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Stephen Martiak v. Eugene S. Molnar


March 30, 2012


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-8973-08.

Per curiam.


Argued February 28, 2012 Before Judges Fisher and Nugent.

The proceedings in the trial court ended when the judge enforced what was referred to as a global settlement agreement, which did not require a contribution from defendant Trans-County Title Agency, Inc., but included a dismissal of Trans-County's counterclaim for frivolous litigation fees. In opposing enforcement, Trans-County's attorney asserted that his client had not consented to the agreement's terms. Because the judge enforced the purported settlement agreement without conducting an evidentiary hearing to resolve the factual dispute presented by the parties' competing certifications, we vacate the order under review and remand.

The details of the underlying collection of claims are not relevant. Briefly, a dispute arose between plaintiff Stephen Martiak and defendant Eugene Molnar about the ownership of real property in Woodbridge Township. Martiak contracted in 1994 to purchase the property from a bankruptcy trustee but Molnar claimed ownership. Martiak was represented in his transaction with the trustee by defendant Jay Arbeiter and his law firm, which retained Trans-County to perform certain title work.

This action was originally filed in the Chancery Division where, in 2008, the judge determined that Molnar was the true owner of the property and then transferred the remaining claims -- asserted by and between Martiak, Arbeiter and his law firm, Trans-County and Lawyers Title -- to the Law Division. Those claims included Martiak's allegation that Trans-County "breached its contract with Martiak by failing to adequately and properly perform the title work and properly communicate title problems" to Martiak and his attorneys. Trans-County answered by claiming that Martiak's complaint is "frivolous on its face."

On April 25, 2011, counsel for the remaining parties were present in court for settlement negotiations. Trans-County asserted the position it had taken at the outset -- that it would not contribute to any settlement. The other parties continued to negotiate. When one attorney was required to leave for personal reasons, the others were excused. If a settlement had been reached by that time, nothing was placed on the record to memorialize it.

At some point, not clearly revealed in the record on appeal, the other remaining defendants agreed to pay Martiak $420,000 and a written settlement agreement was circulated. The settlement agreement did not purport to require Trans-County to pay anything but it called for the dismissal of Trans-County's frivolous-litigation claim against Martiak and, perhaps, others.*fn1

Upon receipt, Trans-County's attorney refused to execute the settlement agreement.

Lawyers Title moved for enforcement of the settlement based on the factual contentions that Trans-County's attorney: was present at the negotiations on April 25, 2011; understood the parties were negotiating a "global" settlement; and never asserted his client's desire to retain its frivolous-litigation claim. Trans-County's attorney filed an opposing certification, asserting that he: "was a noncontributor towards settlement"; heard no mention of a "global settlement" during the negotiations; "[a]t no time . . . ever agree[d] with any of the litigants through their attorneys or the [c]court that [he] was abandoning" the frivolous-litigation claim; and never discussed the frivolous-litigation claim in his two meetings with the judge in chambers.

The trial judge granted enforcement without conducting an evidentiary hearing, holding that because Trans-County's attorney never advised "that his client objected to a global settlement," Trans-County was bound. In addition, the judge noted that Trans-County had, in the past, unsuccessfully moved for summary judgment on its frivolous litigation claim. The judge noted that at the time of the purported settlement, yet another summary judgment motion filed by Trans-County for frivolous litigation fees was pending; the judge held that "[i]f the matter were not settled, that motion would have been denied" and, therefore, the claim that Trans-County sought to preserve was "untenable." The judge's ruling cannot be sustained on this record.

To be sure, the settlement of litigation ranks high in our public policy, Nolan v. Lee Ho, 120 N.J. 465, 472 (1990), but it is not so exalted as to allow a court to bind a party to a settlement to which the party or the party's representative had not consented. And, even though it has been said that courts "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), our courts are not at liberty to enforce settlement agreements by motion when material facts about the formation of the purported agreement are disputed. That is, in Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 474-75 (App. Div. 1997), we held in similar circumstances that a trial judge is not free "to resolve the disputed factual issues" revealed by the papers and may only enforce a settlement agreement without an evidentiary hearing when "the available competent evidence, considered in a light most favorable to the non-moving party," leaves no doubt as to the agreement's enforceability. See also Segal v. Lynch, 417 N.J. Super. 627, 642 (App. Div.), certif. granted, 207 N.J. 190 (2011); Harrington v. Harrington, 281 N.J. Super. 39, 47 (App. Div.), certif. denied, 142 N.J. 455 (1995). Application of this standard compels a remand for an evidentiary hearing since the circumstances described in the certification of Trans-County's attorney, if credited, would preclude enforcement of the settlement insofar as it purports to apply to Trans-County.

The other parties argue that the failure of Trans-County's counsel to affirmatively assert during negotiations his client's desire to retain that claim is fatal to the position now asserted. We disagree. Silence "does not ordinarily manifest assent." Weichert Co. Realtors v. Ryan, 128 N.J. 427, 436 (1992). Moreover, the record does not clarify the point in time when Trans-County's attorney was required to speak such that his silence should now be viewed as assent. No proceeding ever occurred in open court and no in-chambers conference was ever recorded. The parties are unable to refer to a point at which it might demonstrably prove that Trans-County's representative should have spoken. In other words, if the parties had been asked to set forth the terms of their settlement agreement in court, each present attorney would have been expected to state his or her client's agreement or disagreement. Such an event never occurred here and, as a result, we cannot discern from the record a moment during these proceedings at which counsel for Trans-County would have been expected to refute the purported agreement's terms.

The parties seeking enforcement also implicitly suggest that our refusal to uphold the trial judge's decision would greatly harm the administration of justice because such a determination would be inconsistent with the manner in which business is done in the trial courts. The problem with this argument, again, lies with the absence of any memorialization of what occurred in court on April 25, 2011. Had the parties announced their settlement on the record and had the trial judge asked counsel whether they agreed or disagreed with its terms and if, in those circumstances, Trans-County's attorney remained silent -- the outcome might well be different. But no attempt was made to put the settlement on the record or to ferret out any misgivings any party may have had to the purported settlement's terms.

In any event, the moving and opposing certifications presented materially different versions of what was expressed in settlement negotiations. The judge was not free to accept one version and reject another absent an evidentiary hearing at which individuals with personal knowledge would be required to testify and be cross-examined, and at the conclusion of which the impartial trier of fact could make findings regarding the witnesses' credibility.

Vacated and remanded. We do not retain jurisdiction.

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