Opinion
CIVIL ACTION NO. 18-3130
07-23-2019
SHARON MALOY v. LITTMAN JEWELERS
REPORT AND RECOMMENDATION
Presently before the court is defendant's Motion to Enforce Settlement (Doc. 19) ("Motion"). The Motion was referred to the undersigned by the Honorable Eduardo C. Robreno for a Report and Recommendation. The court held an evidentiary hearing on July 12, 2019.
Upon consideration of the Motion, plaintiff's Response in Opposition (Doc. 20), and defendant's reply in support of the Motion (Doc. 25), and for the reasons stated below, the court recommends that defendant's Motion be GRANTED.
I. FINDINGS OF FACT
1. On December 19, 2018, the undersigned conducted a settlement conference in the above-referenced case. Plaintiff attended the settlement conference and was represented by counsel, Jonathan W. Chase (hereinafter "counsel" or "plaintiff's counsel"). Defendant was represented at the conference by Marc Esterow ("defense counsel"). Plaintiff's initial demand was $75,000. The parties were unable to come to a settlement at the conclusion of the conference; plaintiff's final demand was $50,000, and defendant's final offer was $30,000.
2. Plaintiff's deposition was taken by defense counsel on March 19, 2019.
3. On March 25, 2019, defense counsel conveyed to plaintiff's counsel by email a settlement offer of $40,000.
4. Following receipt of defendant's offer, counsel reached out to plaintiff and after a "lengthy discussion," plaintiff authorized counsel to demand $50,000. (N.T. 7/12/19, at 47.) Plaintiff's counsel replied to defense counsel's email on March 25, 2019, stating "I am authorized to respond with a demand of $50,000." (D-1 at 6.)
5. On March 26, 2019, defense counsel responded that defendant had accepted the demand, and set forth a number of additional terms, such as confidentiality, no rehire, and non-disparagement, among others. (D-1 at 5.) Plaintiff's counsel replied, confirming that the matter was settled. Id. at 4.
At the hearing held on July 12, 2019, counsel for both parties agreed that there is no dispute as to the non-economic terms of the written settlement, which contained "standard terms." (N.T. 7/12/19, at 6, 50-51.)
6. On March 28, 2019, plaintiff emailed counsel, stating she had "thought about" what she was told regarding her case, and stated, "I do not wish to settle for $50,000." (D-6 at 1.) Counsel responded to plaintiff on April 2, 2019, stating that she had authorized him to convey the settlement demand to defendant, and that he "strongly advise[d] against backing out from the settlement." Id. Plaintiff replied, "[w]hen I spoke with you last week you told me that you were going to tell Littman that my previous minimum was $50,000. You did not tell me this was final. I assumed you were negotiating on my behalf. I did not agree to settle for $50,000." Id. at 2.
7. On March 31, 2019, April 10, 2019, and April 16, 2019, defense counsel emailed plaintiff's counsel but did not receive an immediate response. (D-1 at 2-4.)
8. On April 17, 2019, plaintiff's counsel responded, indicating that plaintiff was "showing signs of cold feet and trending towards rescinding her acceptance of the settlement amount." (D-1 at 1.)
9. Counsel emailed plaintiff on April 26, 2019, in advance of a telephone conference scheduled the same day with the Honorable Eduardo C. Robreno. Counsel restated his understanding of the circumstances: "[When we spoke] I suggested that we should restate our most recent demand of $50,000 . . . . You agreed that I could proceed in that manner . . . . However, shortly thereafter, you stated that you no longer wished to settle[] for $50,000." (D-7 at 1.) Plaintiff did not challenge this recitation of events, replying instead with "some issues concerning damages in my case that have not been resolved." Id. at 2.
10. On April 26, 2019, during the telephone conference with Judge Robreno, "[p]laintiff's counsel indicated that he was continuing to work with plaintiff to move forward with the settlement agreement, and he did not dispute that he had authority to settle on behalf of his client." (Exh. A to Motion at 2.)
11. Defendant filed the present Motion to Enforce Settlement Agreement on May 29, 2019. The parties subsequently filed their respective briefs.
12. On Friday, July 12, 2019, the undersigned held an evidentiary hearing. Plaintiff and counsel, along with defense counsel, testified. Plaintiff maintained that she had never authorized counsel to settle for the amount of $50,000, but did not recall the specifics of any discussion. (N.T. 7/12/19, at 15.) Plaintiff's counsel testified that, after a "lengthy discussion" in which plaintiff expressed her hesitance to settle, he was authorized to demand $50,000. (N.T. 7/12/19, at 47.) This was the same amount that plaintiff agreed to settle for during the conference before the undersigned in December 2018.
II. DISCUSSION
Pennsylvania law governs this breach of contract dispute, which provides as follows:
Settlement agreements are governed by the ordinary principles of contract law. In re Cendant Corp. Prides Litig., 233 F.3d 188, 193 (3d Cir. 2000). As with any contract, it is essential to the formation of a settlement agreement that "the minds of the parties should meet upon all the terms, as well as the subject matter, of the [agreement]." Mazzella v. Koken, 559 Pa. 216, 739 A.2d 531, 536 (Pa. 1999). "[A]n agreement to settle a lawsuit, voluntarily entered into, is binding upon the parties, whether or not made in the presence of the court, and even in the absence of a writing." Green v. John H. Lewis & Co., 436 F.2d 389, 390 (3d Cir. 1970). A "'settlement agreement is still binding even if it is clear that a party had a change of heart between the time he agreed to the terms of the settlement and when those terms were reduced to writing.'" Wyndmoor Learning Ctr. v. City of Wilmington, 1996 WL 117471, at *7 (E.D. Pa. Mar. 12, 1996) (Robreno, J.) (quoting Pugh v. Super Fresh Food Markets, Inc., 640 F. Supp. 1306, 1308 (E.D. Pa.1986)).Thomas v. Univ. of Pennsylvania, 2007 WL 2891739, at *2 (E.D. Pa. 2007) (Robreno, J.).
In the instant case, plaintiff alleges that she did not authorize her attorney to make a demand of $50,000 to settle the case. (N.T. 7/12/19, at 17.) However, it was counsel's recollection that the $50,000 demand was, in fact, authorized. Id. at 47.
See Reutzel v. Douglas, 870 A.2d 787, 791 (Pa. 2005) (holding that under Pennsylvania law, "an attorney can only bind his client to a settlement based on express authority.").
The court finds that plaintiff authorized counsel to make the $50,000 demand. Plaintiff's counsel was credible in his testimony that the demand was authorized by plaintiff. (N.T. 7/12/19, at 47.) Moreover, the email communications between plaintiff and counsel support counsel's account. First, counsel's recitation of the facts is consistent throughout the emails, as well as his hearing testimony. Second, the court finds that the language used by plaintiff to be more consistent with a change of heart than it is with communicating that a settlement demand was never authorized.
In the first submitted email from plaintiff to counsel, following notification that the matter was settled, plaintiff stated, "I have thought about what you said to me concerning my case. I misunderstood what you said. I do not wish to settle for $50,000." (D-6 at 1.) In this email, plaintiff did not express that counsel made the offer to settle without authorization. Counsel's response to plaintiff offers more insight into the circumstances surrounding the discussions. Counsel noted that plaintiff had been hesitant to settle, even when they discussed the matter over the phone. However, counsel's email response further notes that "you [plaintiff] authorized me [counsel] to convey the $50,000 settlement offer." (D-6 at 1.) Counsel's email response plainly reflects his firm understanding that the settlement was authorized, and that any change would amount to "backing out from the settlement." Id.
Plaintiff subsequently replied that "you [counsel] told me [plaintiff] that you were going to tell Littman that my previous minimum was $50,000. You did not tell me this was final, I assumed you were negotiating on my behalf. I did not agree to settle for $50,000." Id. at 2. At the hearing, while plaintiff initially maintained she did not discuss an amount with counsel, (N.T. 7/12/19, at 21-22), she later acknowledged that they had discussed the amount of $50,000. See id. at 27. Later in the hearing, after reviewing the emails, she again expressed the belief that this number would be used to negotiate with defendant. Id. at 32.
The court finds plaintiff's argument that she believed counsel was using the $50,000 amount to "negotiate" to be disingenuous. See N.T. 7/12/19, at 32-33. At the time of the settlement discussions in question, the parties had already participated in a settlement conference with the undersigned, during which plaintiff agreed to settle the claims for $50,000. Plaintiff was thus familiar with the process of settlement and the nature of settlement discussions, and knew that if her demand of $50,000 was accepted by defendant, the case was settled.
Moreover, in their April email chain, plaintiff's counsel again recounted his understanding of the events, that "I suggested we should restate our most recent demand of $50,000 . . . . You agreed that I could proceed in that manner." (D-7 at 1.) Plaintiff did not challenge this recitation of the facts surrounding the settlement. See id. at 2.
Plaintiff's counsel's email to defense counsel on April 17, 2019, also reflects this understanding. Counsel characterized plaintiff's mentality as "showing signs of cold feet" and "trending towards rescinding her acceptance of the settlement amount," (D-1 at 1); as opposed to evidencing that there was a miscommunication.
For these reasons, the court finds that plaintiff's counsel did, in fact, have express authority to convey a $50,000 settlement demand. Accordingly, the court will treat plaintiff's subsequent position as a change of heart.
It is well established that a settlement agreement is still binding even if it clear that a party had a change of heart between the time she agreed to the terms of the settlement and when those terms were reduced to writing. Wyndmoor Learning Ctr., 1996 WL 117471, at *7 (quoting Pugh, 640 F. Supp. at 1308). See also Swift v. Baskin, 1995 WL 296273, at *9 (E.D. Pa. May 15, 1995) ("A change of heart or mind after an oral settlement has been reached but before the written terms are agreed upon is not grounds for the nullification of the oral agreement.") (citations omitted); Pisarz v. PPL Corp., 604 F. App'x 196, 200 (3d Cir. 2015) (not precedential) ("Having second thoughts about the results of a valid settlement agreement does not justify setting [it] aside" (quoting Hensley v. Alcon Labs, Inc., 277 F.3d 535, 540 (4th Cir. 2002) (alteration in original)). Therefore, defendant has satisfied its burden of proving that the parties entered into an enforceable settlement agreement. Because plaintiff is bound by the terms of the settlement, the court makes the following:
RECOMMENDATION
AND NOW, this 23rd day of July 2019, upon consideration of defendant's Motion to Enforce Settlement, plaintiff's Response in Opposition to Defendant's Motion to Enforce Settlement Agreement, and defendant's reply in support of the Motion, as well as the testimony given at the evidentiary hearing, it is respectfully recommended that the Motion be GRANTED.
Plaintiff may file objections to this Report and Recommendation. See Loc. R. Civ. P. 72.1. Failure to file timely objections may constitute a waiver of any appellate rights.
BY THE COURT:
/s/ Thomas J. Rueter
THOMAS J. RUETER
United States Magistrate Judge ORDER
AND NOW, this day of , 2019, upon consideration of defendant's Motion to Enforce Settlement ("Motion"; Doc. 19), and after careful review of the Report and Recommendation of United States Magistrate Judge Thomas J. Rueter, it is hereby
ORDERED
1. The Report and Recommendation is APPROVED and ADOPTED;
2. The Motion is GRANTED; and
3. Within fourteen (14) days of the date of this Order, plaintiff shall execute a written settlement agreement incorporating the terms as agreed upon by the parties in the March 26, 2019, email, as well as any other documents reasonably required to finalize the settlement. Upon receipt of these documents, defendant shall pay the sum of $50,000 in the manner agreed to by the parties.
BY THE COURT:
/s/_________
EDUARDO C. ROBRENO, J.