Power Services, Inc. v. MCI Constructors, Inc. ( 2001 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
POWER SERVICES, INCORPORATED, 
Plaintiff-Appellant,
v.
MCI CONSTRUCTORS, INCORPORATED;  No. 00-1358
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH,
PENNSYLVANIA,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-97-927-A)
Argued: November 3, 2000
Decided: February 27, 2001
Before WILKINSON, Chief Judge, and
WILKINS and LUTTIG, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
COUNSEL
ARGUED: Robert John Sciaroni, BELL, BOYD & LLOYD,
P.L.L.C., Washington, D.C., for Appellant. Charlie Chong Ho Lee,
MOORE & LEE, L.L.P., McLean, Virginia, for Appellees. ON
BRIEF: Richard O. Wolf, MOORE & LEE, L.L.P., McLean, Vir-
ginia, for Appellees.
2 POWER SERVICES, INC. v. MCI CONSTRUCTORS, INC.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Power Services, Inc. appeals an order of the district court dismiss-
ing its action against MCI Constructors, Inc. and MCI’s surety (col-
lectively, "Appellees") on the basis that the parties had reached a
settlement. Because the record contains unresolved factual disputes
relating to the existence of a settlement agreement, we vacate the
judgment of the district court and remand for further proceedings.
I.
This appeal arises from Power Services’ suit against Appellees to
collect payment for services rendered. It is undisputed that counsel for
Power Services, Robert J. Sciaroni, and counsel for Appellees, Char-
lie C. H. Lee, reached a settlement and reduced it to writing. The par-
ties agree on some of the facts relating to their negotiations but
disagree as to others.
The parties concur that negotiations took place on February 21,
2000 when Sciaroni and two Power Services executives went to Lee’s
office for depositions. Before the depositions began, Lee asked
Sciaroni if he would agree to settle the case for $50,000. Sciaroni
replied that he would prefer $60,000, and Lee endorsed this figure.
The two Power Services executives present for depositions ratified
this proposal and then left Lee’s office. The attorneys prepared a writ-
ten settlement agreement and faxed it to their clients.
It is undisputed that Sciaroni was authorized to sign the written
agreement on Power Services’ behalf and that he did so before leav-
ing Lee’s office. The parties disagree, however, concerning whether
Lee had authority to enter into a settlement agreement on behalf of
MCI and its surety, National Union Fire Insurance Company of Pitts-
burgh, Pennsylvania (National Union). According to Sciaroni, Lee
POWER SERVICES, INC. v. MCI CONSTRUCTORS, INC. 3
stated on multiple occasions that their settlement agreement required
separate approval from MCI and National Union. In contrast, Lee
asserts that National Union tendered settlement authority to MCI and
that the president of MCI approved the $60,000 settlement before the
attorneys drafted the written agreement.
Officials at MCI and National Union signed the settlement agree-
ment the day it was drafted, but Sciaroni was not informed of this.
According to Sciaroni, when he called Lee the next day and asked if
Lee’s clients had signed the agreement, Lee said the matter was "still
under review." J.A. 133 (internal quotation marks omitted). Lee, how-
ever, alleges that he merely told Sciaroni that he did not know
whether the agreement had been signed. At that point, the parties
agree, Sciaroni told Lee that Power Services was withdrawing its set-
tlement offer.
Appellees subsequently moved to dismiss this action, alleging that
the parties had reached a settlement. The district court conducted a
hearing at which the attorneys spoke as officers of the court but did
not testify under oath. After the hearing, the court found that the par-
ties had entered into a binding oral agreement. Further, the court
opted to enforce this agreement and therefore dismissed Power Ser-
vices’ suit.
II.
Power Services argues that the district court erred in dismissing
this action, contending that a genuine issue of material fact exists
regarding whether the parties entered into a binding agreement. We
agree that unresolved factual disputes in the record preclude us from
affirming the judgment of the district court.
Under Virginia law (which the parties agree is controlling here),
"settlement agreements are treated as contracts subject to the general
principles of contract interpretation." Byrum v. Bear Inv. Co., 936
F.2d 173, 175 (4th Cir. 1991). A contract is formed when the offeree
communicates its acceptance to the offeror. See Levy v. Beach Inv.
Corp., 181 S.E.2d 607, 607-08 (Va. 1971) (per curiam). An offer that
is not supported by consideration may be revoked any time before the
offeree communicates its acceptance. See Chang v. First Colonial
4 POWER SERVICES, INC. v. MCI CONSTRUCTORS, INC.
Sav. Bank, 410 S.E.2d 928, 931 (Va. 1991); Chittum v. Potter, 219
S.E.2d 859, 864 (Va. 1975).
When asked to enforce a settlement agreement, a district court
should engage in two distinct inquiries. "First, the court should ascer-
tain whether the parties have in fact agreed to settle the case. Once
the court determines that the parties have agreed to settle the case,
then the court must discern the terms of that settlement." Moore v.
Beaufort County, N.C., 936 F.2d 159, 162 (4th Cir. 1991). If either
inquiry requires resolution of factual disputes, the court must conduct
a "plenary evidentiary hearing." Columbus-America Discovery Group
v. Atl. Mut. Ins. Co., 203 F.3d 291, 298 (4th Cir.), cert. denied, 121
S. Ct. 277 (2000); Alexander v. Indus. of the Blind, Inc., 901 F.2d 40,
41 (4th Cir. 1990).
Here, the record contains factual disputes that prevent us from
upholding the judgment of the district court. These disputes involve
Lee’s communications to Sciaroni concerning (a) what Lee was told
by his clients and (b) whether Lee had authority to bind both Appel-
lees to a settlement agreement.
The district court found that executives from MCI and National
Union accepted Power Services’ offer before Sciaroni withdrew it,
but it is unclear whether this acceptance was ever communicated to
Sciaroni. It is undisputed that Sciaroni did not learn until after with-
drawing his offer that the Appellees’ executives had already signed
the written agreement. Moreover, the parties disagree about whether
Appellees’ earlier oral acceptance was relayed to Sciaroni, an issue
the district court left unresolved. See J.A. 204 ("Sciaroni was aware
that Lee spoke with his clients on the telephone after they received
the fax[ed agreement], and Lee never indicated that there were any
problems ....").
If Lee never told Sciaroni what his clients had said, then no con-
tract was formed unless Lee himself had authority to accept the offer
on Appellees’ behalf. See Columbus-America Discovery Group, 203
F.3d at 298 (discussing attorneys’ apparent authority to settle cases).
Sciaroni alleges that Lee expressly disavowed such authority, but Lee
denies this. Once again, the district court made no finding on this
POWER SERVICES, INC. v. MCI CONSTRUCTORS, INC. 5
issue. Consequently, the record does not establish that Lee was autho-
rized to enter into a binding settlement agreement.
III.
In sum, factual disputes regarding the information conveyed to
Sciaroni prevent us from upholding the finding of the district court
that the parties reached an oral agreement. Accordingly, we vacate the
judgment of the district court and remand this case for resolution of
these factual questions and for any other proceedings that may be nec-
essary.
VACATED AND REMANDED