December 3, 2012
ROSEMARY CASAGRANDE AND FRANK O. CASAGRANDE 2000 TRUST, ROSEMARY CASAGRANDE, TRUSTEE, PLAINTIFFS-RESPONDENTS,
ROBERTA CASAGRANDE, SABRINA CASAGRANDE, CRISTINA CASAGRANDE, AND SENTRY LIFE INSURANCE COMPANY, DEFENDANTS, AND MARK CASAGRANDE, DEFENDANT-APPELLANT, AND ROBERTA CASAGRANDE AND SABRINA CASAGRANDE, THIRD-PARTY PLAINTIFFS,
ROSEMARY CASAGRANDE, AS EXECUTRIX OF THE LAST WILL AND TESTAMENT OF FRANK O. CASAGRANDE, AND THE ESTATE OF FRANK O. CASAGRANDE, THIRD-PARTY DEFENDANTS.
On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-268-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued February 24, 2012 -
Before Judges Messano, Yannotti and Kennedy.
Defendant Mark Casagrande (Mark)*fn1 appeals from Chancery Division orders enforcing a settlement agreement, precluding him from raising additional claims against any party named in the underlying litigation and distributing funds and awarding counsel fees. Mark claims that the settlement agreement was unenforceable because there was no "meeting of the minds" on its terms; it was unconscionable and violated public policy; it was infected with conflicts of interest between counsel and parties; it involved a trust and that plaintiff, a trustee as well as a beneficiary, was in a conflict of interest; and it was the result of a mediation that "veered dramatically" from the order directing the parties to proceed to mediation. We are not persuaded and affirm.
Frank and Roberta Casagrande were married in 1974, and had three children: Mark, Sabrina and Cristina. All the children were adults at the time of the litigation we describe hereinafter. During the marriage, Frank purchased a life insurance policy from Sentry Life Insurance Company (Sentry) in the face amount of $1.7 million. Roberta was the primary beneficiary under the policy, and the children were named as contingent beneficiaries. Further, Frank purchased a life insurance policy from Guardian Insurance Company (Guardian) in the face amount of $1 million, with Roberta named as the primary beneficiary.
On March 10, 1995, the marriage was ended by a divorce judgment which incorporated a matrimonial settlement agreement that the parties had earlier executed. The agreement, among other things, required Frank to maintain life insurance in the amount of $175,000 in favor of Roberta and $250,000 in favor of each daughter. The policy for Roberta would be maintained until the termination of Frank's alimony obligation, at which point the $175,000 policy would be transferred "in favor of the children" until their emancipation.
On September 6, 2000, Frank created "The Frank O. Casagrande 2000 Trust" (the Trust). The Trust named Rosemary Dapuzzo (Rosemary) as the trustee, and provided, in part, that if Frank was obligated under the divorce judgment to maintain life insurance for Roberta or his children, the trustee shall hold such portion of the Trust in a separate fund and, upon Frank's death, make distribution as required under the divorce judgment. The trustee was empowered to obtain life insurance on anyone in which a trust beneficiary had an "insurable interest" and to "have all rights as an owner" of such policies.
It was expected that life insurance policies would be the primary assets in the Trust, and in October 2001, Frank transferred ownership of the Sentry policy to the Trust. However, he failed to change the designated beneficiary of the policy, which still listed Roberta as the primary beneficiary and the three children as the contingent beneficiaries.
In 2002, Frank married Rosemary and they later had a child together. In 2007, Frank executed a will which expressly excluded Mark, Sabrina and Cristina as his "lineal descendents" thereunder. Despite this language, the will provided a bequest to Mark of $10,000; to Sabrina of $25,000; and to Cristina of $150,000. The bequests were each followed by a provision stating that, "[i]n no other respects shall [such child] share in any portion of my estate." Rosemary was named executrix under the will. Mark, who had had a strained relationship with Frank, knew his father planned to disinherit him.
On June 13, 2008, Frank died. Rosemary learned that the beneficiary named in the Sentry policy had not been changed and so in July 2008, she filed an order to show cause and a verified complaint on behalf of herself and the Trust seeking reformation of the Sentry policy to conform it to the "terms, intent and agreements" of the marital settlement agreement, the Trust and the will. The defendants named in the suit were Roberta, Mark, Sabrina, Cristina and Sentry.
Mark engaged counsel and answered the complaint denying that Rosemary was entitled to relief. He also asserted a counterclaim seeking to disqualify Rosemary as trustee due to her alleged "self interest" and "animus" toward him, Roberta and Sabrina. He also sought a declaration that, by operation of law, he and his sisters became the primary beneficiaries under the Sentry policy.
Roberta and Sabrina also engaged counsel and filed an answer denying the relief sought by plaintiffs. They asserted a counterclaim for a declaration that Roberta was the prime beneficiary of the Sentry policy or, alternatively, the children were the prime beneficiaries by operation of law. They also asserted a claim for the life insurance sums they alleged were owed to them under the marital settlement agreement, as well as a claim to disqualify Rosemary. Additionally, they filed a third-party complaint against Frank's Estate and against Rosemary, as executrix, seeking payments allegedly due under the marital settlement agreement and the will.
Apparently, Sentry paid the policy proceeds into court and was thereafter dismissed from the litigation. The parties undertook some discovery, including the deposition of an attorney associated with the law firm representing plaintiffs who had, in fact, drafted the Trust and Frank's will.
On January 15, 2009, Mark's counsel advised him by correspondence that he had met with representatives of plaintiffs' counsel the day before to discuss a "potential merger" of their firms. He advised that there was a "potential conflict of interest," but that he believed there was no actual conflict and was "prepared to continue to represent [him]." Mark refused to consent and then proceeded pro se until April 1, 2009, when he hired new counsel to represent him.
The court thereafter entered a mediation order referring the parties to mediation to "resolve the various outstanding issues between" them. Retired Superior Court Judge John M. Boyle was selected as the mediator.
The parties and their counsel, including Cristina and her counsel, appeared before Judge Boyle on April 3, 2009, for the purposes of mediation. After ten hours of discussions and negotiations, Judge Boyle announced in a recorded statement that "a settlement has taken place." The judge then had counsel and each party identify themselves on the record.
The attorney for Sabrina and Roberta thereafter set forth the terms of the settlement on the record. The settlement required the following sums to be paid from the proceeds of the Sentry policy that had been deposited into court:
- $250,000 to Sabrina; - $250,000 to Cristina; - $175,000 to Roberta; - $125,000 in legal fees to counsel for Rosemary, the Trust and the Estate; - $125,000 in legal fees to counsel for Roberta and Sabrina; - $25,000 in legal fees to counsel for Cristina; - $25,000 in legal fees to prior and current counsel for Mark; - the remainder of the mediation fee due Judge Boyle; - 60% of the remainder to Rosemary and her daughter; - 40% of the remainder to be split among Sabrina, Cristina and Mark.
In addition, the bequests in the will would be paid; Rosemary would provide proof that she was the designated beneficiary of the Guardian policy; and Rosemary, as executrix, would provide a representation that all the shares in Frank's three companies belonged to Frank at the time of his death. Finally, Mark would be given an opportunity to "walk through" Frank's business premises and collect items of personalty that Mark claimed he owned.
Mark stated that he may need a "possible extension" of time to remove his equipment from the property, and counsel for plaintiffs responded that if Mark needed an extension and the parties did not consent, Judge Boyle would "rule" on the request.
Judge Boyle thereafter asked Rosemary if she had any questions and she responded in the negative. Judge Boyle further questioned Rosemary and she replied that she "fully understand[s]" the terms of the settlement; that she had the advice and counsel of her attorney who answered all her questions; that she approved the settlement freely and without pressure from anyone; that she understood that the settlement was a "compromise" and was fair and reasonable; that she understood she had the right "not to settle" and to proceed with litigation; and that she was satisfied with the services of counsel. Judge Boyle then asked each of the other parties whether, if he had asked them all the questions he had asked of Rosemary, their answers be the same, and each replied, "yes."
Mark thereafter asked when the "funds would arrive" and counsel for plaintiffs advised he would have to prepare a consent order, have it approved and then have it executed by the court. He estimated that would take thirty days to accomplish.
Judge Boyle then stated:
I also want all of the parties that are present here today to understand that the purpose of recording this on this machine is for the purpose of making sure that everybody understands the terms, that they agree to it, and that they will be conclusively bound by the terms.
In other words, as I warned you this morning, and I think I mentioned to one or two of you during the course of the day, any settlement that takes place and we record here, is binding on all of you. And there isn't any means by which you can change your mind thereafter. Does everyone understand that? If anyone doesn't, raise your hand. No hands having been raised, I take that as affirmative.
Counsel for Roberta and Sabrina also explained that "all parties to this litigation are going to execute releases in favor of all other parties to this litigation," and that Sabrina and Roberta's release would be "issued" once proof was provided that Rosemary was the proper designated beneficiary of the Guardian policy.
Shortly after the conclusion of the mediation and settlement, plaintiffs' counsel provided the required information on the stock certificates and the beneficiary form pertaining to the Guardian policy. Counsel also provided a stipulation of dismissal, forms of release and a consent order for the distribution of the funds. When Mark, Sabrina and Roberta refused to execute the releases or approve the consent order and stipulation, plaintiffs' counsel filed an order to show cause seeking to enforce the settlement.
Sabrina and Roberta cross-moved to vacate the settlement and Mark joined their motion. Sabrina and Roberta contended they did not understand the settlement was "final and binding," and Roberta further claimed that she "suffered from a mental condition" that rendered her "unable to properly understand the nature and consequences" of her actions at the time of settlement. At oral argument, Mark's new counsel argued that Mark did not understand the settlement barred him from ever raising claims against the estate, and that the attorney who represented Mark at the mediation had only been hired two days earlier, thereby raising an issue of whether Mark was effectively represented.
The judge found that Sabrina and Mark were suffering from no infirmities at the time of the mediation and settlement, and their knowing and voluntary agreement to settle was plainly stated on the record and would, therefore, be enforced. The judge further found that Roberta's claim of a mental infirmity precluding her from understanding what she was doing, would have to be determined at a separate hearing. The judge entered an order enforcing the settlement as to Mark and Sabrina, and setting Roberta's claims down for a hearing. He also appointed a guardian ad litem for Roberta.
Mark thereafter moved for reconsideration and sought to restrict the settlement to claims arising from the Sentry policy. Mark argued that the settlement was marred by conflicts of interest among counsel and parties. In particular, he argued that plaintiffs' counsel had drafted the Trust and the will; that his first counsel had been engaged in negotiations with plaintiffs' counsel respecting a potential merger; that Roberta and Sabrina's counsel had once been associated with the scrivener of the Trust and the will; and that plaintiffs' counsel was in a conflict because Rosemary was both a beneficiary of the Trust and trustee.
The judge denied Mark's motion and found "no nexus between any alleged conflict and any basis for [permitting] defendant to avoid a settlement that he entered into with his eyes wide open." The order denying relief was entered on September 11, 2009. Sabrina withdrew her motion to reconsider and Roberta, by her court-appointed guardian ad litem, withdrew her motion to vacate the settlement.
On February 23, 2010, the court entered an order imposing counsel fees and distributing the proceeds of the policy in accordance with the terms of the settlement. Only Mark appeals.
As noted earlier, Mark argues that there was no "meeting of the minds" as to the terms of settlement and that it is unfair to preclude him from pursuing unspecified other claims against the estate because there was only "limited" discovery undertaken prior to the mediation. He also contends that the conflicts of interest require vacating the settlement.
In furtherance of the strong policy of enforcing settlements, "our courts 'strain to give effect to the terms of a settlement wherever possible.'" Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008) (internal citation omitted). Therefore, an agreement to settle a lawsuit will be honored and enforced in the absence of fraud or other compelling circumstances. Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div. 1983). "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. 1993). "[T]he party seeking to set aside the settlement agreement has the burden of proving . . . extraordinary circumstances sufficient to vitiate the agreement[,]" Jennings v. Reed, 381 N.J. Super. 217, 227 (App. Div. 2005), by clear and convincing evidence. Smith v. Fireworks by Girone, Inc., 380 N.J. Super. 273, 291 (App. Div. 2005), certif. denied, 186 N.J. 243 (2006).
We review the trial judge's decision to enforce a settlement for abuse of discretion. Brundage, supra, 195 N.J. at 613; Chattin v. Cape May Greene, Inc., 216 N.J. Super. 618, 628 (App. Div.), certif. denied, 107 N.J. 148 (1987). The plain terms of a settlement agreement must be enforced, as we have explained, unless they were procured by fraud or compelling reasons exist to withhold their implementation. Nolan v. Lee Ho, 120 N.J. 465, 472 (1990).
The argument that there was no meeting of the minds here is based upon Mark's argument that he and, at least initially, his sister and mother, expressed "strong disagreement" with the settlement and that the requirement of a release was expressed on the record only after he approved the settlement. However, Mark's "strong disagreement" only arose after the settlement was put on the record and explicitly agreed to by him without reservation. Mark was expressly advised that the settlement would be "binding" and "conclusive," and he explicitly approved the settlement. If parties have, in fact, agreed to the terms of a settlement, "second thoughts are entitled to absolutely no weight as against our policy in favor of settlement." Dep't of Pub. Advocate v. N.J. Bd. of Pub. Utils., 206 N.J. Super. 523, 530 (App. Div. 1985). There is no basis to vacate the settlement to which Mark unambiguously consented.
With respect to the alleged conflicts of interest among counsel, we find nothing that would prompt us to vacate the settlement. Mark was well aware that one of plaintiffs' attorneys drafted the Trust and the will, and this attorney was, in fact, deposed. Even assuming this was a conflict for counsel,*fn2 see Clark v. Corliss, 98 N.J. Super. 323, 326 (App. Div. 1967), not every such conflict warrants vacating the settlement. Brundage, supra, 195 N.J. at 613-14. Such a conflict could not have affected Mark's voluntary consent to settlement, and to set aside a settlement on this basis would simply penalize the parties - not counsel. Id. at 614.
Further, Mark's first counsel expressly disclosed to him well prior to the mediation meeting that he was negotiating a "possible merger" with plaintiffs' counsel, and Mark chose to discontinue his relationship with that attorney and hired new counsel prior to the mediation and settlement. We discern nothing improper in this circumstance that would justify vacating the settlement.
Moreover, in this circumstance, we perceive no conflict of interest on the part of Rosemary that would warrant vacating the settlement. First, Mark, Roberta and Sabrina alleged such a conflict in their pleadings, and thus their settlement of the litigation was a knowing surrender of that claim. Second, Rosemary instituted the action in an effort to fulfill the intent of Frank's will and the Trust. No conflict arises from such action. See Howard Savings Institution v. Peep, 34 N.J. 494, 499 (1961). Finally, we observe that Rosemary's status as trustee and beneficiary was expressly provided for in the instrument Frank created and thus it may fairly be assumed that Frank knowingly approved her dual roles. Rosencrans v. Fry, 12 N.J. 88, 103 (1953). In any event, "[n]ot every duality of interest will disqualify a trustee . . . ." Ibid.
The remainder of Mark's arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).