Opinion
Civil Action No. 02-6141 (JBS).
December 17, 2004
Mr. Ravi Patel, Pro Se Plaintiff.
Sidney L. Gold, Esq., Traci M. Greenberg, SIDNEY L. GOLD ASSOCIATES P.C., Eleven Penn Center, Philadelphia, PA, Former Attorneys for Plaintiff
Mr. Gold and his firm were granted leave to withdraw as counsel for Plaintiff by Order filed April 6, 2004.
John L. Slimm, Esq., MARSHALL, DENNEHEY, WARNER, COLEMAN GOGGIN, P.C., Cherry Hill, NJ, Attorney for Sidney L. Gold and Law Offices of Sidney L. Gold Associates, P.C.
Michael K. Furey, Esq., RIKER, DANZIG, SCHERER, HYLAND PERRETTI, Morristown, NJ, Attorney for Defendant CIGNA CORPORATION.
Francine A. Minervini, Esq., BRAFF, HARRIS SUKONECK, Livingston, NJ, Attorney for Defendant TAC PROFESSIONAL STAFFING SERVICES, INC.
OPINION
This dispute arises out of a purported settlement agreement made by Mr. Patel's attorney, Sidney Gold, Esq., on Mr. Patel's behalf. Mr. Gold maintains that Urmila Patel, Mr. Patel's wife, authorized him to settle the underlying civil action. Mr. Patel contends that he never gave his wife that authority and, in any event, she never directed Mr. Gold to settle the matter. Before the Court are Plaintiff's motion to vacate settlement and Defendant CIGNA Corporation's cross-motion to enforce settlement. For the reasons stated herein, the Court finds that even if Mrs. Patel did have the power to authorize settlement, neither she nor her husband in fact did so. Therefore, Mr. Gold was without authority to settle the matter on Plaintiff's behalf. The motion to vacate should be granted.
As the Court holds that Plaintiff's counsel had no authority to settle the matter for $10,000, CIGNA Defendant's cross-motion to enforce settlement will be denied.
I. BACKGROUND
A. Underlying Discrimination Claims
On or about November 23, 1998, Plaintiff, Ravi Patel, was hired by Defendant TAC Professional Staffing Services, Inc. d/b/a EDP Contract Services ("EDP") and placed to work as System Administrator at Defendant CIGNA Corporation's Voorhees, New Jersey office facility. On September 10, 2001, EDP's Contract Manager, Jeffrey Gowman, allegedly informed Plaintiff that his employment contract would be renewed through November 2002. Immediately following the terrorist attacks in this country on September 11, 2001, Plaintiff, who is Indian, alleges that he was "subjected to a systematic and continuous pattern of harassment and discrimination on the basis of his national origin by his co-workers at CIGNA." (First Am. Compl. at ¶ 18.) Roughly one week later, Plaintiff reported this behavior to Mr. Gowman. According to the First Amended Complaint, Mr. Gowman failed to take any action. Plaintiff then made a similar complaint to Bruce Kline, a CIGNA Manager in the Security Administration. Despite the two complaints, the alleged discriminatory behavior continued until September 29, 2001, at which time Defendants terminated Plaintiff's employment in what Mr. Patel calls "an act of retaliation." (First Am. Compl. at ¶ 24.)
Plaintiff subsequently filed a Charge of Discrimination against EDP and CIGNA with the U.S. Equal Employment Opportunity Commission ("EEOC"). The EEOC Determination, dated June 28, 2002, stated that Defendants' actions did constitute a violation of Title VII. Several months later, on or about September 3, 2002, the EEOC downgraded its determination, concluding that there was insignificant evidence to support a Title VII claim. (Def. Ex. 1.) Subsequently, on December 31, 2002 Mr. Patel, through counsel at Lovitz Gold, P.C., brought this cause of action pursuant to Title VII of the Civil Rights Act of 1964 and the New Jersey Law Against Discrimination, N.J.S.A. 10:5.1 et seq.
B. Facts Surrounding Purported Settlement Agreement
Presumably, at some time after this action was filed, the law firm of Lovitz Gold, P.C. was renamed or reorganized as Sidney L. Gold Associates, P.C.
A settlement conference between the parties was held before Magistrate Judge Joel B. Rosen on November 13, 2003. Mr. Gold appeared at the conference on Plaintiff's behalf, accompanied by attorney Krystn Mundy of his firm. Mr. Patel and his wife, though present at the courthouse, did not themselves attend the meeting but, rather, waited outside chambers for Mr. Gold to report to them the details thereof. At the conference, the negotiations converged on a possible settlement figure in the amount of $10,000.00, with equal payments to be made by each Defendant. Following the conference, Mr. Gold suggested to Mr. Patel that he accept that sum. According to counsel for Defendant CIGNA, Michael Gogal, Esq., the parties agreed to settle the matter "shortly thereafter." (3/19/04 Gogal Cert. at ¶ 2.)
Ms. Mundy recalls that Judge Rosen expressed the view, after hearing both sides, that the plaintiff's case had no real value, and that someone suggested $10,000, she does not recall who. (Tr. 112: 15-21.)
On January 6, 2004, Mr. Gold caused a confirmation letter to be sent to Eric Grogan, Esq., counsel for Defendant EDP, detailing the terms of the agreement among the parties. The letter requested immediate payment from Defendants CIGNA and EDP, in the amounts of $5,140.31 and $4,859.69. During the week of January 12, 2004, Mr. Gogal and Mr. Gold had several telephone conversations discussing the terms of the settlement. (Id. at ¶ 3.) On January 14, 2004, Mr. Gold sent a confirmation letter to Mr. Gogal identical to the one previously sent to Mr. Grogan. (Id. at 4.) By letter to Mr. Gold, dated January 19, 2004, Mr. Gogal explained his understanding that applicable employment laws barred immediate settlement payments. (Id. at Ex. B.) Neither Plaintiff nor his counsel responded to that letter. On January 21, 2004, Defendants sent Plaintiff's counsel a General Release which Mr. Patel never executed.
On January 28, 2004, pursuant to Local Civil Rule 41.1, the case having been reported settled, the Court issued an order dismissing the action without prejudice in light of the purported settlement agreement [Docket Item 25]. On February 25, 2004, Plaintiff's counsel advised Defendant CIGNA by letter and telephone that Plaintiff was trying to rescind the settlement. On March 9, 2004, Plaintiff, through counsel, filed the instant motion [Docket Item 26]. On March 19, 2004, Defendant CIGNA filed its cross-motion [Docket Item 27].
C. Evidentiary Hearing
The Court conducted an evidentiary hearing on April 28, 2004, at which Mr. Patel appeared pro se. The Court heard testimony of Ravi Patel (Tr. 10-51), Sidney Gold (Id. at 51-92), Urmila Patel (Id. at 92-109) and Krystn Mundy (Id. at 109-120), and received various documents into evidence. In addition to the facts recited above, the Court makes the following factual determinations based on the testimony and documentary evidence adduced at the hearing:
Mr. Gold filed a motion to withdraw as counsel for Mr. Patel on April 2, 2004 [Docket Item 31]. Following oral argument on April 6, 2004, the Court granted that motion.
(a) The e-mail correspondence between Mr. Patel and his attorneys illustrates that as of November 11, 2003, Plaintiff's relationship with his counsel was deteriorating. (Pl. Ex. 3.) During a November 16, 2003 telephone conversation, Mr. Gold indicated his intent to withdraw as counsel. (Id.) He confirmed that intent by e-mail to Mr. Patel the very next day. (Id.)
(b) On November 20, 2003, Krystn Mundy, Esq., another attorney at Sidney L. Gold Associates, P.C., requested, via e-mail, certain documents from Plaintiff, suggesting that if Plaintiff failed to produce those documents" the judge will drop your case." (Pl. Ex. 1.) Plaintiff subsequently confirmed by e-mail that he had caused the requested documents to be faxed to Mr. Gold's office on November 21, 2003. (Id. at 1.)
(c) On November 26, 2003, Plaintiff directed his wife to call the office of Mr. Gold to confirm that the faxed documents had been received, and she did so. In that conversation, Mr. Gold stated to Mrs. Patel that he had received the documents and then initiated a conversation regarding settlement of the case. (Tr. 48: 13-20.)
(d) During the November 26, 2003 phone conversation with Mr. Gold, Plaintiff's wife informed him that Mr. Patel would accept $10,000 to settle the case, according to Mr. Gold's testimony. (Tr. 60:10 to 61:12.) Mrs. Patel denies having made any such representation. (Id. at 95: 9-19.)
(e) Plaintiff, based on Mr. Gold's November 16 and 17 representations that he was going to withdraw from the case, had no further direct contact with Plaintiff's counsel until shortly after he received a letter from Mr. Gold, dated February 11, 2004, the first line of which stated: "As you are aware, the above-referenced matter was settled pursuant to your authority and direction for the sum of $10,000.00 on December 10, 2003." (Pl. Ex. 2.) The letter indicated that Mr. Gold made a number of unsuccessful attempts to contact Plaintiff via telephone and mail in an effort to consummate settlement. (Id.)
(f) On February 19, 2004, Mr. Patel sent a lengthy e-mail to Mr. Gold, informing him that he never authorized or directed settlement. (Pl. Ex. 3.)
(g) Sometime after February 19, 2004, Mr. Patel consulted with Thomas D. Williamson, Esq., regarding his February 11 correspondence with Mr. Gold. By letter dated March 8, 2004, Mr. Williamson requested certain information from Mr. Gold regrading his prior representation of Plaintiff. (Pl. Ex. 4.) Mr. Gold responded by letter, dated March 15, 2004, that "[o]n or about December 3, 2003, Patel's wife telephoned me and informed me that she had been authorized by Mr. Patel to accept the $10,000 offer which was proposed at the Settlement Conference with Judge Rosen on November 13, 2003." (Pl. Ex. 5.)
(h) Mr. Gold's belief that he had authority to settle the matter derived from the conversation with Mrs. Patel (Tr. 76: 24-25) and from the fact that Mr. Patel had authorized his wife to supply discovery documents to Mr. Gold, and from the fact that she was knowledgeable about the case, having accompanied Mr. Patel to many meetings and discussions with Mr. Gold.
(i) Mrs. Patel was present at almost all meetings between Plaintiff and his counsel, and sometimes participated in those discussions. (Id. at 56, 96.)
(j) Prior to the November 26, 2004 telephone conversation between Mr. Gold and Mrs. Patel, it was "emphatically clear" to Mr. Gold that Plaintiff did not wish to settle the case for $10,000. (Id. at 88; 19-21.) Mr. Gold was "surprised" by his understanding that Mr. Patel had changed his mind regarding settlement. (Id. at 89, 91.)
Mr. Gold initially testified that this conversation occurred on December 3, 2004. (Tr. 60:10 to 61:12.) In his papers supporting the motion to vacate settlement, Mr. Gold indicated the conversation took place on January 6, 2004, but Mr. Gold testified that date was inaccurate." (Id. at 61:18-23.) Ultimately, Mr. Gold acknowledged that the date of the telephone conversation was November 26, 2003. (Id. at 64:3-12.)
Although Mr. Gold testified that he made numerous attempts to contact Mr. Patel, admittedly those efforts were unsuccessful. (Pl. Ex. 2; Tr. 71: 17-25.)
II. LEGAL STANDARD
A. Choice of Law
Where the rights and liabilities of the parties derive from federal law, as they do in this Title VII cause of action, questions regarding the enforceability of settlement agreements are resolved by consulting federal law. Dice v. Akron, Canton Youngstown R.R. Co., 342 U.S. 359 (1952); Int'l Longshoremen's Assoc., Local Union 1332 v. Int'l Longshoremen's Assoc., 940 F. Supp. 779, 781 (E.D.Pa. 1996). "Giving content to that federal law, however, can be accomplished in two different ways: courts can look to state law and incorporate it into the federal law, or they can fashion federal common law." Fisher Development Co. v. Boise Cascade Corp., 37 F.3d 104, 108 (3d Cir. 1994). The Court chooses the first path and, thus, all issues related to agency law will be determined under New Jersey law. See id. (holding where federal statute was silent, court may look to state law in enforcing a contract after considering: (1) the need for a nationally uniform body of law; (2) whether application of state law is inconsistent with the objective of the federal program; and (3) whether application of federal rule would frustrate commercial relationships founded on state law); Lightman, 988 F. Supp. at 457 (choosing to incorporate state law into federal law in deciding issues related to agency law).
B. Authority to Settle
Though New Jersey public policy strongly favors settlement,see Scarpignato v. Sumathisena, 1990 U.S. Dist. LEXIS, at *5 (D.N.J. 1990), "[t]he general rule is that unless an attorney is specifically authorized by the client to settle a case, the consent of the client is necessary." Amatuzzo v. Kozmiuk, 703 A.2d 9, 12 (N.J.Super. 1997). In other words, "[a] settlement is enforceable in New Jersey where the attorney either had actual or apparent authority to settle. Id. (citing United States Plywood Corp. v. Neidlinger, 194 A.2d 730, 733 (N.J. 1963)). Actual authority is conferred upon an attorney when the principal, through his words or conduct, reasonably interpreted, causes the agent to believe that the principal desires him to act on the principal's behalf. Restatement (Second) Agency § 26.
"[A]pparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him." Restatement (Second) Agency § 27; Neidlinger, 194 A.2d at 734; Amatuzzo, 703 A.2d at 12. Indeed, the Third Circuit's "discussions of apparent authority in the context of . . . the law generally have emphasized that whether the doctrine applies depends upon the client's conduct." Farris v. JC Penney Co., 176 F.2d 706, 711 (3d Cir. 1999). "Thus, in private litigation, where the client[,] by words or conduct communicated to the adverse attorney, engenders a reasonable belief that the attorney possesses authority to conclude a settlement, the settlement may be enforced. However, the attorney's words or acts alone are insufficient to cloak the attorney with apparent authority."Amatuzzo, 703 A.2d at 12.
III. DISCUSSION
Plaintiff has moved before the Court to vacate the settlement agreement. Pursuant to the Court's January 28, 2004 Dismissal Order, such a motion may have been made either upon "good cause shown" or pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. Motions under Rule 60(b) must be read in conjunction with Rule 41.1(b) of the Local Civil Rules. Int'l Longshoremen's Assoc., 940 F. Supp. at 781. The latter provision states:
Additionally, Defendant CIGNA has moved to enforce the settlement. By Order dated January 28, 2004, the Court specifically retained jurisdiction of the matter to the extent necessary to entertain such a motion. See Langella v. Anderson, 734 F. Supp. 185, 189 (D.N.J. 1990) (holding that a district court does not retain jurisdiction to enforce a settlement under Rule 41 of the Federal Rules of Civil Procedure unless the court does so in express terms). However, as noted above, because the Court holds that counsel had no authority to settle the matter, the merits of Defendant's motion need not be reached.
When a case has been settled, counsel shall promptly notify the Clerk and the Court, thereafter confirming the same in writing. Within 15 days of such notification, counsel shall file all papers necessary to terminate the case. Upon failure of counsel to do so, the Clerk shall prepare an order for submission to the Court dismissing the action, without costs, and without prejudice to the right to reopen the action within 60 days upon good cause shown if the settlement is not consummated.
L. Civ. R. 41.1(b) (emphasis added). The "good cause" standard articulated in Rule 41.1(b) is satisfied by proof that plaintiff's attorney did not have authority to settle a dispute on his client's behalf. Int'l Longshoremen's Assoc., 940 F. Supp. at 781-82. Thus, the Court now turns its attention to the question of whether Mr. Gold had the authority to settle the underlying civil action.
A. Plaintiff's Counsel Never Had Authority to Settle
Defendant CIGNA argues that Mr. Gold had authority, either actual or apparent, to settle the underlying dispute. (Def. Br. at 5.) Mr. Gold could have derived this authority from two potential sources: obviously, his client was the first source; the second was Mr. Patel's wife. As the discussion below illustrates, though, neither Mr. Patel nor his wife ever authorized settlement. Thus, Mr. Gold did not have either actual or apparent authority to settle the matter for $10.000.
1. Plaintiff Never Authorized Settlement
Though inherently possessed with the power to do so, Plaintiff similarly never authorized settlement. First, Mr. Patel's actions directed towards Mr. Gold, viewed as a whole, would not have reasonably suggested that he was authorizing settlement. Instead, Mr. Patel made it "emphatically clear" to Mr. Gold that he did not wish to settle the case for $10,000 — so much so that Mr. Gold was surprised when Mrs. Patel seemed to tell him that Plaintiff had changed his mind. Indeed, Mr. Gold concedes that he did not believe that Mr. Patel had given him the authority to settle the underlying dispute prior to his conversation with Mrs. Patel. (Tr. 76: 24-25.) In sum, Mr. Patel did not confer actual authority on his attorney to settle.
Unfortunately, Mr. Patel's conduct toward this case, and toward Mr. Gold's office in particular, was highly ambiguous. He was apparently estranged from Mr. Gold and was non-cooperative, as shown by Mr. Gold's first motion to withdraw. Rather than dealing directly with his own lawyer, Mr. Patel put his wife into the middle and left it to Mr. Gold and Ms. Mundy to diving their client's sentiments. This is not productive and Mr. Patel has brought this confusion upon this case. Nonetheless, before enforcing this settlement, there must be some clearer indication that Mr. Patel acquiesced in the settlement, or that he vested in his wife the authority to make this decision for him. Such indications seem absent.
Nor are there any facts before the Court suggesting in any way that defense counsel could have reasonably interpreted Mr. Patel's behavior as authorizing Mr. Gold to settle. InAmatuzzo, the court was faced with a similar set of facts. This Court has had the opportunity to discuss Amatuzzo on a prior occasion, see United States v. Lightman, 988 F. Supp. 448, 464 (D.N.J. 1997), and the Court's summary of that case is worth repeating now:
In light of this determination, it is irrelevant to examine whether defense counsel actually believed that Mr. Gold had apparent authority to bind his client. Specifically, apparent authority only exists where it is reasonable for a third party to believe that the agent is authorized to act on the principal's behalf, and the third party actually believes that the agent is so authorized. See Restatement (Second) Agency § 8 cmt. c. Here, because it was not reasonable for defense counsel to have believed that Mr. Patel cloaked his attorney with such authority, the second prong of the analysis is unnecessary.
In that case . . . the counsel for the parties had notified the court that they had agreed to a stipulation of settlement; the defendant subsequently refused to sign the stipulation, however, claiming that he had not authorized his attorney to enter such a settlement. The defendant in Amatuzzo submitted a certification in which he stated under oath that he told his attorney that he strenuously objected to the terms of the settlement.Lightman, 988 F. Supp. at 464 (internal citations to the record omitted). Similarly here, counsel notified the Court of a purported settlement agreement. Shortly thereafter, Plaintiff objected to that representation and refused to sign the General Release provided by defense counsel. Plaintiff's counsel was not surprised by Plaintiff's refusal, as Mr. Patel had expressed to Mr. Gold on previous occasions his unwillingness to settle for $10,000.
In contrast, in Lightman the Court based its finding of apparent authority in part on defendant Stepan's failure to submit any evidence that Stepan's General Counsel objected to the terms of the funding agreement proposed by Stepan's litigation attorney. Lightman, 988 F. Supp. at 464. Instead, the testimony of Stepan's litigation attorney reflected his understanding that his client did approve the terms of the proposal. Id. The facts here are distinguishable from those presented in Lightman and, thus, the Court concludes that did not cloak Mr. Gold with apparent authority.
2. Plaintiff's Wife Never Authorized Settlement
Even if Mrs. Patel did have authority to direct Mr. Gold to settle the underlying civil action on her husband's behalf, the Court finds, for reasons now explained, that Mrs. Patel never exercised that authority. Rather, at most the evidence in the record suggests that while Mr. Gold and Mrs. Patel may have spoken of the possibility of settling the dispute, she, in fact, never authorized settlement. Indeed, Mr. Gold testified that she merely expressed her belief that her husband was "ready to put this matter behind him," and "that he wanted to move on." (Tr. 76: 16-18.) To be sure, Mr. Gold also testified that Mrs. Patel informed him during their phone conversation that Mr. Patel "was willing to settle the case for that $10,000." (Tr. 76: 17-18.) In the first instance, Mrs. Patel denies having made that statement to Mr. Gold. In any event, in light of Mr. Gold's belief that Plaintiff did not want to settle for that amount, the Court is unable to conclude that Mrs. Patel conferred Mr. Gold with the authority to settle. In other words, Mrs. Patel did not give Mr. Gold actual authority to settle for $10,000.
By this conclusion the Court does not mean to suggest the impropriety of Mr. Gold's actions. Indeed, as neither Mrs. Patel nor Mr. Gold remember their conversation in explicit detail, the Court concludes that the miscommunication between them was nothing more than that.
Similarly, Mrs. Patel's actions did not confer apparent authority on Mr. Gold as to defense counsel. Mrs. Patel's conduct was not such as to engender a reasonable belief by defense counsel that she had the power to cloak Mr. Gold with the authority to settle. Indeed, at the November 13 settlement conference, she was not even present in the same room as counsel. Rather, she waited in the hall with her husband for Mr. Gold to report back the details of the conference with Judge Rosen.
As the foregoing makes clear, even if Mrs. Patel had authority to direct Mr. Gold to act on her husband's behalf, her actions, reasonably interpreted, could not have engendered a belief by Mr. Gold or defense counsel that she did, in fact, authorize the matter to be settled. In short, Mr. Gold did not derive actual or apparent authority to settle from Mrs. Patel.
IV. CONCLUSION
Mr. Patel's relationship with his counsel had been deteriorating for months prior to the purported settlement agreement being made. If nothing else, Plaintiff and his counsel were having difficulty communicating. Against that backdrop, it is not surprising that the settlement at issue was borne out of a misunderstanding between Plaintiff, his wife and his attorneys. That sort of confusion warrants nothing more than that the purported settlement be vacated.
Mr. Patel and Defense counsel are directed to attend a Status Conference with Judge Rosen on Thursday, January 20, 2005, at 9:30 a.m., to prepare this case for trial.
The accompanying Order is entered.
ORDER
This matter came before the Court upon motions by Plaintiff, Ravi Patel, to vacate settlement and Defendant CIGNA to enforce the same; andThe Court having entered a January 28, 2004 Order of Dismissal without prejudice to the parties to reopen the action upon a showing of "good cause" or pursuant to Rule 60(b) of the Federal Rules of Civil Procedure [Docket Item 25]; and
The Court having determined that Mr. Patel did not authorize Plaintiff's counsel to enter into said settlement agreement; and
The Court having determined that Plaintiff's wife, even if possessed with the authority to direct counsel to settle on her husband's behalf, never exercised that authority; and
The Court having determined, based on the above, that Plaintiff's counsel entered into the settlement agreement without the proper authority to do so; and
For the reasons expressed in the accompanying Opinion;
IT IS THIS 17th day of December, 2004 hereby
ORDERED that that Defendant CIGNA's motion to enforce settlement is DENIED ; and
IT IS FURTHER ORDERED Plaintiff's motion to vacate settlement is GRANTED and the Court's January 28, 2004 Order of Dismissal is set aside; and
IT IS FURTHER ORDERED that Plaintiff and Defense counsel shall appear at a Status Conference before the Honorable Joel B. Rosen, U.S.M.J., on Thursday, January 20, 2005, at 9:30 a.m., to prepare this case for trial.