Opinion
Civ. No. 95-6554 (DRD).
August 26, 1999.
Dennis Estis, Esq., Greenbaum, Rowe, Smith, Ravin Davis, P.C. Iselin, N.J., Attorneys for Plaintiff.
Christopher P. Morrison, Esq., Smith, Stratton, Wise, Heher Brennan, Princeton, N.J., Attorneys for Howard Industries, Inc.
OPINION
Defendant Howard Industries, Inc. ("Howard"), has moved for an order enforcing a settlement agreement that it allegedly entered into with the Plaintiff, Carlyle Towers Condominium Association, Inc. (the "Association"). Oral argument was held on August 23, 1999. For the reasons set forth below, Howard's motion will be granted.
I. BACKGROUND
This matter arises from the construction and sale of condominium units at the Carlyle Towers Condominium (the "Condominium"), a high-rise condominium development located on the Palisades in Cliffside Park, New Jersey. From the beginning of its occupancy in 1990 the Condominium has suffered from various defects that will allegedly cost over $15 million to repair.
The Condominium consists of residential dwelling units located in two towers (North and South) and a lobby or atrium structure connecting the two towers and containing fourteen townhouse-type units, for a total of 370 residential units. The Condominium also consists of a two level parking structure located below the lobby. The complex is situated on four acres of land and has a guest parking lot located on an adjacent piece of property.
Howard was hired by Anchorage Woods Construction, the Condominium's general contractor, to manufacture sliding glass door and window units for the building. Since at least 1992, residents have been beset by numerous and increasing problems affecting certain elements of the Condominium. These continuing problems include water and/or excessive air infiltration from numerous areas of the building including, but not limited to, the exterior cavity walls and the window units located therein. The extent of the water infiltration problem became known during a succession of storms in the winter of 1992-1993. During these storms, the common elements and numerous units in the Condominium experienced substantial damage resulting from severe water infiltration. In response to this problem, the sponsor-controlled Board retained Helpern Architects to conduct a building envelope study at the Condominium. The report confirmed that there was water leakage around the HVAC units, through the windows due to window hardware inadequacies, through the sliding doors, and through the expansion joints.
On June 25, 1995, the Association, a New Jersey non-profit corporation established under the New Jersey Non-Profit Corporation Act, N.J.S.A. 15A:1-1 et seq., and the New Jersey Condominium Act, N.J.S.A. 46:8B-1 et seq., filed a multi-count complaint in the New Jersey Superior Court in Bergen County. Howard was not named as a defendant, however, until the Association filed its Amended Complaint on May 7, 1996.
From about September 1997 through the summer of 1998, Howard actively engaged in discovery. Counsel for Howard attended numerous depositions and conducted an exhaustive review of the Association's documents. On June 16, 1998, Magistrate Judge Pisano issued an order staying discovery to afford the parties the opportunity to resolve their differences through meditation. During the course of the mediation, Howard and the Association discussed the terms of a possible settlement. Howard was willing to settle the case despite what it thought were strong arguments for summary judgment in its favor.
The Association and Howard discussed an appropriate settlement figure, the need for a stipulation of dismissal and releases, and indemnification of Howard for claims and/or cross-claims against it relating to the windows at the Condominium. See Morrison Cert. ¶ 17. The Association allegedly stated that providing the indemnification would not be a problem. Id.
During the final mediation sessions in October of 1998, the Association and Howard reached a settlement on principle (the "October Agreement"). The essential terms included Howard's agreement to pay the Association a specific dollar amount in return for the Association's dismissal of its claims against Howard. The Association agreed to have its attorneys prepare the necessary releases and a written settlement agreement memorializing the terms to which the parties had agreed. Id. ¶ 9.
After the mediation concluded, the stay on discovery was lifted and the parties engaged in an aggressive discovery schedule. Numerous depositions were scheduled and conducted. With the alleged settlement in place, however, Howard stopped participating in discovery. Id. ¶ 10. Howard also instructed its expert to cease working due to the settlement. Id.
On November 23, 1998, counsel for the Association forwarded a draft copy of a written settlement agreement to Howard. Id. ¶ 11, Ex. A. According to Howard, the draft reflected the October Agreement in its essential terms and included provisions for the payment of money by Howard in exchange for a release and indemnification from the Association. The indemnification provision stated that:
The Association shall indemnify and hold harmless Howard from and against any and all claims and cross claims brought by any other parties in the Litigation and any non-parties (including but not limited to individuals, corporations, partnerships or any other legal form of entity or group) that are joined in the litigation after the date of this Agreement [to the extent such claims and/or cross claims concern goods sold and/or services rendered by Howard in connection with the Carlyle Towers Condominium].
Therefore, this draft of the agreement contemplated full indemnification for any claims or cross-claims against Howard made by any party in the litigation.
After receipt of the agreement, counsel for the Association notified Howard's attorney that it wished to exclude the St. Paul intervenor claim from the indemnification language. Howard's attorneys agreed to the limitation.
On December 17, 1998, Howard's attorney wrote to the Association's counsel accepting a vast majority of the draft as written, but proposing several minor modifications to the agreement (the "December Agreement"). None of the modifications requested would affect the essential terms of the agreement.
On December 28, 1998, the Association's attorneys provided Howard with a second draft settlement agreement incorporating several, but not all, of the modifications requested by Howard. The Association also inserted additional limiting language to the indemnification term that was no part of the December Agreement. The new indemnification provision read as follows:
The Association shall indemnify and hold harmless Howard from and against any and all claims and cross claims brought by any other parties in the Litigation and any parties hereafter named, except for claims by St. Paul Fire Marine Ins. Co. Nothing contained herein shall constitute an agreement by the Association to indemnify or hold harmless Howard from any claims brought by any party based upon contractual indemnification agreed upon by Howard, except any claims for contractual indemnification and attorneys' fees brought by Anchorage Woods and/or Republic National Bank.
In this provision, the Association proposed to exclude all claims made by St. Paul rather than merely excluding the claims made by St. Paul in its intervenor complaint. Additionally, the Association proposed to limit the indemnification it was willing to provide Howard for contractual indemnification claims to those claims brought by Anchorage Woods and Republic National Bank. The Association did not, however, suggest any modification to the essential terms of the October Agreement. The Association still agreed that it would provide Howard with a stipulation of dismissal and a release in exchange for the same specific dollar amount.
In a January 11, 1999, letter to the Association, Howard noted that in the Association's December 28, 1998, draft, the scope of indemnification had been limited beyond that which the parties had agreed to in the December Agreement. Id. ¶ 16. Howard's attorney requested that the language used in the latest draft be replaced by the following:
The Association shall indemnify and hold harmless Howard from and against any and all claims and cross claims brought by any parties currently in the Litigation and any individual[s], partnerships, corporations, associations, or entities that are subsequently joined in the litigation after the date of the Agreement. This indemnification shall extend only to such claims concerning goods sold and/or services rendered by Howard in connection with the Carlyle Towers Condominium. Excepted from this agreement to indemnify and hold harmless are those claims made against Howard by St. Paul Fire Marine Ins. Co. in its intervenor complaint in the Litigation.
Howard also requested that a change in the date payment was to be made under the agreement. Id.
On January 26, 1999, the parties attended a case management conference before Magistrate Judge Joel A. Pisano. Counsel for Howard and counsel for the Association were able to speak to each other regarding the status of the agreement and, in particular, the two issues raised in Howard's January 11, 1999, letter. Id. ¶ 17. The Association's attorney did not believe that the change in the date of payment would be a problem but stated that he would have to review the indemnification language from the previous drafts before agreeing to any changes. Id. ¶ 18.
On February 5, 1999, the Association's attorney wrote to Howard and agreed to the minor date change but rejecting the request to modify the indemnification language. Id. ¶ 19. On February 23, 1999, Howard's attorney wrote to the Association with another proposal on changing the indemnification language. That proposal read as follows:
The Association shall indemnify and hold harmless Howard from and against any and all claims and cross claims brought by any other parties in the Litigation and any non=parties (including but not limited to individuals, corporations, partnerships or any other legal form of entity or group) that are joined in the Litigation after the date of this Agreement [to the extent such claims and/or cross claims concern goods sold and/or services rendered by Howard in connection with the Carlyle Towers Condominium]. Excepted from this agreement to indemnify and hold harmless are those claims made against Howard by St. Paul Fire Marine Ins. Co. in its intervenor complaint in the Litigation.Id. ¶ 20.
On March 23, 1999, the Association's attorney contacted Howard in writing suggesting yet another indemnification term. Id. ¶ 23. That suggested provision stated that:
The Association shall indemnify and hold Howard from and against any and all claims and cross claims brought by any parties in the Litigation after the date of this Agreement to the extent that such claims and/or cross claims concerned goods sold and/or services rendered by Howard in connection with the Carlyle Towers Condominium. Excepted from this paragraph are any claims (I) by St. Paul Fire Marine Ins. Co., and/or (ii) by any party based upon contractual indemnification agreed upon by Howard, except any claims for contractual indemnification and attorneys' fees brought by Anchorage Woods and/or Republic National Bank.Id. Ex. H.
On April 5, 1999, Howard's attorney contacted the Association's counsel in writing and accepted the language that was proposed in the March 23, 1999, letter. Counsel for Howard explained that since Howard no longer existed as an entity, Howard was unaware of the existence of any claims against it relating to Carlyle Towers besides those brought by the Association. Howard's attorney stated that:
[W]e are . . . prepared to enter into the settlement agreement as you propose with the understanding that you and/or your client are not currently aware of: 1) any contractual indemnity claims against Howard in regard to the Carlyle Towers other than those potentially asserted by Anchorage Woods and/or CrossLand/Republic National Bank, and 2) any claim by St. Paul against Howard in regard to the Carlyle Towers other than those claims asserted in the intervenor complaint. [P]lease forward to me for execution a final copy of the settlement agreement including all modifications as discussed in our previous correspondence.Id. ¶ 24, Ex. I.
Howard did not receive an immediate response from the Association. It was not until May 19, 1999, that Howard was again contacted by the Association. On that date, which was after discovery had closed in this action, the Association's attorney wrote to Howard and stated that:
After many months of discussions regarding possible settlement between Howard Industries and the plaintiff, in efforts to reach agreement on the terms of a settlement document, it has become clear that no settlement can be effectuated at this time. Therefore I have been directed to advise you that settlement negotiations between the two parties should be considered terminated.Id. ¶ 28.
On June 2, 1999, Howard forwarded to the Association a signed copy of the April Agreement, incorporating all of the terms to which the parties allegedly agreed. Id. ¶ 30. The Association did not sign the agreement and maintains that no agreement to settle exists.
II. DISCUSSION
Howard has moved to enforce an alleged settlement agreement with the Association. Howard contends that all terms deemed essential by both parties during the negotiation process were agreed upon even though no writing had been executed. The Association, however, argues that the essential provision dealing with the extent of the Association's indemnification of Howard was never agreed upon and precludes any enforcement of a settlement.
An agreement to settle a lawsuit is a contract which, like all contracts, may be freely entered into and which a court, absent a demonstration of "fraud or other compelling circumstances," should honor and enforce as it does other contracts. Honeywell v. Bubb, 130 N.J. Super. 130, 136, 325 A.2d 832 (App.Div. 1974). Indeed, the "settlement of litigation ranks high in [the] public policy" of New Jersey. Lahue v. Pio Costa, 263 N.J. Super. 575, 595-96, 623 A.2d 775, 788 (App.Div. 1993); Pascarella v. Bruck, 190 N.J. Super. 118, 125, 462 A.2d 186 (App.Div.), certif. denied, 94 N.J. 600, 468 A.2d 233 (1983); Bistricer v. Bistricer, 231 N.J. Super. 143, 147, 555 A.2d 45 (Ch.Div. 1987); Department of the Pub. Advocate v. Board of Pub. Util., 206 N.J. Super. 523, 528, 503 A.2d 331 (App.Div. 1985); Jannarone v. W.T. Co., 65 N.J. Super. 472, 476-77, 168 A.2d 72 (App.Div.), certif.denied, 35 N.J. 61, 171 A.2d 147 (1961). 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. Bistricer, 231 N.J. Super. at 145, 555 A.2d 45.
The settlement negotiations between the Association and Howard revolved around three separate issues. These issues were the amount of money Howard would pay to the Association, the release the Association would give to Howard, and the scope of the Association's indemnification of Howard. The parties do not dispute that an agreement had been reached as far as the amount of money to be paid and the release to be issued. The only real contention is whether the parties agreed on the scope of the Association's indemnification of Howard.
The parties have not contested an agreement as to the monetary amount and the entry of a release and stipulation of dismissal. The Association even stated in its brief submitted in connection with this motion that "it is willing to enter into a settlement with Howard at the agreed upon figure, with the entry of a stipulation of dismissal and releases." Accordingly, this portion of the settlement agreement will be enforced.
A review of the record, the numerous drafts of the indemnification provision, and the correspondence between the parties indicates that the scope of the indemnification had been agreed to and that Howard has proven the existence of the agreement and its terms with reasonable certainty. See Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992). The Association proposed an indemnification term on March 23, 1999. After taking time to review the latest draft, counsel for Howard notified the Association's attorney that Howard accepted the March 23, 1999, proposed language. The Association argues that this acceptance was nothing more than a counteroffer because Howard requested it to make certain "representations" about the existence of claims. The Association contends that it rejected Howard's April 5, 1999, counteroffer and terminated settlement negotiations.
The Association's arguments are unpersuasive. Howard clearly accepted the Association's latest version of the indemnification provision in its letter of April 5, 1999. This was the final essential term needed to consummate the agreement between the parties. The acceptance and the settlement were not contingent upon any further representations as the Association suggests in its brief. The April 5, 1999, letter to the Association did not request any changes in the indemnification language and did not make acceptance dependant on any further representations.See Lahue, 263 N.J. Super. at 596, 623 A.2d at 787. The letter merely outlined Howard's understanding as to what claims were currently pending against it and had nothing to do with the acceptance of the indemnification language. Accordingly, the indemnification language proposed by the Association in its March 23, 1999, letter and accepted by Howard in its April 5, 1999, letter is controlling and will be enforced as part of the settlement agreement.
For the reasons set forth in this opinion, I do not need to discuss Howard's alternative argument based on estoppel.
III. CONCLUSION
For the reasons set forth above, Howard's motion to enforce the settlement agreement will be granted. The agreement shall be consistent in language and form with the draft attached as Exhibit M to the Certification of Christopher P. Morrison Esq. in Support of Defendant Howard Industries, Inc.'s Motion to Enforce Settlement. An appropriate order will issue.O R D E R
Defendant Howard Industries, Inc. ("Defendant"), having moved to enforce a settlement agreement between it and Plaintiff, Carlyle Towers Condominium Association, Inc. ("Plaintiff"); and the Court having heard oral argument on August 23, 1999; and in accordance with this Court's opinion of even date;
IT IS this day of August, 1999, hereby
ORDERED that Defendant's motion to enforce the settlement agreement be and hereby is GRANTED; and it is further
ORDERED that the draft attached as Exhibit M to the Certification of Christopher P. Morrison Esq. in Support of Defendant Howard Industries, Inc.'s Motion to Enforce Settlement shall constitute the settlement agreement between the parties, subject to any modifications upon which the parties may agree in writing.