SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-4244-96T5
PAUL AMATUZZO,
Plaintiff-Respondent,
v.
MICHAEL G. KOZMIUK,
Defendant-Appellant.
________________________________________
Argued October 29, 1997 - Decided November 14, 1997
Before Judges Shebell, D'Annunzio and A.A. Rodríguez.
On appeal from the Superior Court of New Jersey,
Chancery Division, Hudson County.
Lawrence B. Diener argued the cause for appellant.
Donato J. Battista argued the cause for respondent
(Cole & Cole, attorneys; Mr. Battista, of counsel,
and on the brief).
The opinion of the court was delivered by
SHEBELL, P.J.A.D.
Defendant, Michael G. Kozmiuk, appeals from two orders of
the Chancery Division entered on March 26, 1997. The first
vacated the order of December 20, 1996 denying plaintiff's motion
to enforce the settlement, ordered that the Stipulation of
Settlement negotiated by the attorneys be enforced
notwithstanding defendant's refusal to execute the Agreement, and
awarded fees to plaintiff's attorney subject to the filing of a
certification of services. The second order was in response to
defendant's objection to the certification of services. It
awarded a counsel fee in the sum of $2,350.00, payable within
thirty days. We reverse both orders and remand for a hearing as
to whether an enforceable settlement was entered into.
A detailed recitation of the facts surrounding the
underlying litigation is not necessary. Suffice it to say that
negotiations between the attorneys for the parties resulted in
the drafting of a "Stipulation of Settlement" containing some
eleven paragraphs. On August 30, 1996, prior to a scheduled
pretrial conference, counsel for the plaintiff, with a copy to
defendant's counsel, advised the court in writing that the
litigation was resolved and that a Stipulation of Settlement
would be filed within ten days.
The final draft of the Stipulation of Settlement provided
for, among other things, transfer of defendant's interest in a
residence in Jersey City, free and clear of any claims, except a
mortgage with an approximate balance of $138,000.00. Defendant
could reside in the property until January 31, 1997, provided he
paid for the mortgage, taxes, insurance, and utilities during
that time.
Further, the settlement was contingent upon plaintiff
examining the premises on October 29, 1996 at 10:30 a.m. to
verify its condition. Plaintiff was to furnish defendant with a
release executed by plaintiff's parents, releasing defendant of
any liability for monies they loaned for repairs to the property.
The Agreement also provided for distribution between plaintiff
and defendant of certain personal property upon the premises.
Additionally, plaintiff was to refinance the mortgage or
otherwise seek to have defendant removed as an obligor on the
mortgage. Moreover, defendant after vacating the premises was to
be secured by plaintiff from any further payments on the
mortgage. If defendant could not be removed from the mortgage
obligation, the premises were to be sold.
Each party was to be responsible for his own attorney's fees
unless attorney's fees and costs were incurred in order to compel
compliance with the terms of the provisions of the settlement.
In that event, the defaulting party would be responsible for the
other party's fees and costs. The Stipulation further provided
that:
11. The parties shall file simultaneously
with the filing of this Stipulation of
Settlement a Stipulation of Dismissal with
Prejudice of the complaint and counterclaim.
Notwithstanding that filing, either party may
institute the appropriate action necessary to
enforce the terms and provisions of this
Stipulation of Settlement and nothing
contained in the Stipulation of Dismissal
shall preclude the prosecution of that
action.
The Stipulation of Settlement, when sent to defendant's
counsel was undated, but contained the personal signature of the
plaintiff and his attorney. A release from plaintiff's parents
dated October 25, 1996, releasing the defendant of any and all
claims, was also provided.
Defendant failed to be present for inspection of the
premises on October 29, 1996, and he refused to sign the
Stipulation of Settlement. Plaintiff, therefore, filed a motion
with certification to enforce the settlement, returnable on
November 22, 1996. On December 4, 1996, a Substitution of
Attorney was filed on behalf of defendant by his present counsel,
which reflected that his previous counsel agreed to withdraw.
Defendant filed a certification in opposition to plaintiff's
motion, stating: "I did not enter into any settlement agreement
with the plaintiff in this case." He specifically stated that
when his attorney presented him with the first settlement
agreement, he strenuously objected because plaintiff would become
the sole owner of the property, while defendant would remain
liable on the mortgage even after vacating the property. He also
certified that he objected because his counterclaim for fraud
against the plaintiff would be dismissed and he would have to
leave personal items at the property.
Defendant noted that the objectionable matters in the
original agreement were also contained in the later Stipulation
of Settlement attached to plaintiff's certification supporting
the motion. Specifically, he asserted that contrary to paragraph
9 of plaintiff's certification "I made no agreement to settle on
August 30, 1996. I had made my objection to the proposed
agreement quite clear to [my attorney] and never authorized her
to settle the case on the terms demanded by plaintiff."
Defendant also asserted he expended thousands of dollars in
improvements to the property and that under no circumstances
would he agree to dismissal of his counterclaim. He noted that
neither he nor his attorney had "signed any document to settle
this matter," and continued:
If my attorney orally agreed to settle this
matter on the terms of the settlement
agreement attached to plaintiff's
certification it was without my knowledge or
consent. I did not agree, in writing or
orally, to settle this matter on those terms.
We conclude that the factual issues surrounding the motion
to enforce the settlement required the Chancery judge to conduct
a hearing to ascertain the intent of the parties at the various
critical times in the proceedings. Despite the August 30, 1996
letter from plaintiff's counsel, advising the court that the
matter had been settled and that a Stipulation of Settlement
would be filed within ten days, the September 16, 1996 letter
from defendant's attorney reflects an ongoing disagreement as to
the terms of the Stipulation, as changes in seven different
paragraphs were proposed. Moreover, plaintiff conveyed counter-proposals to defendant's counsel on October 7, 1996.
We recognize that, thereafter, on October 14, 1996, a "fax"
from defendant's attorney to her adversary stated that "[a]ll
terms of your 10/7 letter are acceptable to my client except
number 3," and that this exception pertained only as to how the
mortgage would be paid while he remained in possession. However,
defendant has disputed that his attorney had authority to make
any such representation.
The Chancery judge was convinced on the motion for
reconsideration that defendant's counsel had apparent authority
to enter into the discussions, as defendant failed to certify
that he only retained counsel to litigate the matter and not to
settle it. The judge further found it unnecessary to determine
the issue of express authority, as defense counsel had
represented in her "fax" that her client was in agreement with
the counter proposals offered by plaintiff. The judge concluded
that there was an enforceable settlement for the following
reason:
[T]he action and conduct of [defendant's
counsel] in this case bound [defendant], who
permitted [his counsel] to be held out as
having express or implied authority and who
did, in fact, consent to the settlement that
I find exists in this case. Secondly, even
if [defendant] did not expressly or impliedly
authorize [his counsel] to enter into such an
agreement, he has not made a showing of
extraordinary circumstances such that he
would suffer an extreme and unexpected
hardship if the settlement were not enforced.
On a disputed motion to enforce a settlement, as on a motion
for summary judgment, a hearing is to be held to establish the
facts unless the available competent evidence, considered in a
light most favorable to the non-moving party, is insufficient to
permit the judge, as a rational factfinder, to resolve the
disputed factual issues in favor of the non-moving party. See
Brill v. Guardian Life Ins. Co.,
142 N.J. 520, 540 (1995)
(setting forth standard for review of a summary judgment motion).
The disputed facts here are not so one-sided.
Moreover, the ruling of the Chancery judge was not in
accordance with the applicable law. If, in fact, defendant's
counsel had neither express or implied authority to settle, it
would not be defendant's burden to demonstrate extraordinary
circumstances to bar the enforcement of the purported settlement.
It is only where a contract of settlement is actually held to
exist that the party seeking to vacate the settlement must show
compelling circumstances. Nolan v. Lee Ho,
120 N.J. 465, 472
(1990). Here, plaintiff had the burden of establishing that a
contract of settlement was entered into.
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. City of Jersey City v. Roosevelt Stadium
Marina, Inc.,
210 N.J. Super. 315, 327 (App. Div. 1986) (citing
Stout v. Stout,
155 N.J. Super. 196, 203-04 (App. Div. 1977)).
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.
United States Plywood Corp. v. Neidlinger,
41 N.J. 66, 74 (1963)
(citing and quoting J. Wiss & Sons Co. v. H.G. Vogel Co.,
86 N.J.L. 618, 621 (E. & A. 1914)).
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. Seacoast Realty v. West Long
Branch,
14 N.J. Tax 197, 203 (1994) (citing Hallock v. State, 64
N.Y.2D 224, 230, 474 N.E.2D 1178, 1181 (1984)).
Defendant's certification is sufficient to raise a material
and substantial issue as to whether he granted his attorney
actual authority to settle. That does not mean that his previous
attorney, if produced, may not by testimony at a hearing convince
the judge to the contrary. Additionally, any acts of the
defendant relating to apparent authority must be proved to have
emanated from defendant's words or actions and not merely those
of his attorney. We, therefore, remand for further proceedings
in accordance with our holdings.
The award of attorney fees and costs is set aside in light
of our reversal of the order enforcing the settlement.
Reversed and remanded.