LLC v. Excel Hotel Services, Inc.

          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 ...