December 8, 2010
FRANCIS R. GALDO, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
SALLY HAGARTY, DEFENDANT-RESPONDENT/ CROSS-APPELLANT.
On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Camden County, Docket No. FM-04-793-97.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 17, 2010
Before Judges Fisher, Simonelli and Fasciale.
In this post-judgment matrimonial matter, plaintiff Francis Galdo claims error in the trial judge's refusal to enforce an agreement settling the parties' disputes about the payment of a child's college expenses. We find the trial judge should have conducted an evidentiary hearing into the circumstances surrounding the formation of the settlement agreement and remand for that purpose.
The parties were married and had five children. They were divorced by way of a judgment entered in this action in 1997. At the time of the divorce, the parties' four sons resided with Francis and their daughter resided with Sally. When, in February 2007, their son Eric moved in with Sally, she moved for and obtained an order requiring Francis to pay child support at the rate of $92 per week and 68% of Eric's college expenses.
Francis filed an appeal seeking review of the college expense aspect of the order, and Sally moved for enforcement. The parties thereafter agreed to explore settlement, and over the next few months, counsel wrote, emailed and exchanged written proposals; they also agreed to numerous adjournments of Sally's motion and consented to an extension of time to file briefs regarding Francis's appeal. The record demonstrates that Sally received copies of many of those communications.
On March 17, 2009, because their discussions over the previous few months had not borne fruit, Francis's attorney advised Sally's attorney that he intended to initiate proceedings against a trust established by Sally's late father.*fn1
The next day, Sally's attorney faxed another proposed settlement agreement. Francis's attorney emailed a revised copy at 1:48 p.m., on March 19, 2009. Sally's attorney responded by email twelve minutes later, stating: "Agreed . . . please confirm that we have a settlement." At 3:15 p.m., Francis's counsel emailed this response: "This confirms we have a settlement . . . . Please confirm that you will be withdrawing your motion . . . ." Someone at the office of Sally's attorney confirmed with Francis's attorney that the enforcement motion would be withdrawn.*fn2 Later that day, Francis's attorney faxed to Sally's attorney a copy of the settlement agreement executed by Francis.
The record further reveals that Francis took no further action with regard to his appeal, which was dismissed for lack of prosecution on April 30, 2009. Francis also refrained from filing the threatened probate action.
On or about March 19, 2009, Francis moved to terminate his child support obligations for Eric. Sally filed no opposition, and on May 28, 2009, the trial judge entered an order terminating Francis's child support obligation.
On September 29, 2009, Sally -- represented by a new attorney -- moved to vacate the May 28, 2009 order, claiming excusable neglect or mistake in her failure to file opposition; she also sought enforcement of the college-expense portion of an earlier order, which was the subject of the parties' earlier settlement discussions and Francis's abandoned appeal. Francis cross-moved for an order enforcing the March 19, 2009 settlement agreement. On the return date, Sally argued no enforceable settlement agreement had been formed, claiming she did not authorize her attorney to bind her. In response, Francis relied on, among other things, the clear communications between counsel, which revealed a meeting of their minds, as well as the conduct of the parties in the wake of the agreement. By way of his October 30, 2009 order, the judge denied Francis's cross-motion for enforcement of the settlement agreement, denied Sally's motion to vacate the May 28, 2009 order, enforced that part of the September 21, 2007 order that compelled Francis to pay 68% of Eric's college expenses, and denied Sally's request for counsel fees.
Francis quickly moved for reconsideration, and Sally cross-moved for an order compelling Francis to reimburse her $12,000 in tuition payments and for an award of counsel fees. By way of an order entered on January 8, 2010, the judge denied Francis's motion and denied Sally's motion for counsel fees, but granted Sally's motion for an order compelling reimbursement.
Francis filed this appeal, seeking our review of the orders entered on October 30, 2009, and January 8, 2010. Sally cross-appealed, seeking review of that part of the January 8, 2010 order that denied her motion for counsel fees.
Francis's appeal requires our consideration of what it takes for discussions between attorneys to ripen into a binding agreement. We start with the premise that "to be enforceable, matrimonial agreements, as any other agreements, need not necessarily be reduced to writing or placed on the record." Harrington v. Harrington, 281 N.J. Super. 39, 46 (App. Div.), certif. denied, 142 N.J. 455 (1995); see also Brawer v. Brawer, 329 N.J. Super. 273, 284 (App. Div.), certif. denied, 165 N.J. 138 (2000). In comparing the judge's decision with this general principle, we observe that in denying Francis's motion, the judge provided only a brief conclusory statement of his rationale, the entirety of which is contained in the following paragraph of his October 30, 2009 order*fn3
The issue in this motion is the enforceability of an order dated September 21, 2007. [Francis] argues that the order was modified through counsel for [the parties]. Serious negotiations were entered into between the parties attempting to modify the September 21, 2007 order; but without a formal document being prepared and fully executed by the parties, the original court order must be followed. Thereupon, [Francis] is required to pay 68% of Eric's net college expenses. [Emphasis added.]
The emphasized portion of the order reveals the fundamental error in the judge's decision.
Whether all or some aspect of litigation has been settled does not depend on the existence of a written agreement formally executed by the parties to be charged; as in any other circumstance, a binding contract may arise in less formal circumstances. Harrington, supra, 281 N.J. Super. at 46.
Because "[s]ettlement of litigation ranks high in our public policy," Nolan v. Lee Ho, 120 N.J. 465, 472 (1990) (quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61 (1961)), and because our courts will "strain to give effect to the terms of a settlement wherever possible," Dep't of Pub. Advocate v. N.J. Bd. Of Pub. Utils., 206 N.J. Super. 523, 528 (App. Div. 1985), the trial judge's holding that the matter could not be settled without a written and formally executed contract was erroneous. Accord Jennings v. Reed, 381 N.J. Super. 217, 228-29 (App. Div. 2005). That leaves, however, the question of whether what transpired in this case sufficiently ripened into a settlement agreement binding upon Sally.
In considering that question, we first recognize it is beyond dispute that counsel for both parties understood that the purpose of their discussions leading up to their final exchanges on March 19, 2009, was to settle the dispute over college expenses. There is also no question that Sally had some degree of knowledge of and involvement in the discussions; letters sent by Sally's attorney to Francis's attorney in this regard indicate they were also forwarded to Sally. She certainly understood her attorney was negotiating with Francis's attorney as revealed by her own email on March 10, 2009, in which she asked her attorney about the status of the matter and outlined the terms to which she would agree.
There is also no genuine dispute that the communications between the parties' attorneys on March 19, 2009, led to their agreement as to all disputed terms. As mentioned earlier, Sally's attorney emailed late that afternoon expressing to Francis's attorney his agreement with the last proposal and asking for final confirmation, which was given and, indeed, followed by the transmission of the written agreement bearing Francis's signature. Certainly, the attorneys and Francis as well understood there was a meeting of the minds.
Notwithstanding the clarity of the attorneys' statements to each other, Sally contends that her attorney did not have the authority to bind her. She chiefly relies on Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 475 (App. Div. 1997), where we expressed "the general rule . . . that unless an attorney is specifically authorized by the client to settle a case, the consent of the client is necessary." Seizing on this language, Sally contends that the agreement reached by the attorneys cannot be enforced because she neither authorized her attorney to settle the case nor consented to the terms of the agreement. This argument, however, represents an over-simplification of the problem presented. Amatuzzo, in stating a general rule, did not undermine the well-established principle that "stipulations . . . made by attorneys when acting within the scope of their authority are enforceable against their clients." Jennings, supra, 381 N.J. Super. at 230 (quoting Carlsen v. Carlsen, 49 N.J. Super. 130, 137 (App. Div. 1958)).
In declaiming against a settlement agreement stipulated to by both attorneys and the adverse party, Sally was saddled with the "heavy burden to establish that [her] attorney acted without any kind of authority." Id. at 231 (quoting Sur. Ins. Co. of Cal. v. Williams, 729 F.2d 581, 583 (8th Cir. 1984)). In seeking to sustain this burden, Sally presented only her self-serving sworn statements that her attorney was not authorized to bind her. In the face of the numerous other circumstances that suggest otherwise -- particularly the absence of a sworn statement from Sally's attorney revealing the content of their discussions and his understanding as to whether he was authorized -- we conclude that the judge erred when he rejected enforcement of the settlement agreement without further development of the issues. In essence, the judge not only refused to enforce the settlement agreement because it was not fully and solemnly executed -- a holding that was erroneous as a matter of law -- but he also appears to have credited Sally's self-serving statements in the face of contrary evidence and without a recognition that as compelling a case as Francis made, he could do no more since the critical evidence needed to support Sally's position was not accessible to him.*fn4
A plenary hearing is required, at which time the judge must determine
whether Sally's attorney was authorized to act on her behalf when he
reached an agreement with Francis's attorney on March 19, 2009. In
seeking such a ruling, Sally must sustain the heavy burden described
in Jennings. In determining whether the attorney acted with or without
Sally's expressed authority, the judge should closely examine the
circumstances leading up to the events that transpired on March 19,
2009. The judge may also consider the events that followed. Parties'
subsequent acts or omissions may provide considerable insight into
whether they understood they had settled or not. Cf. Michaels v.
Brookchester, Inc., 26 N.J. 379, 388 (1958) (recognizing that "the
subsequent conduct of the parties in the performance of the
agreement may serve to reveal their original understanding").
Moreover, the subsequent actions taken by Francis warrant considerable examination not only because Francis clearly acted as if an agreement had been reached,*fn5 but also because those events may require -- in the exercise of the judge's equity jurisdiction -- a finding that Sally should be estopped from claiming her attorney's lack of authority in entering into the settlement agreement. It is undisputed that -- in the wake of what transpired on March 19, 2009 -- Francis took no further action with regard to his appeal, which led to its dismissal, and did not file the threatened probate action, which he claims is now time-barred. Should further exploration of these circumstances demonstrate that Francis irretrievably abandoned those claims or rights because of his legitimate assumption that the college-expense issue had been settled, the judge may conclude that Sally's silence for many months following the March 19, 2009 communications, bars her from arguing that no enforceable agreement was then formed. In short, the judge in those circumstances could find that by remaining silent when Francis allowed his appeal to be dismissed and abandoned the nascent probate action, Sally should be barred from now being heard to dispute the existence of a settlement agreement. Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N.J. 493, 503-04 (1955); In re Estate of Schinn, 394 N.J. Super. 55, 69-70 (App. Div.), certif. denied, 192 N.J. 595 (2007). In the words of a chancery court long ago, "he who is silent when conscience requires him to speak, shall not be permitted to speak when conscience requires him to be silent." Besson v. Eveland, 26 N.J. Eq. 468, 472 (Ch. 1875).
We, thus, remand for an evidentiary hearing for the exploration of these issues. In light of this disposition of Francis's appeal, we do not reach the counsel-fee issue raised in Sally's cross-appeal. Whether or to what extent counsel fees may be awarded must abide the resolution of the issues that will be examined following today's judgment.
The orders under review are vacated and the matter remanded for an evidentiary hearing in conformity with this opinion. We do not retain jurisdiction.