Opinion
Docket No. 75594.
Decided February 19, 1985. Leave to appeal applied for.
George G. Newman, P.C. (by George G. Newman and Patricia A. McKanna), for plaintiffs.
Parenti Treinen, P.C. (by Robert L. Bunting), for defendant.
Before: BRONSON, P.J., and HOOD and SHEPHERD, JJ.
Plaintiffs filed this malpractice action on August 24, 1982. The case was set for mediation on July 20, 1983. Before the mediation date, defendant made a $2,000 settlement offer. On September 2, 1983, defendant filed a "motion for summary judgment", alleging that plaintiffs had accepted defendant's offer and that plaintiffs' attorney had acknowledged such settlement. On December 6, 1983, the circuit judge granted the motion and adjudged the settlement to be valid. Plaintiffs appeal as of right.
On August 10, 1983, after the alleged settlement had been entered into, plaintiffs filed a motion to reinstate mediation. The motion, which was supported by plaintiffs' attorney's affidavit, stated in part:
"3. That an offer of settlement was made by the defendant in this matter and plaintiffs represented to counsel that they would accept the offer as full settlement and the mediation was dismissed.
"4. That plaintiffs have decided that the settlement offer is not sufficient and are desirous of proceeding to trial in this case.
"5. That plaintiffs will be obtaining other counsel and successor counsel will be proceeding in this matter but the mediation should be re-scheduled since the case is not dismissed.
"Wherefore, plaintiffs respectfully request that this honorable court re-schedule this matter for mediation as the case is not settled."
On September 2, 1983, defendant filed his motion for summary judgment, alleging that the case was settled and, therefore, no genuine issue as to any material fact remained and he was entitled to judgment as a matter of law. On October 4, 1983, before defendant's motion was heard, the circuit judge granted plaintiffs' motion to reinstate mediation.
Plaintiffs allegedly speak very little English. A breakdown in communication developed between the plaintiffs and the law firm which was representing them. On November 2, 1983, the trial court entered an order granting plaintiffs' first attorney's motion to withdraw. The same day, the court ruled that plaintiffs had until November 11 to respond to defendant's motion for summary judgment. The court also indicated that it would grant the defendant's motion with prejudice and with costs if plaintiffs did not comply.
On November 18, 1983, plaintiffs' new attorney entered an appearance. Twelve days later, the court heard defendant's motion for entry of summary judgment. The court ordered the plaintiffs to pay $550 in "costs". Plaintiffs stated that their former attorney lacked authority to enter into a settlement, that the settlement was not embodied in a written agreement, and that they had never even accepted the offer of settlement. The brief was supported by an affidavit of Rok Gojcaj which stated that he and his wife had declined to accept the offer and that his wife was not competent to settle her rights in the lawsuit at the time of the alleged agreement. The trial court stated as follows:
"Plaintiffs insist that they did not accept an offer of settlement. Plaintiffs apparently contend that there was a mistake in their accepting the settlement offer. This allegation rests on the fact that plaintiffs do not speak or understand English. However, plaintiffs' motion to reinstate mediation, brought by their former counsel, Samuel A. Meklir, contained a statement by Meklir that `plaintiffs represented to counsel that they would accept the offer as full settlement and the mediation was dismissed.' This statement is clear, unambiguous, and supported by affidavit. Such a settlement will only be set aside by the court on a showing of mistake, fraud, duress or unconscionable advantage. Miller v McGinnis, 285 Mich. 28 [ 280 N.W. 96] (1938). Plaintiffs have presented no reason why this settlement should be set aside. Plaintiffs' assertion that they `could not, and should not be expected to, understand the full meaning of a proposed settlement * * *' is without merit. Plaintiffs' counsel explained the settlement offer to them through an interpreter."
We first note that defendant's motion should have been labeled "motion for accelerated judgment". GCR 1963, 116.1(5). "However, mislabeling of the motion will not prevent our consideration of the question." Witucke v Presque Isle Bank, 68 Mich. App. 599, 604, fn 2; 243 N.W.2d 907 (1976), lv den 397 Mich. 842 (1976).
Accelerated judgment is proper only if no material factual dispute exists between the parties regarding the circumstances which provide the basis for accelerated judgment. Kropff v City of Monroe, 128 Mich. App. 450, 452; 340 N.W.2d 119 (1983). When plaintiff has demanded a jury trial, accelerated judgment should be granted only if, based on the undisputed facts, the trial court can properly conclude as a matter of law that the plaintiff's claim is barred because of earlier disposition of the claim. GCR 1963, 116.3; Wallisch v Fosnaugh, 126 Mich. App. 418, 424; 336 N.W.2d 923 (1983), lv den 418 Mich. 871 (1983). If a court, in ruling on a motion for accelerated judgment, engages in fact-finding reversal is required. Kropff, supra. In deciding a motion for accelerated judgment, the court is to accept all well-pleaded allegations of the nonmoving party as true. Affidavits submitted by either party may be considered by the court. Wallisch, supra.
The trial court concluded that plaintiffs were claiming mistake as a defense to the settlement agreement and that the facts asserted by the plaintiffs did not establish mistake. This conclusion was error. The plaintiffs actually claimed that they never entered into an agreement. Plaintiff Rok Gojcaj's affidavit stated that they had specifically declined to accept the agreement.
An attorney has no power by virtue of his general retainer to compromise his client's cause of action. Precedent special authority or subsequent ratification is necessary to make such a compromise valid and binding on the client. Henderson v Great Atlantic Pacific Tea Co, 374 Mich. 142, 147; 132 N.W.2d 75 (1965); Michigan National Bank of Detroit v Patmon, 119 Mich. App. 772, 775; 327 N.W.2d 355 (1982). In this case, the facts in regard to ratification and precedent special authority are in dispute. Plaintiff Rok Gojcaj stated in his affidavit that plaintiffs neither ratified the agreement nor gave precedent special authority to their attorney to enter into it.
The trial court also concluded from their former attorney's statements in the motion to reinstate mediation that plaintiffs had admitted that they entered into an agreement. The motion contained a statement that "plaintiffs represented to counsel that they would accept the offer as full settlement and the mediation was dismissed". However, plaintiff Rok Gojcaj's affidavit directly contradicts that assertion. Thus, unless the attorney's admission is binding on plaintiffs, a factual issue exists as to whether they actually entered into the agreement. A statement is a judicial admission only if it is a statement made by a party or his attorney during the course of trial, and is a distinct, formal, solemn admission which is made for the express purpose of dispensing with formal proof of that particular fact at trial. Ortega v Lenderink, 382 Mich. 218, 222-223; 169 N.W.2d 470 (1969); Michigan Health Care, Inc v Flagg Industries Inc, 67 Mich. App. 125, 129; 240 N.W.2d 295 (1976). See also, GCR 1963, 606, treating statements in pleadings as admissions. A motion is not a pleading. GCR 1963, 110.
In addition, plaintiffs allege that plaintiff Age Gojcaj lacked the capacity to enter into a settlement agreement. An agreement to settle a pending lawsuit is a contract which is to be governed by the legal principles which are generally applicable to the interpretation and construction of contracts. Scholnick's Importers-Clothiers, Inc v Lent, 130 Mich. App. 104, 109; 343 N.W.2d 249 (1983). "`[C]ontracts or conveyances of mentally-incompetent persons made prior to an adjudication of mental incompetency are voidable.'" Brown v Khoury, 346 Mich. 97, 99; 77 N.W.2d 336 (1956) (citations omitted). Thus, even if plaintiffs had entered into an agreement, the factual question of capacity would remain.
More importantly, GCR 1963, 507.9 states:
"No private agreement or consent between the parties to a cause, or their attorneys respecting the proceedings in a cause which is denied by either party, is binding, unless the same has been made in open court, or unless evidence thereof is in writing subscribed by the party or his attorney against whom the same is alleged."
The above rule "indicates that agreements are not binding unless in writing subscribed by the party against whom the agreement is asserted or that party's attorney or unless the agreement has been made in open court". Scholnick's, supra, p 109 (emphasis in original); See also, Rossi v Transamerica Car Leasing Co, 138 Mich. App. 807; 360 N.W.2d 307 (1984), Kline v Kline, 92 Mich. App. 62, 71-72; 284 N.W.2d 488 (1979). In the present case, plaintiffs denied the existence of a settlement agreement. No settlement or agreement to settle was made in open court. Thus, no alleged settlement agreement is binding on plaintiffs unless the settlement terms are in a writing subscribed by plaintiffs or their attorney. Defendant presented no such evidence below. The motion for reinstatement of mediation is insufficient in this respect since it does not contain the terms of the agreement. Until plaintiffs or their attorney signed such a writing or the settlement was made in open court, they were free to disavow the alleged oral agreement.
We note that an oral settlement agreement, if proved and undenied, is binding on plaintiffs even though not entered on the court record. Rossi, supra; Thomas v Michigan Mutual Ins Co, 138 Mich. App. 117; 358 N.W.2d 902 (1984). "[W]here agreement has been expressed on all the essential terms of the contract, the mere fact that the parties manifest an intention to prepare a written memorial of their agreement does not render the oral contract unenforceable merely because the writing is never prepared." Scholnick's, supra, p 109.
Accordingly, the order granting judgment to defendant is reversed, and the cause remanded to the trial court. The order reinstating mediation shall be reinstated. We decline plaintiffs' invitation to consider the propriety of the order taxing costs at this time. That issue may be raised in the trial court at the conclusion of all trial proceedings.
If a determination is made that the repudiation of an oral agreement knowingly and competently made by both plaintiffs caused the mediation to be canceled and resulted in costs and attorney fees to defendant, the trial court may properly impose such costs and attorney fees, even though the repudiation itself is lawful and even if plaintiffs prevail at trial. We will not countenance the use of such tactics by parties or their attorneys to frustrate the mediation process and to mislead opposing counsel into believing that a settlement has been reached. See 3 Honigman Hawkins, Michigan Court Rules Annotated (2d ed), p 50.
The present record leads us to believe that the repudiation was not the fault of counsel for plaintiffs.
Reversed and remanded.