United States District Court, D. Connecticut
MEMORANDUM AND ORDER
Michael P. Shea, U.S.D.J.
On
September 20, 2018, the parties reported that this case had
settled. Accordingly, I dismissed the case prejudice and
directed the clerk to administratively close the file, but
allowed the parties 30 days to file a stipulation of
dismissal or a motion to reopen the case. The parties
requested four extensions of the final dismissal deadline. On
February 8, 2019, William Crosskey and Crosskey Architects,
LLC (together, “Crosskey”) filed motions to
reopen the case and enforce the parties' settlement
agreement, which Excel Hotel Services, Inc.
(“Excel”) later joined. (ECF Nos. 117, 118.) 50
Morgan Hospitality Group, LLC (“50 Mogan”)
opposed the motion. On July 17, 2019, Excel filed a motion
for an expedited ruling on the motion to enforce the
settlement agreement in light of an upcoming hearing in a
related state-court case. I convened a telephonic conference
on July 26, 2019, during which I granted Excel's motion
to expedite and granted Crosskey's and Excel's
motions to reopen the case and enforce the settlement
agreement. I explained my reasoning on the call but noted
that I would supplement that reasoning with a written opinion
in due course. I write now to provide that supplement.
I.
Procedural Background
Plaintiff
50 Morgan brought this lawsuit against Defendant Excel in
Connecticut Superior Court, alleging that Excel failed to
fulfill its obligations as a general contractor for a
construction project converting the upper floors of a hotel
into multi-family apartments. 50 Morgan asserted claims for
breach of contract, intentional misrepresentation, negligent
misrepresentation, and violation of the Connecticut Unfair
Trade Practices Act (“CUTPA”), Connecticut
General Statutes (“Conn. Gen. Stat.”) §
42-110a et seq. (ECF No. 73-3.) Excel removed the action to
this Court and filed an Answer, Affirmative Defenses, and
Counterclaims against 50 Morgan. (ECF No. 16.) Specifically,
Excel asserted counterclaims for breach of contract, breach
of the covenant of good faith and fair dealing, unjust
enrichment, fraudulent misrepresentation, negligent
misrepresentation, violation of the CUTPA, and foreclosure of
a mechanic's lien in connection with the Project. (ECF
No. 16.) Excel then filed a Third-Party Complaint with
crossclaims and an Apportionment Complaint against several
subcontractors[1]: Electrical Contractors, Inc.
(“ECI”); Kaurette Constricution, Inc.
(“Kaurette”); Crest Mechanical Services, Inc.
(“Crest”); TPC Systems (“TPC”);
Crosskey Architects, LLC; and William Crosskey. Excel's
complaint asserted claims for breach of contract and
indemnification against ECI, Kaurette, Crest, and TPC, and
claims for intentional misrepresentation, negligent
misrepresentation, violation of the CUTPA, and tortious
interference with contractual relations against Crosskey
Architects and Crosskey. (ECF Nos. 88, 89.)
On July
17, 2018, the parties requested to modify the scheduling
order to allow them to “focus their resources on the
now-scheduled mediation of this action which [was] to take
place on August 28, 2018.” On September 21, 2018, they
reported that the case had settled. Accordingly, I ordered
the case dismissed and allowed the parties until October 20,
2018 to file a stipulation of dismissal and to move to reopen
the case. The parties filed four motions for extensions of
the original deadline. (ECF Nos. 109, 111, 113, 115), and on
February 8, 2019, Crosskey moved to restore the case to the
active docket and enforce the parties' settlement
agreement. Excel joined the motion on April 1, 2019. (ECF No.
124.)
II.
Legal Standard
“A
settlement agreement is a contract and is interpreted
according to general principles of contract law.”
Powell v. Omnicom, 497 F.3d 124, 128 (2d Cir. 2007).
“A contract is formed when there is a meeting of the
minds of the parties on the essential terms of an
agreement.” U.S. Titan, Inc. v. Guangzhou Zhen Hua
Shipping Co., Ltd., 241 F.3d 135, 146 (2d Cir. 2001).
“When both parties have mutually assented to a
contract, the agreement is binding even if it is not
signed.” Omega Engineering, Inc. v. Omega,
S.A., 432 F.3d 437, 444 (2d Cir. 2005) (applying
Connecticut law). “The only essential prerequisite for
a valid settlement agreement is that the [parties] . . .
mutually assent to the terms and conditions of the
settlement. It is well recognized that an agreement to settle
a lawsuit, voluntarily entered into, is binding on the
parties.” Millgard Corp. v. White Oak Corp.,
224 F.Supp.2d 425, 431 (D. Conn. 2002). “A trial court
has inherent power to enforce summarily a settlement
agreement when the terms of the agreement are ‘clear
and unambiguous.'” Omega Engineering, Inc., 432
F.3d at 444. “Summary enforcement is not only essential
to the efficient use of judicial resources, but also
preserves the integrity of settlement as a meaningful way to
resolve legal disputes.” Brown v. Nationscredit
Commercial, No. 3:99CV592(EBB), 2000 WL 888507, at *1
(D. Conn. Jun. 23, 2000).
“[A]
settlement is still binding even if a party has a change of
heart between the time of the agreement to the terms of the
settlement and the time those terms are reduced to writing .
. . .” Millgard Corp., 224 F.Supp.2d at 432. When a
settlement agreement has not been reduced to a signed
writing, courts in Connecticut enforce the agreement if the
parties assented to the terms of the settlement agreement and
manifested an intent to be bound. “The parties'
intent is determined from the (1) language used, (2)
circumstances surrounding the transaction, including the
motives of the parties, and (3) purposes which they sought to
accomplish.” Omega Engineering, Inc., 432 F.3d at 444.
III.
Discussion
As
discussed on the telephonic conference on July 26, 2019, I
find that counsel for 50 Morgan, Attorney Luke Conrad, had
apparent authority to negotiate and enter into a settlement
agreement on its behalf and that Attorney Conrad manifested
50 Morgan's assent to the settlement agreement circulated
on December 19.
A.
Attorney Conrad Had Apparent Authority to Bind 50
Morgan[2]
50
Morgan's conduct clearly communicated that Attorney
Conrad had authority to settle this case on its behalf. An
attorney's authority to bind his or her clients to a
contract is governed by the principles of agency law.
Ackerman v. Sobol Family P'ship, LLP, 298 Conn.
495, 509 (2010). “[I]t is a general rule of agency law
that the principal in an agency relationship is bound by, and
liable for, the acts in which [its] agent engages with
authority from the principal, and within the scope of the
agent's employment.” Maharishi Sch. Vedic
Scis., Inc. v. Connecticut Constitution Assocs. Ltd.
P'ship, 260 Conn. 598, 606 (2002). Where an
agent's actions are not expressly authorized by the
principal, the principal may nevertheless be bound where the
“principal, through [its] own acts or inadvertences,
causes or allows third persons to believe [its] agent
possesses” the requisite authority to negotiate and
enter agreements on its behalf. Id. at 607.
Connecticut courts assessing an agent's apparent
authority consider (1) whether it “appear[ed] from the
principal's conduct that the principal held the agent out
as possessing sufficient authority to embrace the act in
question, or knowingly permitted the agent to act as having
such authority;” Ackerman, 298 Conn. at 508; and (2)
whether “the party dealing with the agent . . . acting
in good faith, reasonably believed, under all the
circumstances, that the agent had the necessary authority to
bind the principal to the agent's action.”
Id. at 509 Here, 50 Morgan held Attorney Conrad out
as possessing authority to settle the case. The parties held
a mediation session with Attorney John Bulman on August 28,
2018. (Conrad Declaration, ECF No. 120-2 ¶ 7.) Attorney
Conrad represented during the July 26 telephone conference
that the mediator required each party to send representatives
with binding settlement authority to the mediation. He
further represented on the July 26 telephonic conference that
he attended the session together with in-house counsel and a
project manager for 50 Morgan. Although he asserts that
in-house counsel and the project manager were the
representatives with settlement authority, Attorney Conrad
was authorized to make the main presentation for 50 Morgan at
the mediation and was the primary point of contact with the
mediator and the other parties before the mediation. He
continued as the primary contact for 50 Morgan after the
mediation as well. In September, 50 Morgan authorized him to
communicate to the mediator and the other parties 50
Morgan's assent to provide $100, 000 toward a settlement
fund that would be paid to Excel. This assent formed a
component of the financial terms of the agreement in
principle ultimately brokered by the mediator. In addition,
when the parties were drafting the details of the final
written agreement, Conrad sent comments that he represented
were from his “team.” (ECF No. 118-8 at 52.) On
the telephonic conference, he explained that the reference to
his “team” included in-house counsel for 50
Morgan-the same individual who had settlement authority at
the mediation-and he acknowledged that the other parties to
the settlement agreement would have understood as much. In
sum, 50 Morgan held Attorney Conrad out as having authority
to settle the case at the mediation session in August, and it
continued to allow him to represent himself as having that
authority as the parties resolved further details of the
agreement through December.
There
is also evidence that the other parties reasonably believed
that Attorney Conrad had authority to settle the case.
“If a principal has given an agent general authority to
engage in a class of transactions, subject to limits known
only to the agent and the principal, third parties may
reasonably believe the agent to be authorized to conduct such
transactions and need not inquire into the existence of
undisclosed limits on the agent's authority.”
Ackerman, 298 Conn. at 512 (citation and quotation marks
omitted). As noted, Attorney Conrad was the primary point of
contact for all parties in settlement discussions. He was
authorized to offer $100, 000 on 50 Morgan's behalf and
to negotiate the details of the subcontractor releases.
Except in one specific email he identified, in which he
communicated comments on a single provision in the agreement
with the caveat that his client had not yet reviewed his
comments, neither he nor another representative of 50 Morgan
ever communicated that his authority was limited in any way.
This is noteworthy because the documents attached to the
parties' briefs show that they sent dozens of emails and
had numerous phone calls to finalize the memorialization of
the agreement, and Attorney Conrad participated in these
communications. The single example Conrad identified of his
communicating a to limit on his authority only ...