Opinion
CAUSE NO. IP 01-0198-C-T/K.
June 4, 2003
REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO ENFORCE SETTLEMENT AGREEMENT
I. Introduction
This cause is before the Court on Defendant Indiana Department of Labor's motion to enforce settlement agreement. The parties submitted briefs on the pending motion, and the Court held an evidentiary hearing on May 12, 2003. At the hearing, the Court heard testimony from Plaintiff Rudolph Frazier, his wife Cheryl Frazier ("C. Frazier"), and attorney Gregory Coleman, who represented Frazier in the underlying Title VII case. For the reasons set forth below, the Magistrate Judge recommends that Defendant's motion to enforce settlement agreement be GRANTED.
II. Findings of Fact and Conclusions of Law
On Friday, March 21, 2003, the parties appeared in person and by counsel for a Court-ordered settlement conference. The essential terms of Defendant's final settlement offer were: (1) a non-merit Accountant E-7 position; (2) a $41,500 annual salary; (3) a one-year Working Test Period ("WTP"); (4) a non-retaliation clause; and (5) $40,000. Frazier rejected this offer. He did so largely because of the one-year WTP, although the Defendant contended that state law required this WTP. In addition, at the time of the settlement conference, Frazier had pending an emergency motion to reconsider the Court's ruling on Defendant's motion in limine. [Docket No. 96]. The Court's ruling on the Defendant's motion in limine seriously undercut Frazier's ability to admit favorable evidence at trial. [Docket No. 91]. Frazier was reluctant to settle given the possibility that the Court might reconsider and materially change its ruling on the Defendant's motion in limine.
On Saturday March 22, Frazier, his wife, and Coleman met at Coleman's office. The trial was to begin on Monday, March 24. Coleman again discussed with Frazier the WTP and Judge Tinder's pending ruling on Frazier's emergency motion to reconsider. Coleman advised the Fraziers that he had confirmed that the WTP was required by state law for the job Defendant offered. The Defendant had provided Coleman with information in this regard following the settlement conference.
As to the motion to reconsider, Coleman stated consistent with the representations made by the Magistrate Judge at the settlement conference that this motion likely would be denied in all material respects. This would substantially harm Frazier's case by preventing him from presenting certain evidence at trial, the most crucial of which was certain "comparator" evidence Frazier hoped to present. As a result, Coleman opined that Frazier's chances of prevailing at trial were slim, and that the settlement offer Defendant proffered was a "win-win" situation for him. In response, Frazier's wife stated "We need to resolve this," a sentiment consistent with her position at the March 21 settlement conference. Frazier then stated that if Judge Tinder denied his motion to reconsider, he would settle the case for the terms (set forth above) offered by Defendant at the settlement conference. Before Frazier and his wife left the meeting, Coleman again reviewed with Frazier the terms of the proposed settlement.
Soon after the Fraziers left Coleman's office, Coleman contacted Deputy Attorney General Loralei Lannan, lead trial counsel for Defendant. Lannan was in her office that Saturday preparing for Monday's trial. Lannan indicated the settlement offer made at the settlement conference was still on the table. Coleman told Lannan that Frazier was willing to accept the offer provided that Judge Tinder denied the motion to reconsider as expected. Coleman and Lannan then telephoned Judge Tinder's courtroom deputy ("CRD") and inquired into Judge Tinder's pending ruling on Frazier's motion to reconsider. The CRD replied that Judge Tinder was going to deny the motion, and that she would fax the judge's written order to Coleman's office on Monday. Coleman and Lannan then advised the CRD that the case was settled and that the case was no longer necessary. Later that day, Coleman spoke with Frazier and told him that the case was settled.
Although Judge Tinder did reconsider his prior order (and thus technically "granted" the motion for reconsideration), the Court made only minor changes to its ruling and expressly stated that "most of the court's ruling[s] on the Defendant's Motion in Limine remain the same." [Docket No. 98, p. 11]. Most notably, Judge Tinder did not alter his prior decision limiting the comparator evidence Frazier could present. [Docket No. 98, pp. 2-4]. Frazier does not argue that Judge Tinder's minor changes to his prior ruling were sufficient to override any conditional settlement authority Frazier gave Coleman.
Nevertheless, Frazier and his wife appeared in court on the morning of Monday March 24. Judge Tinder's staff informed Frazier that his case had been settled, and that the trial was vacated. Coleman and his wife left the courthouse and went to Coleman's office, but Coleman was not there. Coleman arrived at his office later that morning and learned that Frazier had stopped by his office after showing up earlier in court. In response to this news, Coleman called Frazier at home but got no answer. He then prepared a detailed letter to Frazier again setting forth the terms of the settlement. [Def.'s Ex. 2]. Coleman faxed this letter to Frazier March 24. On March 25, Frazier returned Coleman's call. Coleman asked Frazier why he had gone to court the previous morning, and Frazier responded, "I forgot." Frazier then inquired into the possibility of changing the terms of the settlement regarding the WTP, but Coleman told Frazier that was not possible.
On March 26, 2003, Lannan sent Coleman the settlement documents she had drafted for Coleman to review. [Def.'s Ex. 1]. On March 31, Coleman faxed these documents to Frazier at the same fax number as he had sent the March 24 letter. [Def.'s Exs. 2, 3]. Coleman heard nothing else from Frazier until approximately April 8, when Frazier's new attorney, Ken Roberts, called Coleman to tell him he did not have authority to settle Frazier's case. The instant motion to enforce settlement agreement soon followed. [Docket No. 105].
Frazier contends that he never gave Coleman authority to settle his case. However, the Court finds Frazier's testimony at the hearing, as well as much of C. Frazier's testimony, lacking in credibility. The Court reaches this conclusion for several reasons.
First, Frazier testified that when he left Coleman's office on Saturday March 22, he stated only that he would "consider" the settlement if the motion to reconsider were denied. This testimony is simply not believable. There was no more time for Frazier to "consider" the offer. Trial was to begin on Monday March 24. No trial preparation occurred Saturday with Frazier or C. Frazier in Coleman's office. Since no trial preparation took place, and there was no time left to "consider" the Defendant's offer, the only reasonable conclusion is that Frazier gave Coleman authority to settle his case.
Second, Coleman faxed a detailed letter to Frazier on March 24 confirming that Frazier gave him authority to settle his case for the terms offered by Defendant. [Def.'s Ex. 2]. Frazier testified that he never received this fax, but the Court finds this similarly unbelievable. Frazier admitted that the fax was sent to the correct number at his home. Moreover, a fax confirmation sheet establishes that the fax was successfully sent. [Def.'s Ex. 2]. Frazier admits to receiving the settlement documents that Coleman faxed to him at the same number on March 31. [Def.'s Ex. 3]. Therefore, the only reasonable conclusion is that Frazier did in fact receive the March 24 letter the day Coleman faxed it to him.
This conclusion is important because of how Frazier reacted when he received the fax. He did nothing. If Frazier had not actually given Coleman authority to settle his case, one would expect that, upon receiving the March 24 letter explaining that the case was settled, Frazier would have immediately contacted Coleman to address this matter. But Coleman did nothing. Rather, the undisputed facts reveal that Frazier never contacted Coleman again. Coleman heard nothing on this issue until he received a phone call on or about April 8 from attorney Roberts.
Thus, Frazier's response — or more correctly the lack thereof — to Coleman's March 24 letter further undermines Frazier's credibility. Frazier's contention that he never received this March 24 fax further supports this Court's conclusion that Frazier's version of events is not to be believed. It is far more plausible that the seeds of indecision Frazier expressed to Coleman during their March 25 conversation ultimately blossomed into full-blown "settler's remorse."
The third reason the Court discounts the credibility of Frazier and his wife is the witnesses' demeanor during the May 12 evidentiary hearing. This is most notably so with respect to C. Frazier, whose testimony at the May 12 hearing generally supported Frazier. While testifying during the May 12 hearing, C. Frazier was visibly uncomfortable. She spoke so softly that her voice was nearly inaudible at times; the Court had to ask her to speak up so that she could be heard. C. Frazier's demeanor in testifying left the Court with the distinct impression that her testimony was half-hearted and shaded by a desire to help the man she had been married to for 10 years back out of a settlement he no longer wanted. Frazier's testimony was slightly more convincing, but as set forth above the Court has other compelling reasons to question the credibility of Frazier's testimony.
In contrast to the Fraziers' testimony was that of Coleman. Coleman testified confidently, consistently, and believably. The Court is well aware that there could be reasons for Coleman to shade his testimony as well. Frazier has filed a disciplinary action against Coleman in connection with Coleman's acceptance of the settlement offer. Regardless of the outcome of that proceeding, Coleman likely would prefer to avoid any suggestion that he was acting contrary to his client's wishes. Yet even mindful of these circumstances, on balance the Court finds Coleman's version of events far more believable than the Fraziers' version.
In reaching this conclusion, the Court has given great consideration to one nagging question: if Frazier really authorized Coleman to settle his case, why did Frazier show up in court Monday morning, and then proceed to Coleman's office? Based upon the evidence presented at the hearing, the Court finds that the explanation is relatively simple. Namely, this appears to be nothing more than a miscommunication whereby Frazier apparently expected Judge Tinder to announce his decision on the motion to reconsider in open court. This never occurred; the CRD faxed Judge Tinder's decision to Coleman's office as promised. Frazier then proceeded to Coleman's office for an explanation, but did not receive one because Coleman was not there. What Frazier did receive from Coleman was the March 24 letter again setting forth the details of the settlement. [Def.'s Ex. 2]. But Frazier never directly responded to this letter. This supports the conclusion that Frazier authorized Coleman to accept the settlement contingent upon Judge Tinder's ruling, and that the Fraziers' appearance at court on the morning of trial was simply a miscommunication.
Courts enforce the terms of settlement agreements like those of any other contract, even when the agreement in question somehow limits the discretion of the courts. See Hatcher v. Consolidated City of Indianapolis, 323 F.3d 513, 515 (7th Cir. 2003), citing Dutchak v. Central States Southeast Southwest Areas Pension Fund, 932 F.2d 591, 595-96 (7th Cir. 1991). Applying the basic principles of state contract law, courts routinely enforce valid settlement agreements. See, e.g., Pohl v. United Airlines, Inc., 213 F.3d 336, 337 (7th Cir. 2000) ("Some litigants in pursuing settlement of their claims hold the belief that they can change their mind at any time before they actually sign the settlement agreement. As this case illustrates, that perception is often unfounded in the law."); Natare Corp. v. Aquatic Renovation Systems Inc., 987 F. Supp. 695, 700 (S.D. Ind. 1997) ("Settlements allow our courts to operate more efficiently and, equally important, allow the parties to fashion the outcome of their disputes through mutual agreement. Although settlement agreements differ from court ordered judgments, such agreements are nonetheless binding on the parties.").See also Isby v. Bayh, 75 F.3d 1191 (7th Cir. 1996) (federal policy favors settlement).
Here, Frazier disputes whether Coleman was vested with authority to settle his case. "Under Indiana agency and contract law, a principal will be bound by a contract its agent enters into on its behalf only if the agent had actual or apparent authority, or if the principal subsequently ratifies the agreement. Koval v. Simon-Telelect, Inc., 979 F. Supp. 1222, 1226-27 (N.D. Ind. 1997), citing Carr v. Runyan, 89 F.3d 327, 331 (7th Cir. 1996). See also Pohl, 213 F.3d at 338 ("As the Indiana Supreme Court [has] held . . . in order to bind a client to a settlement, an attorney must have either express, implied, or apparent authority, or must act according to the attorney's inherent agency power").
Frazier asserts no other arguments in response to the motion to enforce settlement agreement. Therefore, Frazier has waived any other arguments he might have made. Pohl, 213 F.3d at 340.
Actual authority exists "where the principal has authorized the agent to enter into such a contract on its behalf." Natare Corp., 987 F. Supp. at 697. The authorization "may be implicit, arising from the actions by the principal that would lead a reasonable agent to believe he possessed such authority." Id. It may also be explicit, given orally or in writing. See Koval, 979 F. Supp. at 1227. In this case, the Court concludes that Frazier gave Coleman actual authority to settle his case. The only reasonable conclusion to draw from the evidence is that during the March 22 meeting at Coleman's office, Frazier agreed to settle his case provided that Judge Tinder did not materially change his decision on reconsideration. He didn't, and the settlement is therefore valid and enforceable. See Pohl, 213 F.3d at 338 (authority to settle a case "derives from other actions of the client with respect to the attorney or third parties, including but not limited to express grants of actual authority.").
In light of this Court's ruling that Coleman had actual authority to settle this case, the Court need not reach the issue of whether Coleman had apparent authority to enter into a binding settlement on Frazier's behalf.
III. Conclusion
The Magistrate Judge recommends that Defendant's motion to enforce the settlement agreement be GRANTED and that the Court find that the material terms of the agreement are as follows: (1) Defendant will put Frazier in a non-merit Accountant E-7 position; (2) the position will have a $41,500 annual salary; (3) the position will be subject to a one-year WTP; (4) Defendant will acknowledge its obligation not to retaliate against Frazier for bringing or settling this lawsuit; and (5) Defendant will pay Frazier a total lump sum of $40,000, inclusive of attorney's fees and costs. The Magistrate Judge further recommends that the Court order the Defendant to implement the foregoing terms within 30 days, and to notify the Court within 30 days that these terms have been implemented, whereupon this action should be dismissed with prejudice (subject to resolution of Coleman's pending notice of attorney's lien [Docket No. 102]). The Magistrate Judge further recommends that the Defendant's request for fees and costs be denied.
Defendant's motion to enforce settlement agreement makes a passing request for attorney's fees and costs. Defendant fails to provide any legal authority or other support for this request, which is therefore denied.
IV. Notice to the Parties
Any objections to the Magistrate Judge's report and recommendation shall be filed with the Clerk in accordance with 28 U.S.C. § 636 (b)(1). Failure to file timely objections within ten days after service shall constitute a waiver of subsequent review absent a showing of good cause for such failure.
So ordered.