add the following comments.
A settlement of a legal claim between parties is a contract like any other contract, Nolan v. Lee Ho, 120 N.J. 465, 472 (1990), which "may be freely entered into and which a court, absent a demonstration of 'fraud or other compelling circumstances,' should honor and enforce as it does other contracts," Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div.) (quoting Honeywell v. Bubb, 130 N.J. Super. 130, 136 (App. Div. 1974)), certif. denied, 94 N.J. 600 (1983). That the agreement was oral, instead of written, is of no consequence. Pascarella, supra, 190 N.J. Super. at 124. "Where the parties agree upon the essential terms of a settlement, so that the mechanics can be 'fleshed out' in a writing to be thereafter executed, the settlement will be enforced notwithstanding the fact the writing does not materialize because a party later reneges." Lahue v. Pio Costa, 263 N.J. Super. 575, 596 (App. Div.), certif. denied, 134 N.J. 477 (1993). See also Jennings v. Reed, 381 N.J. Super. 217, 227-29 (App. Div. 2005).
The burden of proving that the parties had entered into a settlement agreement is upon the party seeking to enforce the settlement. Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 475 (App. Div. 1997). "On a disputed motion to enforce a settlement, as on a motion for summary judgment, 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 rationale factfinder, to resolve the disputed factual issues in favor of the non-moving party." Id. at 474-75. However, not every factual dispute on a motion requires a plenary hearing; a plenary hearing is only necessary to resolve a genuine issue of a material fact. Eaton v. Grau, 368 N.J. Super. 215, 222 (App. Div. 2004); Harrington v. Harrington, 281 N.J. Super. 39, 47 (App. Div.), certif. denied, 142 N.J. 455 (1995); Adler v. Adler, 229 N.J. Super. 496, 500 (App. Div. 1988). Here, contrary to Amatuzzo, supra, 305 N.J. Super. at 474, we are satisfied there are no material issues of fact requiring a plenary hearing.
The trial judge correctly determined, from review of the extensive record of communications between counsel, that the parties had agreed to a settlement. Alvaro has never specifically denied that his then attorney, Zatuchni, was authorized to negotiate a settlement, nor has he specifically denied that any of the representations made by Zatuchni to defense counsel about Alvaro's willingness to settle were unauthorized. Instead, he claims that the agreement required him to consult "independent counsel" other than Zatuchni and that, when he did so, he was advised not to settle.
We find that argument unpersuasive. First, as held in Lahue, supra, 263 N.J. Super. at 596, once the essential terms had been agreed to, here, that Alvaro would dismiss his claims if defendants would make no claim for counsel fees or costs, the settlement was complete. The wording of releases was simply a matter to "be 'fleshed out' in a writing to be thereafter executed." Ibid. Second, the issue of releases was actually "fleshed out," and Alvaro, through his then attorney, agreed to sign the documents prepared by defense counsel. Most significantly in our view, Alvaro's certification in opposition to the motion to enforce the settlement did not specifically assert that he did not authorize Zatuchni's February 16, 2009, communication that he would sign the agreement if that additional language was included.
Finally, we see no merit in Alvaro's claim that the agreement as drafted contemplated that he would consult an attorney other than Zatuchni. The language about "independent counsel" was simply boilerplate settlement-agreement language. Here, Alvaro was represented by his own counsel, Zatuchni, during the settlement negotiations.
In any event, although we have concluded that Zatuchni had actual authority, he clearly had apparent authority to settle the case and defendants were entitled to rely on that authority. Jennings, supra, 381 N.J. Super. at 230-32 ("[A]n attorney is presumed to possess authority to act on behalf of the client[.]"). To the extent Alvaro is unhappy with his representation, he may have a claim against Zatuchni. See Guido v. Duane Morris LLP, ____ N.J. ____, ____ (2010) (slip op. at 18-23).
There is a strong public policy in New Jersey favoring settlements. See Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008) ("Fundamental to our jurisprudence relating to settlements is the principle that '[t]he settlement of litigation ranks high in our public policy.'" (quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif denied, 35 N.J. 61 (1961))); Jennings, supra, 381 N.J. Super. at 226-27. That Alvaro may have had second thoughts about the settlement before he actually signed the agreement does not vitiate that settlement.