October 18, 2010
RANDY SENNA, T/A FLIPPERS FASCINATION, PLAINTIFF-APPELLANT,
WALTER FLORIMONT, ROBERT MEHLBAUM, 2400 AMUSEMENTS, INC., T/A OLYMPIC ENTERPRISES, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-576-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 29, 2010
Before Judges Wefing and Payne.
Plaintiff, Randy Senna, appeals from an August 28, 2009 order enforcing a settlement with defendants Walter Florimont and 2400 Amusements, Inc. t/a Olympic Enterprises (Florimont).*fn1
This matter arises out of a defamation action filed on October 16, 2003 by Senna against a business rival, Florimont, who at the time operated a competing boardwalk game known as Fascination. On March 31, 2006, the trial court granted defendant's motion for summary judgment, and we affirmed in an unreported opinion, holding that the trial court had properly applied an actual-malice standard in granting summary judgment on Senna's defamation claim. Senna v. Florimont, No. A-4605-05 (App. Div. May 30, 2007). The Supreme Court reversed and remanded the matter for further proceedings, holding "that the false and defamatory verbal broadsides of defendant's employees, impugning the honesty of a business competitor, fell into the category of commercial speech that is not entitled to heightened protection under the actual-malice standard." See Senna v. Florimont, 196 N.J. 469, 474 (2008).
On remand, Florimont again moved for summary judgment. While the motion was pending, extensive settlement negotiations took place within and outside of Senna's presence. At some point Senna offered to settle the matter for $15,000 plus an amount of up to $5,000 to be used to purchase Fascination machines from Florimont's business successor. However, Florimont declined to settle on those terms because the settlement was contingent upon the participation of a non-party.
Following denial of summary judgment on May 28, 2009, settlement negotiations were renewed and, that day, a $20,000 cash-only settlement offer was allegedly accepted by Senna. Counsel for Florimont, Frank L. Corrado, has certified that, after Florimont accepted the settlement, Corrado contacted counsel for Senna, Scott E. Becker, and "specifically asked Mr. Becker to confirm that plaintiff had authorized this 'cash-only' settlement and that there was no requirement that the equipment be purchased." Becker confirmed Corrado's understanding.
On June 3, 2009, Corrado e-mailed drafts of a settlement agreement and stipulation of dismissal to Becker. However, Becker responded by stating that Senna would not agree to the settlement. The e-mail stated:
Randy advised me last night that he never agreed to the settlement. Apparently, its not about the amount. Rather, because he thought he was going to [be] able to use the extra money to make the deal for the equipment. After speaking with him 2 or more times, after Thursday, I believed he understood the terms, but he disagrees. I had already let Kim [a court employee] know the matter was settled. At this point, unless he is able to make his deal with the new owners today, I will have to report his problem to the court. I also advised him that I would seek to withdraw from the case.
I apologize for the trouble, but I don't believe I have ever had this problem before.
I'll keep you advised.
Senna did not change his position, and as a result, Florimont tendered the settlement amount and, after its refusal, moved to enforce the settlement. In support of his motion, Florimont relied on the certification of Corrado, which set forth the facts as we have stated them. Becker responded, in relevant part:
2. Having reviewed Mr. Corrado's certification, I find his sequence of events to be accurate.
3. After speaking with my client it was my understanding that he had agreed to settle the matter for $20,000 after he presented that increased amount to me over the proposal for $15,000 plus the machines.
4. I did not understand that the extra money he was requesting . . . was to purchase the machines and that the settlement was contingent on a purchase.
5. It was not until a few days later that a third party advised me that the plaintiff did not consider the case settled.
6. Upon hearing this, I spoke to the plaintiff and then advised Mr. Corrado of the situation.
7. Following that time, we made unsuccessful efforts to effectuate the purchase of the machines.
In contrast, in a separate certification, Senna recounted the history of Florimont's rejection of Senna's demand for $15,000 along with a fund to permit Senna's buy-back of the Fascination machines because Florimont no longer owned them. Senna also confirmed that, thereafter, he had been advised that Florimont's insurer, which had initially offered $15,000, was now willing to pay $20,000, "which could be used to pay the third party for the buy-back of the Fascination machines and related equipment." Significantly, Senna neglected to discuss in his certification whether or not he authorized a "counter offer" for the $20,000. Rather, he proceeded directly to describe his unsuccessful efforts to purchase the machines, and then he asserted: "My offer was always meant to be contingent on my getting the machines" (emphasis supplied) and that "somewhere" what Senna termed as his "counter offer" became "twisted." Senna stated:
12. As the court is aware from assisting with settlement negotiations, this is a very emotional matter for me and the machines and game of Fascination are very important to me and an integral part of my life. I never thought the money offered was adequate, but was willing to accept it if I was at least getting the machines.
According to Senna, the present owner of the machines was willing to sell them back to Florimont only on the condition that Florimont renegotiate the terms of a lease between them, and Florimont was unwilling to do so.
The parties waived an evidentiary hearing on the motion, which was granted following oral argument on August 29, 2009. Basing his decision on facts that counsel conceded were undisputed, the judge determined that Becker possessed the apparent authority to settle the matter on behalf of his client, Senna. On October 9, 2009, the court heard and denied Senna's motion for reconsideration.
We have previously held:
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 rational factfinder, to resolve the disputed factual issues in favor of the non-moving party. See Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) (setting forth standard for review of a summary judgment motion). [Amatuzzo v. Kosmiuk, 305 N.J. Super. 469, 475 (App. Div. 1997).]
As we have illustrated, in the present case, the facts were sufficiently one-sided to permit a resolution of Florimont's motion without a hearing, since neither counsel nor Senna disputed that Senna had authorized settlement of the matter.
On appeal, Senna does not contest that conclusion, but instead argues that there was "no meeting of the minds." As Florimont points out, however, what Senna is arguing is that the settlement should be voided on the grounds of unilateral mistake of fact on Senna's part as to whether he would be able to purchase the Fascination machines. However, we have held as a general principle that "a unilateral mistake of fact, unknown to the other party, is not ordinarily ground for avoidance of a contract." Center 48 Ltd. P'ship v. May Dept. Stores Co., 355 N.J. Super. 390, 412 (App. Div. 2002) (citing Intertech Assocs., Inc. v. City of Paterson, 255 N.J. Super. 52 (App. Div. 1992)).
We have occasionally granted rescission based on unilateral mistake of fact in the context of public bids. See Intertech, supra, 355 N.J. Super. at 59-65. However, we have held in that context that:
"To qualify for the equitable relief sought, [the party] must show special circumstances justifying a departure from the generally controlling principle that parties are bound by the contracts they make for themselves." Cataldo Constr. Co. v. County of Essex, 110 N.J. Super. [414,] 418 [(Ch. Div. 1970)]. These special circumstances have been described as: (1) the mistake must be of so great a consequence that to enforce the contract as actually made would be unconscionable; (2) the matter as to which the mistake was made must relate to the material feature of the contract; (3) the mistake must have occurred notwithstanding the exercise of reasonable care by the party making the mistake, and (4) the requested rescission cannot cause serious prejudice to the other party, except for loss of bargain. [Intertech, supra, 255 N.J. Super. at 59-60 (citing Conduit & Found. Corp. v. Atlantic City, 2 N.J. Super. 433, 440 (Ch. Div. 1949)).
This matter of course is not a public bidding one, but rather is a private dispute between two business persons. Moreover, even if we were to deem this precedent applicable, Senna cannot establish special circumstances, since he has not demonstrated that to enforce the settlement as negotiated would be either procedurally or substantively unconscionable or that he exercised due care, particularly in light of Becker's efforts to clearly convey the solely monetary nature of the settlement. See Kugler v. Romaine, 58 N.J. 522, 543-44 (1971) (defining unconscionability); Sitogum Holdings, Inc. v. Ropes, 352 N.J. Super., 555, 564-65 (Ch. Div. 2002) (distinguishing between procedural and substantive unconscionability); Cataldo Constr. Co. v. Cnty. of Essex, 110 N.J. Super. 414, 421-42 (Ch. Div. 1970) (discussing due care).
Senna relies on our opinion in Villaneuva v. Amica Mut. Ins. Co., 374 N.J. Super. 283 (App. Div. 2005) in support of his position that the settlement should be rescinded. However, that decision, recognizing as valid the defendant insurer's rescission of a settlement agreement prior to payment based upon a $15,000 mistake of fact regarding the limits of coverage, was decided under the same considerations that we adopted in Intertech and Conduit. Id. at 289-90. We have already concluded that Senna has failed to present evidence that satisfies those considerations. Moreover, in Villanueva, it was the policyholder, as a proposed recipient of a settlement that exceeded policy limits, who sought its enforcement, not the payor. Thus considerations of unjust enrichment were present that are absent here.
The Supreme Court has held:
A settlement agreement between the parties to a lawsuit is a contract. "Settlement of litigation ranks high in our public policy." Consequently, our courts have refused to vacate final settlements absent compelling circumstances. In general, settlement agreements will be honored "absent a demonstration of 'fraud or other compelling circumstances.'" Before vacating a settlement agreement, our courts require "clear and convincing proof" that the agreement should be vacated. [Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (citations omitted).]
Our careful review of the record in this matter satisfies us that such "clear and convincing proof" was not offered by Senna.