Opinion
Civil Action No. 99-1136 (RMU).
May 13, 2005
MEMORANDUM AND ORDER
This matter comes before the Court on the defendant's Motion to Enforce a Settlement Agreement allegedly executed between the plaintiff and the defendants in March, 2000. Upon consideration of the defendant's motion, the plaintiff's response thereto, the testimony of counsel for both parties, the testimony of the plaintiff, the testimony of another witness, the applicable law, and the entire record herein, the Court finds that a valid and enforceable settlement agreement was formed between the parties; and thus the Court will grant the defendant's motion to enforce that settlement agreement. The Court's reasoning is set forth below.
I. BACKGROUND
The plaintiff, Faye Hall, formerly employed as a typist, help desk coordinator, and customer service assistant by The George Washington University ("GWU"), claims that she was sexually harassed by one of her supervisors on numerous occasions between 1992 and 1996, see Pl.'s 2d Amended. Compl., ¶¶ 19-20; that she complained about the harassment, see id. at ¶ 25; and that her application for a promotion from the position of help desk coordinator to the position of telecommunications system administrator was rejected in retaliation for complaints. See id. at ¶¶ 41-43. Ms. Hall filed suit in this Court on May 10, 1999. The second amended complaint, filed December 16, 1999, alleges the following causes of action against GWU: sexual harassment and retaliation under Title VII of the federal Civil Rights Act, sexual harassment and retaliation under the District of Columbia Human Rights Act, common-law breach of contract, and common-law intentional infliction of emotional distress. See id. at ¶¶ 44-89 (Counts I-VI).
This case was originally assigned to Judge Urbina, who referred it to mediation with the consent of the parties by Order issued October 7, 1999. The first mediation period was interrupted, however, when the plaintiff's attorney, Thomas Harper, filed a motion to withdraw as counsel on November 9, 1999. Ms. Hall's new attorneys, Steven Teppler and Frazer Walton, Jr., entered their appearances on December 8, 1999; and Judge Urbina granted Ms. Hall's original attorney's withdrawal motion by Order issued December 9, 1999. After the second amended complaint was filed, Judge Urbina again referred the case to mediation by Order issued December 16, 1999. Mediation was set to conclude March 1, 2000. On March 13, 2000, the plaintiff's new attorneys filed a motion for leave to withdraw as counsel for Ms. Hall and requested that the Court conduct an emergency status conference. The defendant filed the present motion to enforce an alleged settlement agreement on March 22, 2000. Apparently, something went wrong during or immediately after mediation.
On May 6, 2002, the defendant filed a motion to expedite consideration of the enforcement motion. Judge Urbina denied the motion to expedite, as well as plaintiff's counsel's motion to withdraw, without prejudice pending assignment of the motion to enforce the settlement agreement to the Court's enforcement Judge. As I was, at the relevant time, the designated enforcement Judge for disputes arising out of Court-sponsored mediation proceedings, GWU's enforcement motion was assigned to me for disposition. The Court took testimony concerning the events surrounding the formation of the purported settlement at a sealed hearing held March 28, 2003 and at an unsealed hearing held April 30, 2003.
The following facts concerning the circumstances surrounding the formation of the purported settlement agreement are undisputed. After Judge Urbina referred this case to mediation for the second time, the plaintiff, plaintiff's counsel, and defense counsel engaged in settlement negotiations with the assistance of a mediator on February 8 and 11, 2000. See Pl.'s Resp. to Def.'s Mot. to Enforce Settlement ("Pl.'s Resp."), Ex. A (Teppler Aff.), at ¶ 3; id., Ex. B (Walton Aff.), at ¶ 3. The parties agreed to all material terms of a settlement — including Ms. Hall's resignation, dismissal of the lawsuit, and the defendant's agreement not to oppose the plaintiff's application for unemployment benefits — except for the amount of money that the defendant would pay the plaintiff, on which issue the parties were deadlocked at the close of formal mediation sessions. See Tr. (Hearing, Mar. 28, 2003), at 9 (testimony of Frazer Walton, Jr.). The terms of the settlement agreement are set forth in the Confidential Settlement Agreement and General Release attached to the defendant's motion at tab 1. See generally Def.'s Mot., Tab 1 (Agreement).
Sometime in late February 2000, Ms. Hall and Mr. Walton discussed the litigation over the telephone. During that conversation, Ms. Hall advised Mr. Walton that she wished to reopen settlement discussions with the defendant. See id. at 10. On March 1, 2000, Mr. Walton informed Mr. Teppler that the plaintiff had authorized he and Mr. Teppler to negotiate and execute a settlement with the defendant in any amount greater than or equal to $50,000. See id. at 12 (testimony of Walton); id. at 16-17 (testimony of Teppler); accord id. at 19 (testimony of Hamilton, defendant's counsel); see also Pl.'s Resp., Ex. A (Teppler Aff.), at ¶ 5; id., Ex. B (Walton Aff.), at ¶ 5.
Teppler contacted the mediator on Thursday, March 2, to request the mediator's assistance in negotiating a settlement with the defendant. Pl.'s Resp., Ex. A (Teppler Aff.), at ¶ 6. The next day, Teppler and counsel for the defendant, through the mediator, orally agreed to settle Ms. Hall's lawsuit for $62,500, an amount within the plaintiff's specified range of acceptable amounts.See id., Ex. A (Teppler Aff.), at ¶ 8; Tr. (Hearing, Mar. 28, 2003), at 12 (testimony of Walton); id. at 15-16 (testimony of Teppler: "THE COURT: You had that conversation with Mr. Walton earlier where he said she would agree to $50,000? MR. TEPPLER: Yes."); accord id. at 19 (testimony of Hamilton). Later that day, Teppler contacted Ms. Hall to inform her that an agreement had been reached. Pl.'s Resp., Ex. B (Teppler Aff.), at ¶ 9; Tr. (Hearing, Mar. 28, 2003), at 15 (testimony of Teppler). Only the percentages of the total settlement amount to be allotted to economic injuries including back pay and compensatory damages, respectively, remained to be finalized; and this apportionment was left to the discretion of the plaintiff. See Tr. (Hearing, Mar. 28, 2003), at 4 (testimony of Hamilton); see also Def.'s Mot. to Enforce Settlement Agreement ("Def.'s Mot."), Tab 1 (Agreement), at 3. Ms. Hall advised Mr. Teppler during their March 3 conversation that she did not have time to speak with him, and would call him back. Tr. (Hearing, Mar. 28, 2003), at 16.
During a telephone conversation on Sunday, March 5, Ms. Hall informed Mr. Teppler that she would not accept the settlement agreement — that she had the "right to change [her] mind." Pl.'s Resp., Ex. B (Teppler Aff.), at ¶ 10; Tr. (Hearing, Mar. 28, 2003), at 16. When asked by the Court about this statement, the plaintiff responded that she had "never agreed" to any settlement. Tr. (Hearing, Mar. 28, 2003), at 28 (testimony of Hall).
In the enforcement motion, the defendant argues that Hall gave Walton and Teppler actual authority to act as her agents in negotiating and executing a settlement agreement, which was accomplished on March 3, 2000. The only issue before the Court on the present motion, then, is whether Ms. Hall did, in fact, give her attorneys the requisite authority to enter into a valid and enforceable contract on her behalf.
II. DISCUSSION
The law in our circuit requires that the Court conduct an evidentiary hearing when factual disputes arise concerning the validity of a settlement agreement. Here, after listening to the testimony of the attorneys for both sides and of the plaintiff herself, the Court concludes that the defendant has satisfied its burden of proving the existence of an agreement by clear and convincing evidence. While the plaintiff disputes her attorneys' assertion that she conferred on them actual authority to execute a settlement with the defendant, the Court does not find her testimony in this regard credible. Thus, the Court concludes that Walton and Teppler had the requisite actual authority, acting as agents for Ms. Hall, to execute a binding agreement with the defendant, and that the plaintiff is therefore subject to enforcement of the terms of that agreement against her by the defendant.
A. Enforcement of Settlement Agreements: Legal Standard
It is well established that federal district courts have the authority to enforce settlement agreements entered into by litigants in cases pending before them. See Autera v. Robinson, 419 F.2d 1197, 1200, 1200 n. 9 (D.C. Cir. 1969) (collecting cases from various federal circuits). Parties seeking enforcement of a settlement agreement have no right to a jury trial because the relief sought is equitable in nature. See Quijano v. Eagle Maintenance Servs., Inc., 952 F. Supp. 1, 3 (D.D.C. 1997). "[T]he right to have a jury determine issues of fact turns essentially on whether the claim to which those issues relate is legal or equitable." Hensley v. E.R. Carpenter Co., Inc., 633 F.2d 1106, 1110 n. 5 (5th Cir. 1980) (as quoted in Quijano, 952 F. Supp. at 3). An action to enforce a settlement agreement is, at bottom, an action seeking the equitable remedy of specific performance of a contract. See Quijano, 952 F. Supp. at 3 (quoting Adams v. Johns-Manville Corp., 876 F.2d 702, 709 (9th Cir. 1989); Hensley, 633 F.2d at 1110 n. 5). This is the case even where, as here, the opposing party disputes certain facts related to the formation of the settlement contract. See id., Hensley, 633 F.2d at 1110 n. 5.
The party moving for enforcement of a settlement agreement bears the burden of showing, by clear and convincing evidence, that the parties in fact formed a binding agreement in resolution of all the disputed issues in the underlying litigation.Quijano, 952 F. Supp. at 3 (citing Anschutz v. Radiology Associates of Mansfield, Inc., et al., 827 F. Supp. 1338, 1343 (N.D. Ohio 1993)). In most cases, a district court can enforce a settlement agreement summarily. See Autera v. Robinson, 419 F.2d 1197, 1200 (D.C. Cir. 1969). However, "[w]hen there is a genuine dispute about whether the parties have entered into a binding settlement, the district court must hold an evidentiary hearing[.]" United States v. Mahoney, 247 F.3d 279, 285 (D.C. Cir. 2001). Summary proceedings are inappropriate when the existence of the settlement is genuinely disputed, as the Court's equitable enforcement powers extend only to "complete settlement agreements" — that is, agreements about whose existence there is no genuine dispute. See Quijano, 952 F. Supp. at 4 (citingOzyagcilar v. Davis, 701 F.2d 306, 308 (4th Cir. 1983); Gardiner v. A.H. Robins Co., 747 F.2d 1180, 1189 (8th Cir. 1984)). Where there is such a genuine dispute regarding the existence of an enforceable settlement agreement, an evidentiary hearing affords the Court "the opportunity to make credibility determinations," an opportunity that is absent from any disposition based on pleadings and affidavits alone. Id.;Autera, 419 F.2d at 1202.
In our circuit, "[w]hether parties have reached a valid settlement is a question of contract law." United States v. Mahoney, 247 F.3d 279, 285 (D.C. Cir. 2001); Village of Katovik, 689 F.2d at 47, 47 n. 62 (citing a number of cases from the United States Supreme Court and various circuits other than the District of Columbia Circuit; holding that "the enforceability of a settlement agreement is governed by familiar principles of contract law"). Thus the defendant bears the burden of demonstrating the existence of a valid agreement under District of Columbia contract law. See Novecon, Ltd. v. Bulgarian Am. Enter. Fund, 190 F.3d 556, 564 (D.C. Cir. 1999). For a contract to be enforceable under District of Columbia law, the proponent must show that there was an agreement among the parties to all material terms and that the parties had the intention to be bound. Mahoney, 247 F.3d at 285; Simon v. Circle Assocs., 753 A.2d 1006, 1012 (D.C. 2000); Sims v. Westminster Invest. Corp., 648 A.2d 940, 942 (D.C. 1994);Georgetown, Entertainment Corp. v. District of Columbia, 496 A.2d 587, 590 (D.C. 1985). While "one or both of the parties may insist that the terms [of a settlement] be reduced to writing and that only a signed agreement will be effective, . . . not all settlements must be written in order to be enforceable." Makins v. District of Columbia, 277 F.3d 544, 547 (D.C. Cir. 2002),superceded on other grounds, Makins v. District of Columbia, 389 F.3d 1303 (D.C. Cir. 2004) (per curiam); see also Mahoney, 247 F.3d at 285; Autera, 419 F.2d at 1198 n. 1 ("Lawsuits may, of course, be compromised by oral contract."); Feltman v. Sarbov, 366 A.2d 137, 141 (D.C. 1976); Brown v. Brown, 343 A.2d 59, 61 (D.C. 1975) (upholding oral settlement contract).
The Court's reliance upon the general rule that oral settlement agreements are enforceable, as expressed in the caselaw, reflects the unique posture of this dispute. By Order issued May 17, 2001, the Court amended the Local Civil Rules to add LCvR 84.7(f), which provides that "[a]greements reached during mediation shall not bind the parties unless they are reduced to writing and signed by counsel for the parties." LCvR 84.7(f) (2001). Thus, this rule created an exception to the general rule that oral settlements are enforceable for settlements reached during mediation. The settlement contract at issue here, however, was allegedly formed on March 3, 2000, before passage of LCvR 84.7(f), and is thus enforceable in this Court under the general rule set forth in Makins. Although the general principle is that a court is to "apply the law in effect at the time the court rules," Cobell v. Norton, 392 F.3d 461, 466 (D.C. Cir. 2004) (citing Landgraf v. USI Film Prods., 511 U.S. 244, 264 (1994)), a Court may decide not to apply modified procedural rules retroactively where there are policy reasons that militate against retroactive application. See Pac. Coast European Conf. v. Fed. Maritime Comm'n, 439 F.2d 514, 521, 521 n. 27 (D.C. Cir. 1970) (applying new fair hearing procedures to offenses prior to adoption of new procedures because the Court of Appeals found "no relevant public policy which would be offended by" retroactive application).
Here, because the alleged settlement agreement was negotiated by the attorneys for the plaintiff and defendant, whom the Court presumes to be legally sophisticated contracting parties, it follows that, at the time this particular agreement was negotiated and executed, the parties would have relied on the old rule that oral settlement agreements are enforceable in this Court. It is a general principle of contract law that a Court is to uphold the expectations of the parties where possible. See RESTATEMENT (SECOND) OF CONTRACTS § 344 cmt. a (courts in contract enforcement cases should be in the business, where possible, of protecting the expectation that the injured party had when he made the contract"). This general interest in promoting the interests of contracting parties is sufficient to persuade the Court that retroactive application of LCvR 84.7(f) would be inappropriate here.
"Agency principles are applied to determine whether an attorney . . . had authority to bind his [or her] principal to the settlement contract." Makins v. District of Columbia, 861 A.2d 590, 593 (D.C. 2004) (citing Bronson v. Borst, 404 A.2d 960, 960 (D.C. 1979); Feltman, 366 A.2d at 139). While "[a] client's right to accept or reject a settlement offer is absolute" under District of Columbia law, In re Hager, 812 A.2d 904, 919 (D.C. 2002), it is also well established that an attorney may execute a legally binding settlement agreement on behalf of a client if the attorney possesses the requisite actual authority under governing agency principles. See Makins, 861 A.2d at 593; United States v. Beebe, 180 U.S. 343, 352 (1901); Bronson, 404 A.2d at 963. The D.C. Court of Appeals relies on the Restatement (Second) of Agency to determine when an agent is properly authorized to execute an agreement legally binding on the principal. See Makins, 861 A.2d at 593-94. An agent's actual authority to act on behalf of his or her principal is created by "written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal's account." RESTATEMENT (SECOND) OF AGENCY § 26 (1958).
Here, it is undisputed that the parties agreed during mediation to all material terms of the settlement except for the actual amount of money that the defendants would pay the plaintiff. If the Court finds that Ms. Hall conferred on her attorneys actual authority to execute a settlement for any amount of money greater than or equal to $50,000, she will be bound to the agreement by operation of agency principles and the defendants may enforce the settlement against her. Thus, the disputed fact question of whether Ms. Hall's attorneys possessed actual authority to execute the settlement for $62,500 is dispositive of the present motion.
Under District of Columbia law, the Court is the fact-finder on a motion seeking enforcement of a purported settlement agreement. In that role, the Court conducted an evidentiary hearing at which Ms. Hall's attorneys testified that Ms. Hall authorized them, over the telephone, to settle her case for some amount of money greater than or equal to $50,000. Such a statement would clearly constitute "written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal's account" in satisfaction of the Second Restatement of Agency's test for actual authority. Ms. Hall, for her part, testified that she never granted such authorization. Thus there are two conflicting versions of the relevant events, and if one is true it follows that the other must be false. By extension, it cannot be that both Ms. Hall and her attorneys testified truthfully at the hearing.
It should be noted that the Court indicated, at the close of the April 30, 2003 evidentiary hearing, that resolving this dispute might require the testimony of the mediator. See Tr. (Hearing, Apr. 30, 2005), at 28. Upon further review of the record, however, the Court has determined that this extreme step will not be necessary. In our jurisdiction, as in most others, there is a strong policy preference for maintaining the confidentiality of the mediation process. See, e.g., LCvR 84.9 (2003) (establishing a number of requirements designed to maintain the confidentiality of mediation proceedings). Indeed, there is a specific prohibition on communications between the Judge presiding over a case and a mediator, see LCvR 84.9(a)(2), and the desire to prevent disclosure of communications occurring during mediation provides the for the local rule requiring referral of disputes arising out of mediation to the compliance judge. See LCvR 84.9(a)(2); 84.10. Generally, all parties to a mediation sign a confidentiality agreement before proceedings begin. See LCvR 84.9(b). There being no compelling reason in this case to depart from this established policy of confidentiality, and having concluded that this dispute may be resolved solely on the basis of the facts currently in the record, the Court will not take the mediator's testimony in this case.
A central purpose behind the requirement that a court hold an evidentiary hearing to resolve a factual dispute concerning the existence of an enforceable settlement agreement is to allow the Court, as the finder of fact, "to make credibility determinations" regarding the disputants' respective versions of events. See Quijano, 952 F. Supp. at 4; Autera, 419 F.2d at 1202. Here, the Court finds the testimony of plaintiff's counsel to be the more credible, and thus concludes that Ms. Hall did in fact grant Walton and Teppler actual authority to execute the settlement with the defendants. Walton and Teppler were authorized to settle the case for any amount of money greater than or equal to $50,000; and their decision to accept the defendant's offer of $62,500 was clearly within the scope of their authority.
Indeed, statements in the record that illustrate Ms. Hall's expectations for recovery through this litigation serve to both undercut her credibility and render her attorneys' version of events more plausible. More than once, the Court heard testimony that Ms. Hall anticipated an award of several million dollars for her claims, and perhaps even in a settlement. See, e.g., Tr. (Hearing, Mar. 28, 2003), at 47 (testimony of Teppler) ("[Hall's] last demand [to the defendant in settlement negotiations] was close to $6 million back in 1999."); id. at 23 (testimony of Hall) ("A hundred thousand dollars is not enough to walk away from George Washington University . . . the numbers are far, far, far, far, far, far off."); Tr. (Hearing, Apr. 30, 2003), at 7 (testimony of plaintiff's witness Mary L. Phillips-Muse) ("THE WITNESS: I remember [Hall] talking about the amount she thought she should have received [on Sunday, March 5, 2000]. THE COURT: What did she say about that? . . . THE WITNESS: Millions, maybe $4 or $5 million."); id. at 14 (examination of Muse by Walton) ("Q. Now, it was your testimony . . . that she wanted millions, is that correct? A. I knew that before [March 5, 2000] . . . because she had told me that.").
To be sure, a plaintiff may request whatever relief that he or she feels entitled to in consideration of the injury alleged. Ms. Hall's expectations in this case, however, were grossly out of proportion to any feasible recovery, by judgment, jury verdict, or settlement — indeed, they were patently unreasonable in light of the nature of Ms. Hall's claims. Observing these unreasonable expectations of recovery gives the impression that Ms. Hall's view of this case may have been, for the majority of the time, largely divorced from reality. The Court finds persuasive the notion that, sometime around March 1, 2000, Ms. Hall came to her senses, if only for a moment, and realized the truth of what Mr. Walton and Mr. Teppler had undoubtably already emphasized — that any settlement in the neighborhood of $50,000 would represent a good result for Ms. Hall. During these fleeting moments of clarity, then, Ms. Hall authorized the settlement. While Ms. Hall, perhaps again taking up the view that her case was worth millions, attempted to renege on the settlement agreement a few days later, the fact remains that an agreement was executed by an agent with actual authority to bind Ms. Hall to a contract.
Another possible explanation for her sudden change of heart may be that Ms. Hall decided her attorneys were receiving too large a percentage of her settlement payment as things stood at the time. Mr. Walton testified at the Court's sealed hearing that Ms. Hall "was saying that we [Messrs. Walton and Teppler] were getting too much; she was [not] getting enough." Tr. (Hearing, Mar. 28, 2003), at 39. He continued, explaining that "essentially she told me that she was not going to settle until we withdrew. . . . [W]e had a 40 percent retainer, [but] [i]n order to enter into this settlement . . . Mr. Teppler and I agreed to drop it to one-third . . . [so that] she could get additional monies in her pocket[.]" Id. This explanation is supported by a letter that Ms. Hall sent to Messrs. Walton and Teppler after she was served with their motion to withdraw as her counsel in this case. In that letter, which is dated April 3, 2000, Ms. Hall explained that "the case will not be settled prior to your withdrawal." The letter was submitted to the Court at the March 28, 2003 hearing.See Tr. (Hearing, Mar. 28, 2003), at 52. The Court will not speculate about which of the potential explanations for Ms. Hall's sudden change in position is more likely to be true. It is enough to note that there are two possible explanations, and both tend to lend credence to plaintiff's counsel's version of events.
It is of course conceivable that Ms. Hall never wavered from her view that this case is worth millions and that her attorneys have testified falsely that she gave them actual authority to settle this case. The Court is, however, firmly convinced by the course of the negotiations and the entire record herein that these officers of the court have not testified falsely. Rather, they have testified truthfully, as attorneys should, and let the chips fall where they may.
As the defendant alleges facts in support of the enforcement motion identical to those proffered by plaintiff's counsel at the evidentiary hearing, the Court finds that the defendant has satisfied its burden of proving the existence of an agreement by clear and convincing evidence. There being no other factual dispute as to any other term of the settlement agreement, the Court concludes that the settlement will be enforced in the amount of $62,500 and in accordance with the other terms agreed upon by the parties during mediation.
The Court will enter into the record in this case the defendant's Motion to Enforce Settlement Agreement, plaintiff's counsel's response thereto, and the letter from Faye Hall to Frazer Walton, Jr. and Steven W. Teppler introduced into evidence at the Status Conference held by the Court on March 28, 2003 in a separate Order that will issue this date.
III. CONCLUSION
For the foregoing reasons, and having determined that the defendant established by clear and convincing evidence the existence of a valid, enforceable settlement agreement, it is hereby
ORDERED that the defendant's motion to enforce the settlement agreement is GRANTED; and it is further
ORDERED that the Confidential Settlement Agreement and General Release, attached to the defendant's motion at the first tab, shall be enforced on its terms, with the plaintiff retaining the discretion to apportion the $62,500 monetary consideration between "alleged economic injury, including back pay," and "alleged compensatory damages" as the plaintiff sees fit; and it is further
ORDERED that, in accordance with the terms of the settlement agreement enforced herein, the defendant shall tender $62,500 to the plaintiff; and it is further
ORDERED that, in accordance with the terms of the settlement agreement enforced herein, this case is hereby DISMISSED WITH PREJUDICE as settled.
SO ORDERED.