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Colonial Surety Company v. Jason D. Cooper


November 17, 2011


On appeal from the Superior Court of New Jersey, Law Division, Warren County, Docket No. L-77-09.

Per curiam.


Argued October 31, 2011

Before Judges A. A. Rodriguez, Sabatino, and Ashrafi.

Plaintiff Colonial Surety Company appeals from the Law Division's order dated November 12, 2010, denying plaintiff's motion to restore the case to the active trial list after the case had been marked as settled. For the reasons expressed in this opinion, we reverse the November 12, 2010 order and remand for further proceedings.

Although the parties' submissions on appeal devote considerable attention to litigation activities and court orders predating the settlement discussions, we focus our attention on the critical question of whether the court erred in treating the case as conclusively settled. The following facts and circumstances are most pertinent to our analysis.

Defendant Jason D. Cooper was initially employed by plaintiff as a bond salesman from March 2003 through June 2006. Plaintiff rehired defendant in April 2007, and he continued to work at the company until he resigned in December 2008. Defendant's services were allegedly subject to a written employment agreement, which contained restrictions against him competing with the company or using the company's proprietary and confidential information after his departure.

In February 2009, plaintiff filed a complaint against defendant in the Law Division, alleging that he had engaged in wrongful competition, misused proprietary and confidential information, and improperly retained over $13,000 in overpayments for unearned bonuses. Defendant filed an answer admitting that he now works for one of plaintiff's competitors, but denying liability on any of plaintiff's claims. Defendant did not file a counterclaim.

The case proceeded through discovery and motion practice. In May 2010, the trial court denied plaintiff's applications to strike defendant's answer with prejudice for discovery violations and for partial summary judgment on the overpayment issue.

In August 2010 the parties, through their counsel, conducted settlement negotiations. On August 12, defense counsel sent plaintiff's attorney a letter offering to pay $7,000 to settle the case. Plaintiff's attorney responded with a letter dated August 17, indicating plaintiff would accept a higher figure, $10,000, in settlement. The letter did not mention that plaintiff would seek a release from defendant, who had asserted no counterclaim.

The following day, August 18, defense counsel wrote plaintiff's attorney a letter stating that his client would agree to settle the case for $10,000. The letter further stated that defense counsel would prepare a release for plaintiff to sign. Defense counsel also stated that he "assume[d]" that plaintiff's attorney, who had recently filed a motion to reconsider the court's May 2010 orders, would notify the trial court of his withdrawal of that motion.

Consistent with the lawyers' communications up to that point, on August 19, defense counsel sent plaintiff's attorney a release for plaintiff to sign. Upon receipt of that correspondence, plaintiff's attorney injected a new term into the yet-to-be-consummated settlement: a reciprocal release from defendant. In a letter to defense counsel dated August 23, plaintiff's attorney declared, apparently for the first time, that "Colonial [plaintiff] will require a release as well. The case will be dismissed upon receipt of the release [from defendant] and the $10,000." Plaintiff's attorney further noted that he would "advise the [c]court of the settlement and request an adjournment of the motion [for reconsideration] pending the exchange of the closing documents, etc."

The next day, August 24, plaintiff's attorney sent defense counsel a blank release for defendant's signature. Concurrently, plaintiff's attorney wrote the trial court a short letter, which stated:

My client, Colonial Surety Company, has reached a settlement with Defendant Cooper. Accordingly, please adjourn the Motion that is on your list for August 27, 2010 pending the exchange of the closing documents.

The court thereafter adjourned the pending motion to September 16.

As it ultimately turned out, defendant balked at signing a reciprocal release. Through his counsel, defendant objected to this additional settlement condition and insisted that plaintiff settle the case without a reciprocal release. Plaintiff, on the other hand, was unwilling to settle the case without getting back a signed release. On September 9, defense counsel tendered a $10,000 settlement check, which plaintiff's attorney returned, unendorsed, on September 14 because it was not accompanied by a signed release.

Following this impasse, plaintiff's attorney wrote the court and sought to reinstate his previously-filed motion for reconsideration. The assigned judge however declined to hear the reconsideration motion, advising counsel that she regarded the case as closed and that the reconsideration motion had been erroneously adjourned by court staff. This prompted plaintiff to file a motion to restore the case to the active trial list. Defense counsel opposed that motion, arguing that the parties had agreed to settle the case with only plaintiff providing a release and that the case should not be reopened because of plaintiff's unanticipated insistence upon an additional settlement term.

After hearing oral argument, the trial judge denied plaintiff's motion to reopen the case. In her oral ruling, the judge construed the August 24 letter from plaintiff's attorney to the court as a conclusive indication that the matter had been settled. The judge memorialized her decision in an order dated November 12, 2010.

Plaintiff now appeals the November 12, 2010 order, arguing that the trial court erred in declining to reopen the case. Plaintiff also raises a variety of challenges to the court's earlier discovery rulings and the denial of motion for partial summary judgment.*fn1

The pivotal issues before us are whether there was an enforceable agreement to settle the case and whether the trial court erred in declining to reopen the matter when the parties' communications broke down. Some basic principles guide our analysis.

A settlement is a type of contract. See Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div.), certif. denied, 94 N.J. 600 (1983). It is well settled that "[a] contract arises from offer and acceptance, and must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting W. Caldwell v. Caldwell, 26 N.J. 9, 24-25 (1958)); see also Savarese v. Pyrene Mfg. Co., 9 N.J. 595, 599 (1952). An acceptance "must be absolute." Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 538 (1953). Thus, an expression of assent that modifies the offer does not act as an acceptance, but rather serves as a counter-offer. Ibid.

In addition, a settlement is not enforceable until the parties have agreed on all essential terms. Mosley v. Femina Fashions, Inc., 356 N.J. Super. 118, 126 (App. Div. 2002), certif. denied, 176 N.J. 279 (2003). Releases or other closing "contingencies" are essential terms that must be approved by both parties. Ibid.

Here, as in Mosley, plaintiff's desired release from defendant was an important and material request. The parties' settlement was thus contingent on attaining a mutual agreement for the exchange of releases. The reciprocal releases were essential terms, and the parties failed to reach an agreement regarding those essential terms.

In essence, there was no enforceable settlement agreement because there was no ultimate offer and full acceptance. Plaintiff did not unconditionally accept defendant's offer of $10,000 and a release by plaintiff but instead set forth a counter-offer requiring that defendant likewise sign a release. Consequently, there was no ultimate meeting of the minds and no enforceable settlement.

As there was no ultimate meeting of the parties' minds, the trial court erred in declining to reopen the litigation. Although plaintiff's attorney's August 24 letter to the court initially states that the parties had "reached a settlement," the letter goes on to request that the court "adjourn" plaintiff's motion for reconsideration "pending the exchange of the closing documents." That additional language in the letter signaled that the settlement had not yet been finalized. That is apparently why plaintiff's attorney asked to "adjourn" his client's pending motion, rather than to "withdraw" it.

Although we appreciate the trial court's concern that cases should not remain on the docket indefinitely while the parties undertake, sometimes at their leisure, steps to implement a settlement, the particular circumstances before us warrant the restoration of plaintiff's lawsuit. In requiring such restoration, we do not endorse plaintiff's failure to mention the necessity of a reciprocal release earlier in the settlement communications. If that demand had been communicated sooner, we doubt that this appeal would have ensued. Even so, the November 12, 2010 order must be set aside and the matter remanded to the trial court for the entry of a case management order and such other orders that may be warranted in the court's discretion to achieve a prompt final resolution of this case, either on the merits or by settlement. We perceive no necessity to reach the interlocutory issues concerning discovery and summary judgment practice raised on appeal, and instead defer those matters to the trial court for its renewed attention.

Reversed and remanded for further proceedings consistent with this opinion.

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