Opinion
DOCKET NO. A-1677-14T3
04-04-2016
LYONS & ASSOCIATES, PC, Plaintiff-Respondent, v. MINGMING WU, Defendant/Third-Party Plaintiff-Appellant, v. MARK T. GABRIEL, ESQ., Third-Party Defendant-Respondent.
The Hill Firm, LLC, attorneys for appellant (Bilal Hill, on the brief). Lyons & Associates, PC, respondent pro se (Theresa A. Lyons, on the brief). Braff, Harris, Sukoneck & Maloof, attorneys for respondent Mark T. Gabriel, Esq. (Gloria B. Cherry, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Messano and Simonelli. On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1452-13. The Hill Firm, LLC, attorneys for appellant (Bilal Hill, on the brief). Lyons & Associates, PC, respondent pro se (Theresa A. Lyons, on the brief). Braff, Harris, Sukoneck & Maloof, attorneys for respondent Mark T. Gabriel, Esq. (Gloria B. Cherry, on the brief). PER CURIAM
Defendant/third-party plaintiff Mingming Wu appeals from the September 5, 2014 Law Division order, which vacated the entry of default against plaintiff Lyons & Associates, P.C. (the Lyons Firm), enforced a settlement agreement, and dismissed the matter with prejudice. Wu also appeals from the September 18, 2014 order, which vacated entry of default against third-party defendant Mark T. Gabriel, Esq., and from the October 10, 2014 order, which awarded attorney's fees to the Lyons Firm. For the following reasons, we affirm as to the September 5 and 18, 2014 orders, but reverse and remand as to the October 10, 2014 order.
We derive the following facts from the record. Gabriel, an associate attorney with the Lyons Firm, represented Wu in a matrimonial matter. On August 20, 2013, the Lyons Firm instituted fee arbitration against Wu for unpaid legal fees. On October 10, 2103, the fee arbitration panel determined that Wu owed $19,624.24 to the Lyons Firm.
On November 1, 2013, the Lyons Firm filed a complaint against Wu for legal fees. On December 11, 2013, Wu filed an answer and counterclaim against the Lyons Firm and a third-party complaint against Gabriel, asserting claims against both parties of malpractice, unjust enrichment, and fraud. On December 24, 2013, the court stayed the matter pending resolution of Wu's appeal of the fee arbitration determination.
To avoid further litigation, Theresa A. Lyons, Esq., managing partner of the Lyons Firm, sought to negotiate a settlement with Wang, Gao & Associates, P.C., the law firm representing Wu at the time (the Wang Firm). On January 17, 2014, the Wang Firm's managing partner, Heng Wang, Esq., consented to a thirty-day extension for the Lyons Firm and Gabriel to file an answer to the counterclaim and third-party complaint.
Thereafter, Lyons and Wang discussed settlement. In a February 12, 2014 email to Lyons, Wang confirmed he had "obtained authority from [Wu] to settle the pending litigation" and that "[a]s agreed, each party will dismiss the claims against the other with prejudice and walk away." He also stated he would send the Lyons Firm and Gabriel a stipulation of dismissal and a general release.
Wang prepared a Settlement Agreement and General Mutual Release (the settlement agreement) and stipulation of dismissal with prejudice. The settlement agreement provided that the parties relinquished their claims against each other and would dismiss the matter with prejudice. Wang sent the documents to the Lyons Firm and Gabriel on February 17, 2014, with direction to return the executed documents to him, after which he would "instruct [Wu] to sign and return a copy of same." Lyons and Gabriel executed the documents on March 5, 2014, and delivered them to Wang on March 7, 2014.
Wang subsequently advised Lyons that Wu refused to sign the settlement agreement. Without further discussion with the Lyons Firm or Gabriel, on March 12, 2104, Wang filed an amended answer, counterclaim and third-party complaint on Wu's behalf, omitting the fraud claim and adding claims for negligent misrepresentation and breach of fiduciary duty. On March 24, 2014, Wang served the pleadings on the Lyons Firm and Gabriel. Gabriel requested a thirty-day extension to file an answer. Wnag responded, "I generally work with counsel in terms of such requests to extend [a] deadline. However, in this particular case, unless my client instructs me otherwise, you should not assume my client will consent to the extension."
On April 25, 2014, the Wang Firm filed a motion to change the discovery track to a malpractice matter. On May 2, 2014, Wang withdrew as Wu's attorney, and Wu continued pro se. With notice to Wu, on May 12, 2014, the Lyons Firm requested an adjournment of the motion in order to complete discussions with its malpractice insurance carrier. The court adjourned the motion to May 23, 2014. Prior thereto, on May 19, 2014, Bilal Hill, Esq. substituted as Wu's attorney. Without notice to the Lyons Firm or Gabriel, on June 18, 2014, Hill filed a request to enter default against them.
The Lyons Firm and Gabriel filed motions to vacate entry of default and enforce the settlement in lieu of filing an answer. Wu filed a cross-motion for entry of final judgment by default. Notably, neither Wu nor Wang filed certifications confirming that Wu had not agreed to or authorized Wang to agree to the settlement.
On September 5 and 18, 2014, respectively, the court entered an order vacating the entry of default and ordering Wu to execute the settlement agreement. On October 10, 2014, the court entered an order awarding the Lyons Firm $3,120.23 for attorney's fees incurred in this matter. This appeal followed.
On appeal, Wu argues that the court could not bind her to a settlement agreement which she did not sign or authorize her attorney to accept. She also argues there was no good cause to vacate entry of default, and the court erred in awarding attorney's fees to the Lyons Firm.
Unfortunately, there is no statement of reasons for any of the court's orders. Judges must make findings of fact and conclusions of law on motions decided by written order appealable as of right. R. 1:7-4. This requires judges to articulate "specific findings of fact and conclusions of law[.]" Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 1:7-4 (2016); see also Raspantini v. Arocho, 364 N.J. Super. 528, 532 (App. Div. 2003).
Where the trial court failed to issue findings and conclusions, we have remanded the case. See, e.g., Foley, Inc. v. Fevco, Inc., 379 N.J. Super. 574, 588-89 (App. Div. 2005). However, Rule 2:10-5 permits us to "exercise such original jurisdiction as is necessary to complete determination of any matter on review," to avoid "perpetual litigation." Accardi v. Accardi, 369 N.J. Super. 75, 91-92 (App. Div. 2004). Furthermore, we will exercise our original fact-finding jurisdiction where "the record is so clear and complete," and the claim is wholly without merit. Huster v. Huster, 64 N.J. Super. 29, 34 (App. Div. 1960). The record before us is sufficient to determine the issues regarding the settlement and motion to vacate entry of default, but not the attorney's fee issue.
We first address the order enforcing the settlement. It is a well-settled principle that agreements "'made by attorneys when acting within the scope of their authority are enforceable against their clients.'" Jennings v. Reed, 381 N.J. Super. 217, 230 (App. Div. 2005) (quoting Carlsen v. Carlsen, 49 N.J. Super. 130, 137 (App. Div. 1958)). "'[I]t is the clear policy of our courts to recognize acts by the attorneys of the court as valid and presumptively authorized[.]'" Id. at 231 (quoting Bernstein & Loubet, Inc. v. Minkin, 118 N.J.L. 203, 205 (E. & A. 1937)). "Consequently, an attorney is presumed to possess authority to act on behalf of the client, and the party asserting the lack of authority must sustain 'a heavy burden to establish that [her] attorney acted without any kind of authority[.]'" Ibid. (first alteration in original) (citations omitted).
Moreover, "'New Jersey law recognizes two types of authority to settle a lawsuit which would bind [a] client: actual, either express or implied, and apparent authority.'" Burnett v. Cty. Of Gloucester, 415 N.J. Super. 506, 513 (App. Div. 2010) (citation omitted). Even if Wu had certified that Wang lacked actual authority to settle, "the circumstances here gave rise to an apparent authority" on which the Lyons Firm, Gabriel, and the court could rely. U.S. Plywood Corp. v. Neidlinger, 41 N.J. 66, 74 (1963). Wang represented he had Wu's authority to settle, which Wu did not deny. When Wang prepared and approved the settlement agreement and stipulation of dismissal with prejudice, "he presumptively had his client's authority to take that action." See id. at 73-74. Thus, "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." Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 475 (App. Div. 1997) (citation omitted). Accordingly, even ignoring that Wang represented he had Wu's actual authorization to enter into the settlement, the settlement agreement was supported by apparent authority. See Jennings, supra, 381 N.J. Super. at 231-32.
As Wu did not certify that the settlement was not supported by actual or apparent authority, "a contract of settlement was entered into." Amatuzzo, supra, 305 N.J. Super. at 475. Because "'[t]he settlement of litigation ranks high in our public policy,'" we "strain to give effect to the terms of a settlement wherever possible.'" Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008) (alteration in original) (citation omitted). "'[A] court, absent a demonstration of fraud or other compelling circumstances should honor and enforce'" an agreement to settle a lawsuit. Ibid. (quoting Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div.), certif. denied, 94 N.J. 600 (1983)). There is no evidence of fraud or other compelling circumstances here. Consequently, the settlement agreement was enforceable and binding.
We now address the order vacating entry of default. "[T]he requirements for setting aside a default under Rule 4:43-3 are less stringent than the those for setting aside an entry of default judgment under Rule 4:50-1." N.J. Mfrs. Ins. Co. v. Prestige Health Grp., LLC, 406 N.J. Super. 354, 360 (App. Div.), certif. denied, 199 N.J. 543 (2009). "When nothing more than an entry of default pursuant to Rule 4:43-1 has occurred, relief from that default may be granted on a showing of good cause." U.S. Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 466-67 (2012) (citations omitted). "Good cause" as used in this Rule means "the presence of a meritorious defense . . . and the absence of any contumacious conduct[.]" O'Connor v. Altus, 67 N.J. 106, 129 (1975). When determining whether good cause exists, a court must exercise "sound discretion in light of the facts and circumstances of the particular case considered in the context of the purposes of the Court Rule being applied." Del. Valley Wholesale Florist, Inc. v. Addalia, 349 N.J. Super. 228, 232 (App. Div. 2002).
Importantly, "[i]t has been well-established that an application to vacate default 'should be viewed with great liberality and every reasonable ground for indulgence is tolerated to the end that a just result is reached.'" N.J. Div. of Youth & Family Servs. v. P.W.R., 410 N.J. Super. 501, 508, (App. Div. 2009) (quoting Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div.), aff'd, 43 N.J. 508 (1964)), rev'd on other grounds, 205 N.J. 17 (2011). "The decision whether to grant such a motion is left to the sound discretion of the trial court, and will not be disturbed absent an abuse of discretion. All doubts, however, should be resolved in favor of the party seeking relief." Mancini v. EDS ex rel N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993) (citations omitted).
The circumstances of this case present sufficient good cause to vacate entry of default under Rule 4:43-3. There was a settlement, which Wu refused to honor, and no evidence of contumacious conduct by the Lyons Firm or Gabriel. Because the settlement agreement was enforceable and binding, Wu was not entitled to file an amended pleading or obtain entry of default thereon.
As for the award of attorney's fees, we cannot exercise original jurisdiction on the record before us. We note that New Jersey courts "'have traditionally adhered to the American Rule as the principle that governs the allocation of attorneys' fees.'" Occhifinto v. Olivo Constr. Co., 221 N.J. 443, 449 (2015) (quoting Walker v. Giuffre, 209 N.J. 124, 127 (2012)). The American Rule "'prohibits recovery of counsel fees by the prevailing party against the losing party.'" In re Estate of Vayda, 184 N.J. 115, 120 (2005) (quoting In re Niles, 176 N.J. 282, 294 (2003)). Thus, litigants typically bear the cost of their own legal representation. Ibid. "The purposes behind the American Rule are threefold: (1) unrestricted access to the courts for all persons; (2) ensuring equity by not penalizing persons for exercising their right to litigate a dispute, even if they should lose; and (3) administrative convenience." Niles, supra, 176 N.J. at 294.
Neither the Lyons Firm nor Gabriel addressed the attorney's fee issue in their merits briefs. --------
Notwithstanding New Jersey's "'strong public policy against the shifting of costs,'" counsel fees may be awarded in certain circumstances. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 404-05 (2009) (quoting Vayda, supra, 184 N.J. at 120); see also R. 4:42-9(a)(1)-(8). Here, none of the circumstances stated in Rule 4:42-9(a)(1) to (8) apply, and we do not know what other circumstances the court found to justify an award of attorney's fees to the Lyons Firm. Accordingly, we remand for the court to make findings of fact and conclusions of law regarding the attorney's fee award.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION