King, J. v. Driscoll, C. ( 2023 )

J-A11033-23
2023 PA Super 95JOHN G. KING : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
CHRISTOPHER P. DRISCOLL :
:
Appellant : No. 1291 WDA 2022
Appeal from the Order Entered October 14, 2022
In the Court of Common Pleas of Allegheny County Civil Division at
No(s): No,. GD 21-004533
BEFORE: BENDER, P.J.E., STABILE, J., and PELLEGRINI, J.*
OPINION BY PELLEGRINI, J.: FILED: JUNE 5, 2023
Christopher P. Driscoll (Driscoll) appeals from the order entered in the
Court of Common Pleas of Allegheny County (trial court) granting the petition
to enforce settlement filed by John G. King (King). The trial court determined
that the parties reached an enforceable agreement for Driscoll to sell King his
shares in the restaurant that they co-own because King’s attorney accepted a
“redlined” version of the agreement sent by Driscoll’s attorney. On appeal,
Driscoll argues that the trial court erred because both he and his attorney
testified at the evidentiary hearing that Driscoll never gave his attorney
express authority to settle the case without first obtaining the restaurant’s
application to receive funds under the Restaurant Revitalization Fund (RRF).
Because the trial court made no findings concerning whether Driscoll’s
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* Retired Senior Judge assigned to the Superior Court.
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attorney had express authority to enter into the agreement without his final
approval, we remand with instructions.
I.
Driscoll and King are each 50% owners of two LLCs that operate a
restaurant and its building in Bellevue near Pittsburgh. When their business
relationship soured, Driscoll wanted out of the business and asked King if he
would be willing to buy Driscoll’s membership shares. As a result, both parties
obtained counsel to negotiate the buy-out of Driscoll’s shares in March 2021.
King hired Attorney David Fuchs and Driscoll hired Attorney Daniel Conlon.
The two attorneys began negotiations in March 2021 but were unable to reach
an agreement. The negotiations resumed several weeks later in May 2021.1
During this round of negotiations, Attorney Conlon emailed Attorney Fuchs a
term sheet summarizing their negotiations and asked, “if we are in agreement
on all terms.” Attorney Fuchs responded by adding handwritten notes to the
term sheet, and Attorney Conlon incorporated those notes into another draft
that he sent to Attorney Fuchs a few days later. Attorney Fuchs emailed him
back with a “redlined”2 copy of the agreement “with mostly clarifications and
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1 In the interim, on April 28, 2021, King filed a four-count complaint against
Driscoll seeking monetary damages for breach of contract and fiduciary duties,
as well as declaratory relief that Driscoll have no interest in the LLCs or, in the
alternative, dissolution.
2 “Redlining” is defined in part as “[t]he process, usu[ally] automated, of
creating, for an existing document, an interim version that shows, through
(Footnote Continued Next Page)
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a few details.” The next day, which was May 20, 2021, Attorney Conlon replied
that he accepted most of the changes and had “sent the agreement to Driscoll
for his review,” while also highlighting those changes in the draft that he did
not accept. Attorney Fuchs responded that same day: “Client has approved
your redline. Please get your client’s signature and send me a clean copy for
my client to sign.”
Attorney Fuchs believed that they had an agreement but when Attorney
Conlon did not send him back a clean copy for King to sign, Attorney Fuchs
followed up with another email asking him to send a “clean version so we can
get this done.” Again, however, there was no response. Finally, when
Attorney Fuchs tried again a few weeks later, Attorney Conlon emailed him a
letter in which he asserted that “the parties have neither negotiated nor
reached a settlement agreement.” Attorney Conlon emphasized that he never
represented that they had reached a settlement agreement, noting that in his
last email, he wrote that he was sending the agreement to Driscoll for his
review. Attorney Conlon also claimed that during a May 21st phone call, he
told Attorney Fuchs that Driscoll needed a copy of the restaurant’s RRF
application before he would sign off on the agreement.
____________________________________________
strike-outs and other typographical features, all deletions and insertions made
in the most recent revision.” Redlining, Black’s Law Dictionary (8th ed. 2004).
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On June 16, 2021, King filed a petition to enforce settlement alleging
that the parties, through their attorneys, had reached an agreement on all
material terms despite never signing the agreement. Because Driscoll
disputed that an agreement was reached, the trial court held an evidentiary
hearing.3 At the hearing, Attorney Conlon testified that he negotiated the
agreement on behalf of Driscoll but never had his express authority to agree
to the terms of the agreement without Driscoll’s final approval. Attorney
Conlon also claimed throughout his testimony that Driscoll would not sign a
final agreement unless he first obtained the restaurant’s RRF application.
Driscoll reiterated the same as he continually claimed throughout his
testimony that Attorney Conlon could not finalize the agreement unless he
obtained the RRF application that King submitted on the restaurant’s behalf to
the Small Business Administration.
Disputing that the RRF application was ever an integral part of the
negotiations, King emphasized that neither the term sheet nor the draft
agreements contained any mention about the application being an essential
term of the agreement. On top of that, King called an accountant as a witness
to show that the funds received from the SBA—$370,000—had to be used for
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3 See Brannam v. Reedy, 906 A.2d 635, 639 (Pa. Cmwlth. 2006) (“[T]he
existence of a settlement agreement requires an evidentiary hearing
whenever one party disputes the existence of an agreement or its binding
effect.”).
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operating expenses and could not be used to pay Driscoll. Consequently, King
characterized Driscoll’s claim concerning the RRF application as a misleading,
after-the-fact excuse for getting the agreement that he and Driscoll reached
through their attorneys’ extensive negotiations and exchange of term sheets
and draft agreements.
On July 21, 2022, the trial court granted King’s petition to enforce
settlement. In its two-page memorandum explaining its reasoning, the trial
court did not address whether Attorney Conlon had Driscoll’s express authority
to finalize the agreement without first obtaining the RRF application. Rather,
the trial court concluded that, even though the agreement was never signed,
“[t]he accepted redline version in conjunction with the term sheet
establish[ed] the essential terms of the parties’ agreement.” Trial Court
Opinion, 7/21/22, at unpaginated 2.
Following the trial court’s decision, Driscoll timely moved for post-trial
relief under Pa.R.Civ.P. 227.1. King responded by reasserting his arguments
at trial but did not otherwise contend that Driscoll’s filing was improper. After
the motion was denied, Driscoll filed this appeal.
II.
Before addressing the merits of Driscoll’s claims, we address whether
we have jurisdiction over this appeal. After Driscoll filed his notice of appeal,
King moved to quash this appeal as untimely because Driscoll filed a motion
for post-trial relief rather than a notice of appeal after the trial court granted
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the petition to enforce settlement. Citing a note to Pa.R.Civ.P. 227.1(c)(2),
King observes that “[a] motion for post-trial relief may not be filed to matters
governed exclusively by the rules of petition practice.” Asserting that his
petition fell under this rule, King points to this Court’s discussion in Bennett
v. Juzelenos, 791 A.2d 403 (Pa. Super. 2002), as directly on point:
Our Supreme Court held in Coco Brothers, Inc. v. Board of
Public Education of the School District of Pittsburgh, 608
A.2d 1035 (1992), that post-trial motions were not required, or
even permissible, from a trial court’s order disposing of a petition
to enforce a judgment. The Supreme Court held that the
proceedings to enforce a judgment were clearly within the type of
procedures described in the Note to Rule 227.1(c)(2). Similarly,
we held in Kramer v. Schaeffer, 751 A.2d 241 (Pa. Super.
2000), that no post-trial motions were required from a trial court’s
decision on a motion to enforce a settlement. Although the trial
court conducted a lengthy evidentiary hearing in Kramer, we
concluded that the proceedings were not the type from which
post-trial motions are required. Kramer, 751 A.2d at 244.
Bennett, supra at 405-06. Thus, King argues that the trial court’s
evidentiary hearing was held under petition practice.
Driscoll counters that the evidentiary hearing was a trial and that he
needed to file a post-trial motion to preserve his appellate issues. He also
disputes that the hearing was governed by petition practice simply because
King labeled his petition as such. For support, he notes that Pa.R.Civ.P. 206.1
defines a “petition” as either an application to strike or open or any other
application designated by local rule (which there was none). Driscoll also
emphasized that King raised no objection to his post-trial motion in his
response.
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After review, we decline to quash. First, looking at the discussion from
Bennett, while our Supreme Court in Coco Brothers held that post-trial
motions “[are] not required, or even permissible” from a trial court’s order
disposing of a petition to enforce a judgment, the order here did not dispose
of a petition to enforce a judgment. Rather, the trial court’s order here
disposed of a petition to enforce a settlement. As for Bennett and Kramer,
while both cases involved petitions to enforce a settlement, the procedural
posture of those cases concerned applications to quash for waiver of
reviewable issues based on the appellant’s failure to file a post-trial motion.
In both cases, we declined to quash. Here, in contrast, King asserts we must
quash because Driscoll’s notice of appeal is untimely, as no post-trial motions
were required or permitted from the trial court’s July 21, 2022 order. Thus,
neither Bennett nor Kramer are analogous.
Second, we note that a panel of this Court dealt with a similar
jurisdictional issue in U.S. Home Corp. v Sinclair, 249 A.3d 1165, 2021 WL
653236 (Pa. Super. Feb. 19, 2021) (unpublished memorandum). There, after
the trial court granted a motion to enforce a settlement agreement, the
appellant filed a motion for post-trial relief that was denied. On appeal, the
panel noted that it did not appear that the appellant was required under Rule
227.1 to move for post-trial relief and should have instead appealed directly
from the trial court’s order resolving the motion to enforce settlement. See
U.S. Home Corp., supra at *3 n.3 (citing Bennett, supra). We also noted
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that an unauthorized post-trial motion seldom tolls the appeal period. Id.(citing Vietri ex rel. Vietri v. Delaware Valley High Sch., 63 A.3d 1281,
1288 (Pa. Super. 2013)).
That said, we found the appellant’s filing of a post-trial motion rather
than a notice of appeal did not require that we quash its appeal as untimely.
As we explained:
…as the propriety of [appellant’s] post-trial motion was not raised
by the parties or lower court, Rule 227.1 is silent as to whether a
post-trial motion is required in this case, and our precedent does
not directly address the effect on the timeliness of an appeal
where a party files a post-trial motion from a ruling on a motion
to enforce a settlement agreement, we decline to quash U.S.
Home’s appeal as untimely. Cf. Newman Development Group
of Pottstown, LLC v. Genuardi’s Family Markets, Inc., 52
A.3d 1233, 1247-48 (Pa. 2012) (holding that appellate court
should not impose “the heavy consequence of waiver” on a party
due to non-compliance with Rule 227.1 unless the applicability of
Rule 227.1 to the particular circumstance is “apparent upon its
face or, failing that, in clear decisional law construing the Rule”).
U.S. Home Corp., supra at *3 n.3.
While U.S. Home Corp. is an unpublished memorandum, we find its
reasoning persuasive.4 First, like the appellee in that case, King raised no
objection to Driscoll’s motion for post-trial relief in his response to the motion,
waiting instead until Driscoll filed this appeal to raise any issue with the
propriety of the motion for post-trial relief. Second, it is unclear under Rule
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4 See Pa.R.A.P. 126(b) (providing that unpublished non-precedential
memorandum decisions of the Superior Court filed after May 1, 2019, may be
cited for their persuasive value).
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227.1 whether a post-trial motion was required under these circumstances,
especially because the procedural posture of the cases that King relies on—
Bennett and Kramer—differ from that involved here. As there is unclear
decisional law construing Rule 227.1 requiring quashal under these
circumstances, we will not quash Driscoll’s appeal.
III.
On appeal, Driscoll raises two main arguments for why the trial court
erred in concluding that the parties reached an agreement. First, he disputes
that the attorneys’ negotiations resulted in a binding, enforceable agreement.
In particular, he focuses on the May 20th email that Attorney Conlon sent to
Attorney Fuchs in response to the “redlined” draft of the agreement. In that
email, Attorney Conlon wrote that he accepted most of Attorney Fuchs’s
changes and that he was sending the agreement to Driscoll for his review.
Attorney Conlon, however, did not accept all of the changes, as he highlighted
those with which he did not agree. Driscoll contends that this email shows
not only that the attorneys had not yet agreed on all the necessary terms, but
also that he had not yet approved the agreement.
Second, and related to the first part, Driscoll contends that he directed
Attorney Conlon to obtain a copy of the restaurant’s RRF application. Driscoll
asserts that this was an essential part of the parties’ negotiations and that he
would not give his final approval to any agreement unless he first obtained
and reviewed the application. Because he never received the application, he
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never gave Attorney Conlon the express authority he would have needed to
finalize the agreement.5
Our review of a trial court's decision to enforce a settlement agreement
is well-settled:
When reviewing a trial court’s decision to enforce a settlement
agreement, our scope of review is plenary as to questions of law,
and we are free to draw our own inferences and reach our own
conclusions from the facts as found by the court. However, we
are only bound by the trial court’s findings of fact which are
supported by competent evidence. The prevailing party is entitled
to have the evidence viewed in the light most favorable to its
position. Thus, we will only overturn the trial court’s decision
when the factual findings of the court are against the weight of
the evidence or its legal conclusions are erroneous.
Salsman v. Brown, 51 A.3d 892, 893–94 (Pa. Super. 2012) (citation
omitted).
Settlement agreements are enforceable under Pennsylvania law even
without a writing.
Where a settlement agreement contains all of the requisites for a
valid contract, a court must enforce the terms of the agreement.
McDonnell v. Ford Motor Co., ... 643 A.2d 1102, 1105 ( [Pa.
Super.] 1994).... This is true even if the terms of the agreement
are not yet formalized in writing. Mazzella v. Koken, ... 739
A.2d 531, 536 ( [Pa.] 1999); see Commerce
Bank/Pennsylvania v. First Union Nat. Bank, 911 A.2d 133,
147 (Pa. Super. 2006) (stating “an agreement is binding if the
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5 Driscoll also argues that King admitted during his testimony at the
evidentiary hearing that the parties never reached an agreement and that this
constituted a judicial admission. However, as King points out, the full
exchange shows that King meant that the parties never signed the agreement,
not that the parties never reached an understanding of the terms of the
agreement. See N.T., 12/20/21, at 80.
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parties come to a meeting of the minds on all essential terms,
even if they expect the agreement to be reduced to writing but
that formality does not take place[ ]”). Pursuant to well-settled
Pennsylvania law, oral agreements to settle are enforceable
without a writing. Pulcinello[ v. Consolidated Rail Corp., 784
A.2d 122, 124 (Pa. Super. 2001)] (citing Kazanjian v. New
England Petroleum Corp., ... 480 A.2d 1153, 1157 ( [Pa.
Super.] 1984)).
Mastroni-Mucker, supra at 517-18.
However, while the settlement agreement need not be reduced to
writing, an attorney must still have authority to settle their client’s case.
Indeed, “[t]he ordinary employment of an attorney to represent a client with
respect to litigation does not confer upon the attorney the implied or apparent
authority to bind the client to a settlement or compromise, and the attorney
cannot do so in the absence of such express authority.” Baribault v. Zoning
Hearing Bd. Of Haverford Twp., 236 A.3d 112, 122 (Pa. Cmwlth. 2020)
(citations omitted).
Our Supreme Court explained this unambiguous rule as follows:
The law in this jurisdiction is clear and well-settled that an
attorney must have express authority in order to bind a client to
a settlement agreement. McLaughlin v. Monaghan, 290 Pa. 74,
138 A. 79 (1927); Starling v. West Erie Ave. Bldg. & Loan
Ass’n, 333 Pa. 124, 3 A.2d 387 (1939); Archbishop v. Karlak,
450 Pa. 535, 299 A.2d 294 (1973); Rizzo v. Haines, 520 Pa. 484,
555 A.2d 58, 66 (1989). The rationale for this rule stems from
the fact that parties settling legal disputes forfeit substantial legal
rights, and such rights should only be forfeited knowingly. See,
e.g., Starling, 3 A.2d at 388 (“apparent or implied authority does
not extend to unauthorized acts which will result in the surrender
of any substantial right of the client, or the imposition of new
liabilities or burdens upon him”). As such, a client’s attorney may
not settle a case without the client’s grant of express authority,
and such express authority can only exist where the principal
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specifically grants the agent the authority to perform a certain
task on the principal’s behalf. See Restatement (Second) of
Agency § 7 cmt. c (1958).
Reutzel v. Douglas, M.D., 870 A.2d 787, 791-92 (Pa. 2005). As a result, “if
the existence of a settlement is in dispute because it is claimed that the
attorney lacked authority to bind his client, the attorney’s authority ... to bind
[his] client by way of agreement or compromise is not inferred, but must be
proven.” Brannam v. Reedy, 906 A.2d 635, 640 (Pa. Cmwlth. 2006)
(internal citation omitted).
In finding that the “[t]he accepted redline version in conjunction with
the term sheet establish[ed] the essential terms of the agreement,” the trial
court never resolved what was the main factual dispute at trial—whether
Attorney Conlon had Driscoll’s express authority to settle the case. While we
cannot say whether King proved that Attorney Conlon, in fact, possessed that
authority—indeed, that determination belongs to the trial court—there was
evidence at the evidentiary hearing that Driscoll never gave his attorney
authority to settle the case.
As Driscoll highlights, that such authority was lacking is suggested by
the May 20th email that Attorney Conlon sent to Attorney Fuchs in response
to the “redline” draft of the agreement. In that email, Attorney Conlon
indicated that he was sending the “redlined” draft of the agreement to Driscoll
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“for his review.” R. 381.6 When asked about this email at trial, Attorney
Conlon confirmed that he had to keep Driscoll updated on any advancement
in the negotiations and forward him any drafts of settlement agreements. See
R. 246a.
Indeed, throughout his testimony, Attorney Conlon asserted that he did
not have Driscoll’s express authority to settle without his approval. When
asked why he drafted the agreements, he replied:
I never got express authority to draft an – we were negotiating
toward an agreement; we certainly were. And something that I
did as counsel for Mr. Driscoll was to draft an agreement. I
thought it was a way to move this forward.
R. 210a. Attorney Conlon answered similarly when asked why he prepared
the term sheet.
Trying to make a deal, trying to show – isolate maybe those areas
where we still need to discuss. And those we don’t need to discuss
because we already discussed a lot, I’m trying to isolate them.
Then, again, I did not have express authority to do this. I’m just
trying to move the negotiations forward.
R. 216a.
For his part, Driscoll confirmed much the same when he testified.
Q. Was Mr. Conlon authorized to negotiate a potential deal on
your behalf?
A. Yes, he was.
Q. Did he, in fact, that you’re aware of, work to negotiate a
potential deal on your behalf?
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6 For ease of reference, we refer to the reproduced record.
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A. Yes, he did.
Q. Was he required to communicate with you throughout these
negotiations the details of any deal he attempted to negotiate on
your behalf?
A. Yes, he was.
Q. Did he, in fact, do so?
A. Yes.
Q. Was he required to present draft documentation to you for
your review throughout these negotiations?
A. Yes, he was.
Q. Did he, in fact, do so?
A. Yes.
Q. Was your express approval required for any agreements
negotiated by Mr. Conlon on your behalf?
A. Yes, it was.
Q. And did you tell him that he needed your express approval
before he could agree to any deals on your behalf?
A. Yes, I did.
Q. Did you ever grant Mr. Conlon authority to enter into a
settlement agreement on your behalf without your express
approval?
A. No, I did not.
Q. Did you ever grant Mr. Conlon authority to sign any
agreements, settling agreements or other, on your behalf without
your express approval?
A. No, I did not.
R. 312a-313a.
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Driscoll was likewise unequivocal throughout his testimony that
obtaining the restaurant’s RRF application was a condition precedent to him
signing off on any agreement negotiated by Attorney Conlon. For example:
Q. And did you communicate to your counsel that you felt it was
something necessary for the negotiations in this matter for you to
see that RRF application?
A. Yes.
Q. Did you communicate to your counsel that that RRF application
was something you needed to see in order to progress or conclude
any settlement negotiations?
A. Yes, I did.
R. 315a.
When asked the same about the May 20th version of the agreement that
Attorney Conlon sent him, Driscoll testified that he would not agree to bound
by the agreement unless he first saw the RRF application.
Q. Did you accept the terms of this version of the membership
interest purchase agreement?
A. No, I did not.
Q. Why not?
A. Because we still had not received the RRF application.
Q. As of May 20, 2021, now almost three weeks after the
application was submitted, had you or your counsel received a
copy of it?
A. No, we had not. Did not.
Q. Did you ever provide Mr. Conlon, at that point in time, with
the express authority to accept [the May 20, 2021] draft of the
membership interest purchase agreement attached to Exhibit 8?
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A. No, I did not.
R. 319a. This was not an insignificant matter because it resulted in $370,000
coming into the business.
To recap, before it could conclude that the attorneys’ negotiations led
to an agreement, the trial court needed to first find that Attorney Conlon had
Driscoll’s express authority to bind his client to the terms of the agreement
without first getting Driscoll’s final approval. As part of such a finding, the
trial court would have also needed to discredit Attorney Conlon’s and Driscoll’s
claims that Driscoll being provided a copy of the RRF application was a
condition precedent to any final agreement. As the above sampling of
evidence shows, both Attorney Conlon and Driscoll unequivocally denied that
such express authority was ever given. Unless King proved that Attorney
Conlon in fact had such authority, then the trial court erred in finding that the
parties, through merely the attorneys’ exchange of drafts and negotiations,
bound their clients to the agreement.
Accordingly, because this was a factual question to be resolved by the
trial court, we will remand this matter for the trial court to determine within
60 days of the date of this memorandum whether King sustained his burden
in proving that Attorney Conlon had express authority to settle the case
though his negotiations with Attorney Fuchs.
Order reversed. Case remanded with instructions. Motion to quash
denied. Jurisdiction retained.
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