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Felice Zalk and Glen Zalk v. One Beacon Insurance Company

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 29, 2011

FELICE ZALK AND GLEN ZALK, PLAINTIFFS-RESPONDENTS,
v.
ONE BEACON INSURANCE COMPANY, DEFENDANT-RESPONDENT.
RINALDO AND RINALDO, ESQS., INTERVENOR-APPELLANT.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-3769-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Telephonically argued February 3, 2011

Before Judges Fuentes, Gilroy and Ashrafi.

This is an underinsured motorist (UIM) coverage action. Intervenor, the law firm of Rinaldo and Rinaldo, appeals from: the April 22, 2009 order that denied defendant One Beacon Insurance Company's motion seeking to enforce an alleged settlement of a UIM claim and granted plaintiffs Felice Zalk and Glen Zalk's motion seeking a plenary hearing pursuant to our prior remand, Zalk v. One Beacon Insurance Company, No. A-3625-05 (App. Div. January 16, 2007); from the June 30, 2009 order that granted defendant's motion seeking to reopen the plenary hearing to take testimony from one of defendant's attorneys concerning the timeliness of plaintiffs' complaint; and from the November 16, 2009 order that granted defendant's motion for summary judgment dismissing plaintiffs' complaint as untimely filed.*fn1 Intervenor also appeals from the January 8, 2010 order that denied its motion for reconsideration, or in the alternative, for a new plenary hearing. We affirm.

Because the procedural history and statement of facts leading to the filing of the complaint were discussed at length in our prior opinion, it is unnecessary for us to detail them here. However, the following summary will place this opinion in context.

I-A.

Plaintiff was injured in an automobile accident on November 15, 1996, when her automobile collided with a vehicle operated by tortfeasor Grace Narcisse. Plaintiff's vehicle was insured by General Accident Insurance Company*fn2 with a single-limit policy that provided $300,000 in uninsured and UIM coverage; Narcisse's vehicle was insured for liability coverage by Allstate Insurance Company with limits of $25,000 per person and $50,000 per accident. Plaintiff retained Matthew Rinaldo of the intervenor law firm*fn3 to represent her in a personal injury damage claim. On January 22, 2001, Matthew Rinaldo sent a Longworth*fn4 letter to defendant advising that plaintiff had received a $15,000 offer from Allstate to settle her personal injury claim against the tortfeasor, and that plaintiff desired to accept that offer and pursue a UIM claim against defendant by providing defendant with a $25,000 credit against the UIM coverage. Defendant's counsel rejected the offer advising plaintiff's counsel that it was necessary for plaintiff to first exhaust the tortfeasor's liability policy limits before proceeding to UIM arbitration.

On April 4, 2003, plaintiff accepted Allstate's offer to settle her personal injury claim against the tortfeasor for $15,000. On October 24, 2005, plaintiff filed her UIM complaint against defendant. Defendant filed a motion seeking summary judgment, contending that the complaint was time barred, having been filed more than six years post-accident. In opposing the motion, Matthew Rinaldo filed a certification stating that defense counsel had verbally agreed during the limitations period that defendant would proceed to UIM arbitration, but defendant failed to do so. On February 3, 2006, the trial court entered an order granting summary judgment, determining that Matthew Rinaldo's verbal representation of an agreement to arbitrate was insufficient proof to defeat the motion.

On appeal, we reversed, determining that the issue was not whether the complaint had been timely filed, but whether the parties had actually reached an agreement to arbitrate within the six-year statute of limitations period. In so doing, we stated that "through the supplemental certification of her counsel, [plaintiff] raised a material issue of fact concerning whether or not the parties had, within the limitations period, reached an agreement to arbitrate her UIM claim based upon the stated representations of defense counsel." We remanded, directing that the trial court "conduct a plenary hearing to determine whether or not an agreement had been reached between the parties to submit that matter to UIM arbitration within the six[-]year statute of limitations."

I-B.

In accordance with our remand instruction, the trial court scheduled a plenary hearing for March 9, 2007. On March 8, 2007, defendant's counsel Mark Herforth made an offer to settle plaintiff's UIM claim for $7,500 to Richard Rinaldo. Richard Rinaldo discussed the offer with plaintiff via telephone that day. Believing that plaintiff had consented to settle her UIM claim for $7,500, Richard Rinaldo informed Herforth of plaintiff's acceptance. Herforth then advised the court that the case was settled, and the court cancelled the plenary hearing scheduled the next day.

On September 12, 2007, plaintiff visited the intervenor's office contesting the existence of a settlement, claiming she had not authorized Richard Rinaldo to settle the UIM matter on March 8, 2007, and that she had not spoken to Richard or Matthew Rinaldo since March 8, 2007. Plaintiff ended her attorney-client relationship with intervenor by letter from her new attorney, Richard Galex of Galex Wolf, LLC. on November 20, 2007. On December 20, 2007, Galex sent a letter to Herforth stating that although Richard Rinaldo told Herforth that plaintiff had agreed to settle the UIM action for $7,500, plaintiff had neither accepted the offer, nor had authorized Richard Rinaldo to settle the claim. Galex further informed Herforth that plaintiff was rejecting the $7,500 settlement offer.

On April 22, 2008, recognizing that the existence of a binding settlement of the UIM claim would negate the need for a remand hearing, plaintiff filed a motion seeking a plenary hearing to determine whether a settlement had been reached on March 8, 2007. Defendant filed a cross-motion, seeking to enforce the purported settlement. The court bifurcated the issues, determining that it would conduct an initial plenary hearing to decide whether the parties had settled the UIM claim for $7,500. If not, the court would then conduct a second plenary hearing to determine whether plaintiff and defendant had reached an agreement to arbitrate the UIM claim prior to the expiration of the six-year statute of limitations.

The court conducted the initial plenary hearing on January 2 and 8, and February 6, 2009. Testifying on behalf of defendant were Matthew and Richard Rinaldo; plaintiff testified on her own behalf, along with her husband. On April 22, 2009, Judge Brock entered an order supported by a forty-five page written opinion denying defendant's motion to enforce settlement and granting plaintiff's motion for a plenary hearing as directed by our remand. In so doing, the court reasoned that having been "left with a 'he said/they said' situation" concerning the telephone conferences between plaintiffs and Richard Rinaldo on March 8, 2007, the court concluded "that the defendant has failed to meet its burden to prove by a preponderance of the evidence that there was a $7,500 settlement on March 8, 2007, which should be enforced by this [c]court."

On May 26, 2009, the first day of the second plenary hearing, Rinaldo and Rinaldo filed a motion seeking to intervene, asserting an interest to protect itself against a potential legal malpractice claim. Without objection, the court granted the motion.

The court conducted the second plenary hearing on May 26 and 27, 2009. Matthew Rinaldo testified on behalf of plaintiff; Clifton Hall and Michael McDonald, two of defendant's attorneys, and Elizabeth Murphy, defendant's claim adjustor, testified on behalf of defendant. On June 30, 2009, the court entered an order reopening the plenary hearing to take testimony of Robert MacDonald, another of defendant's attorneys. The court heard MacDonald's testimony on August 24, 2009. On November 16, 2009, Judge Brock entered an order supported by a thirty-six page written opinion determining that an agreement to settle the UIM claim had not been reached between intervenor on behalf of plaintiff and defendant prior to the running of the six-year statute of limitations. Accordingly, the court granted defendant's motion for summary judgment dismissing the complaint as time barred. In granting defendant's motion, the court stated:

This [c]court finds that the plaintiffs have failed to prove by a preponderance of the credible evidence that Matthew Rinaldo had a conversation on June 20, 2002 with Michael McDonald or Robert MacDonald in which they agreed to accept the Zalk claim for possible settlement and arbitration if no settlement could be reached, and there is no proof that the insurance company did anything by words or conduct to engender a reasonable belief that it changed its position that the claim would not be accepted for arbitration. [See Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 475-76 (App. Div. 1997).]

We incorporate the trial court's factual findings and legal conclusions as expressed in its written opinions of April 22 and November 16, 2009.

II.

On appeal, defendant argues that the trial court erred in:

1) determining "that even if a conversation between any of the then-counsel for defendant occurred it was without legal effect"; 2) "denying [i]ntervenor's motion for a new (plenary hearing) because the trial court's erroneous holdings and understanding of the law determined its credibility findings"; 3) "failing to consider and give weight to evidence diminishing the credibility of witnesses" such that the court's factual findings were manifestly unsupported by or inconsistent with the competent, credible evidence; 4) refusing to grant intervenor's motion for reconsideration; 5) finding that intervenor did not prove by a preponderance of the evidence that Matthew Rinaldo conversed with then-counsel for defendant on or before June 20, 2002; and 6) finding there was no agreement by plaintiff to settle her UIM claim for $7,500. At oral argument, intervenor also contended that the trial court incorrectly placed the burden of persuasion upon defendant to prove that plaintiff had agreed to settle her UIM claim for $7,500 on March 8, 2007, rather than place the burden upon plaintiff to prove that settlement of the UIM claim had never been reached. Intervenor contended that if the court had properly placed the burden of persuasion upon plaintiff the record would support plaintiff's failure to meet that burden, and as such, the trial court would never have had to reach the issue whether intervenor and defendant had agreed to arbitrate the UIM claim during the limitations period.

We will not disturb the factual findings and legal conclusions of a trial court unless they are "so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). Consequently, "the appellate court should exercise its original fact finding jurisdiction sparingly and in none but a clear case where there is no doubt about the matter." Ibid. "That the case may be a close one or that the trial court decided all evidence or inference conflicts in favor of one side has no special effect." Czoch v. Freeman, 317 N.J. Super. 273, 283 (App. Div.) (quoting State v. Johnson, 42 N.J. 146, 162 (1964)), certif. denied, 161 N.J. 149 (1999).

The rationale underlying this limited scope of appellate review is that "a trial judge's findings are substantially influenced by his or her opportunity to hear and see the witnesses and to get a 'feel' for the case that the reviewing court [cannot] enjoy." Twp. of W. Windsor v. Nierenberg, 150 N.J. 111, 132 (1997) (quoting State v. Whitaker, 79 N.J. 503, 515 (1979)). For this reason, credibility determinations are entitled to particular deference, because the trial judge has a superior perspective "in evaluating the veracity of witnesses." Id. at 133. However, the same level of deference is not required when we are reviewing a legal conclusion. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

We will not reverse a trial court's ruling on a motion for a new trial unless it "clearly and convincingly appears that there was a miscarriage of justice under the law." R. 4:49-1(a). In this regard, a new hearing would only be required if we conclude that the trial court's erroneous rulings, either singularly or cumulatively, resulted in undue prejudice to intervenor. Crawn v. Campo, 136 N.J. 494, 512 (1994).

We have considered plaintiff's first six arguments on appeal in light of the record and applicable law. We determine that the arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons expressed by Judge Brock in her extensive written opinions of April 22 and November 16, 2009.

We now turn to intervenor's argument that the trial court erroneously placed the burden of persuasion upon defendant to prove plaintiff had agreed to settle her UIM claim for $7,500 on March 8, 2007, rather than place the burden upon plaintiff to prove that no settlement had been reached between her and defendant. We conclude that this argument is also without merit.

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. Id. 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.) (quoting Bistricer v. Bistricer, 231 N.J. Super. 143, 144 (Ch. Div. 1987)), certif. denied, 134 N.J. 477 (1993).

In resolving the issue whether parties to a dispute reached a settlement of the claim when they are represented by counsel, we are informed by the principles enunciated in Amatuzzo:

The general rule is that unless an attorney is specifically authorized by the client to settle a case, the consent of the client is necessary. Negotiations of an attorney are not binding on the client unless the client has expressly authorized the settlement or the client's voluntary act has placed the attorney in a situation wherein a person of ordinary prudence would be justified in presuming that the attorney had authority to enter into a settlement, not just negotiations, on behalf of the client.

Thus, in private litigation, where the client by words or conduct communicated to the adverse attorney, engenders a reasonable belief that the attorney possesses authority to conclude a settlement, the settlement may be enforced. However, the attorney's words or acts alone are insufficient to cloak the attorney with apparent authority.

[Amatuzzo, supra, 305 N.J. Super. at 475-76 (citations omitted).]

Here, the trial court conducted an extensive evidentiary hearing to resolve the issue in dispute. The court found, based upon credible evidence in the record, that defendant had not proven plaintiff authorized Richard Rinaldo to settle her UIM claim on March 8, 2007. Because defendant failed to prove plaintiff authorized her attorney to settle, the court correctly denied defendant's motion seeking to enforce the purported settlement.

At the time of oral argument, intervenor cited Jennings v. Reed, 381 N.J. Super. 217, 231 (App. Div. 2005), in support of its assertion that the trial court should have placed "a heavy burden" upon plaintiff to prove that Richard Rinaldo had acted without her authority in agreeing to settle the claim with defendant's counsel. We determine that Jennings is distinguishable from the present matter.

In Jennings, the plaintiffs (husband and wife) appealed from a consent order of settlement entered among the parties and placed upon the record. Id. at 222. The plaintiffs had filed a complaint against the defendants alleging, among other things, trespass by defendants upon their property. Ibid. The court conducted a settlement conference on the day prior to trial. Id. at 222-23. Present at the conference were plaintiff-husband, plaintiffs' counsel, defendants and their counsel. Id. at 223. During the conference, the attorneys reached a settlement. Ibid. Plaintiff-husband negotiated changes to the settlement agreement. Ibid.

Plaintiffs' counsel advised the plaintiff-husband not to sign the settlement agreement if he believed he was under duress; the husband signed the agreement on behalf of himself and his wife. Ibid. Plaintiffs' counsel placed the agreement on the record without the presence of the plaintiff-husband who had left to consult with another attorney. Ibid. The defendants subsequently filed a motion seeking to enforce the settlement. Ibid. In opposing the motion, the plaintiffs asserted that plaintiff-husband had neither the mental capacity to approve the terms of the settlement nor the authority to agree to the settlement on behalf of the plaintiff-wife. Ibid.

The trial court granted the defendants' application to enforce the settlement without conducting a plenary hearing. Id. at 226. Because plaintiff-husband did not deny the existence of the agreement, the court stated: "Clearly, the party seeking to set aside the settlement agreement has the burden of proving his incapacity or incompetence to contract or other extraordinary circumstance sufficient to vitiate the agreement." Id. at 227. Applying that standard of review, the court enforced the settlement, concluding that the plaintiffs had failed to prove the plaintiff-husband did not have the mental capacity to competently agree to the terms of the settlement. Id. at 225-26. We affirmed the trial court's determination. Id. at 228-30.

On appeal, we also addressed plaintiffs' contentions that neither the plaintiff-husband nor plaintiffs' counsel possessed the authority to agree to the settlement on behalf of the plaintiff-wife. Id. at 230. We rejected the plaintiffs' argument that the plaintiff-husband was not authorized to settle the action on behalf of his wife. Id. at 231-32. In doing so, we noted that by the plaintiff-wife's own admission she expressly authorized her husband to negotiate, and therefore, "by her own conduct, placed her husband in a position such that opposing counsel and the court were justified in presuming [plaintiff-husband] had the requisite authority." Id. at 232.

We also rejected plaintiffs' argument that their attorney did not have the authority to settle the action when he placed the terms of the settlement upon the record. Id. at 231. We stated: "It is well settled that 'stipulations . . . made by attorneys when acting within the scope of their authority are enforceable against their clients.'" Id. at 230 (quoting Carlsen v. Carlsen, 49 N.J. Super. 130, 137, (App. Div. 1958)). "Consequently, an attorney is presumed to possess authority to act on behalf of the client, and the party asserting the lack of authority must sustain 'a heavy burden to establish that [her] attorney acted without any kind of authority in agreeing to the entry of judgment in the trial court.'" Id. at 231 (quoting Surety Ins. Co. of Cal. v. Williams, 729 F.2d 581, 583 (8th Cir. 1984)). Intervenor contends that in citing that latter principle we intended to state as a matter of law that when an attorney advises another attorney that a case is settled and an issue subsequently arises concerning whether a settlement was reached between the parties, such representation will always shift the burden of persuasion to the party denying that the settlement was reached. Intervenor misconstrues the principle cited.

The principle of shifting the burden to the party denying that a settlement was reached is applicable when the settlement is reduced to an order, judgment, or stipulation of record, and a party seeks to vacate the pleading. See Surety Ins. Co., supra, 729 F.2d at 583 (holding that on a motion pursuant to F.R.C.P. 60(b), to vacate the judgment confirming a settlement, the party prosecuting the motion carries "a heavy burden to establish that their attorney acted without any kind of authority in agreeing to any entry of judgment in the trial court"); accord Bradford Exch. v. Trein's Exch., 600 F.2d 99, 102 (7th Cir. 1979); Thomas v. Colo. Trusts Deed Funds, Inc., 366 F.2d 136, 139 (10th Cir. 1966). The party seeking to vacate an order or judgment pursuant to Rule 4:50, the counterpart to the federal rule, bears the burden of proving one of the grounds contained in Rule 4:50-1. Nolan, supra, 120 N.J. 472.

Here, contrary to Jennings, the issue was not whether "a consent order of settlement" should be vacated, but whether plaintiff and defendant had entered into an agreement to settle the UIM claim on March 8, 2007. The first question, like in Jennings, places the burden on the party seeking relief from the consent order or settlement agreement. The second question, as presented here, places the burden on the party seeking to prove that a settlement agreement had been reached. The trial court determined that defendant had not proven that plaintiff had authorized Richard Rinaldo to settle her claim, and that the record did not disclose any evidence showing that plaintiff's words or actions had led defendant or its attorneys to reasonably believe that Richard Rinaldo possessed plaintiff's authority to settle the claim. An "attorney's words or acts alone are insufficient to cloak the attorney with apparent authority." Amatuzzo, supra, 305 N.J. Super. at 476.

Affirmed.


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