Manuel Cruz, Et Ano., Resps. v. Abel Chavez, Apps. ( 2015 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MANUEL CRUZ, GILBERTO RAMIREZ,
and EPIFANIO RIOS, No. 70741-8-1
Respondents, DIVISION ONE
v. PUBLISHED OPINION
no
CT3
ABEL CHAVEZ and JANE DOE
CHAVEZ, and the marital community
thereof; and CHAVEZ LANDSCAPING,
LLC, a limited liability company; CO
Appellants,
jOO
O
and C",
AMERICAN CONTRACTORS
INDEMNITY COMPANY, bond
Numbers 100089494 and 100023375,
FILED: April 13,2015
Defendant.
Trickey, J. — Civil Rule 2A precludes enforcement of a settlement agreement
where there is a genuine dispute of material fact regarding the existence of the
agreement. Under principles of contract law, which govern settlement agreements,
mutual assent is an essential element for the formation, or existence, of a valid
agreement. Here, the plaintiffs demonstrated a question of material fact as to the validity
of plaintiff Gilberto Ramirez's assent by presenting evidence that the defendant and his
attorney induced Ramirez's assent through deceptive, coercive, or otherwise wrongful
tactics. In so doing, the plaintiffs established a material dispute over the existence of the
settlement agreement. Accordingly, we affirm the trial court's decision denying
enforcement of the alleged settlement agreement.
No. 70741-8-1/2
FACTS
On June 9, 2011, Manuel Cruz, Ramirez, and Epifanio Rios (collectively, plaintiffs)
filed a lawsuit against their former employer, Abel Chavez and Chavez Landscaping LLC
(collectively, Chavez), alleging that Chavez withheld and underpaid wages owed to
them.1 According to the plaintiffs' trial memoranda, the plaintiffs worked as landscape
employees for Chavez. The plaintiffs, who came from Mexico and speak no English,
claimed that Chavez took advantage of them throughout their employment.
At all relevant times throughout the litigation, attorney John Frawley represented
the plaintiffs and attorney Michael Jacobson represented Chavez.
The case proceeded through arbitration. In April 2012, the trial court entered an
arbitration award in favor of the plaintiffs. According to the plaintiffs' trial memoranda,
thereafter, Chavez requested a trial de novo.
In July 2012, Jacobson contacted Rios's former place of employment and falsely
represented to Tim McLaughlin, the company's president, that he represented Rios.
Jacobson later served McLaughlin at least two subpoenas in which Jacobson signed his
name as the "ATTORNEY FOR PLAINTIFF."2 Through these subpoenas, Jacobson
sought confidential records regarding Rios's employment. Jacobson provided no notice
to the plaintiffs or to Frawley about his contact with McLaughlin or his requests for
discovery. The plaintiffs and Frawley learned of Jacobson's discovery requests in
January 2013.
1 Defendant American Contractors Indemnity Company was dismissed by stipulated order dated
April 9, 2012.
2 Clerk's Papers (CP) at 142-43, 146.
No. 70741-8-1/3
On September 4, 2012, Chavez and Ramirez executed a settlement and release
agreement (Ramirez agreement), in which Ramirez agreed not to sue Chavez in
exchange for a monetary settlement of $4,000. The agreement was written in Spanish
and appears to have been signed by Ramirez, Chavez, and a witness. Attorneys Frawley
and Jacobson were not present during this meeting.
According to Chavez, Chavez notified Jacobson of the Ramirez agreement shortly
after its execution. However, neither Jacobson nor Ramirez informed the other plaintiffs,
Frawley, or the trial court of the Ramirez agreement. In fact, Ramirez terminated
communication with Frawley after signing the agreement. He also stopped contacting the
other plaintiffs and refused to discuss the matter with them. The record indicates that
Ramirez's sudden lack of communication following the agreement's execution may have
been attributed to a statement made by Chavez to Ramirez. Chavez told Ramirez that,
according to Jacobson, Ramirez would not need Frawley's assistance ifthey settled and
should no longer contact Frawley.
By February 2013, Cruz and Rios settled their claims with Chavez in mediation.
Between September 4, 2012, and the trial date on February 11, 2013, Chavez
communicated with Frawley, the trial court, and the mediator on several occasions. Not
until five days before trial on February 11 did Jacobson reveal to Frawley that Ramirez
had signed a settlement agreement with Chavez. On February 11, 2013, the court struck
the trial date.
On June 11, 2013, Chavez filed a motion, apparently for the second time,3 to
enforce the Ramirez agreement. Chavez submitted to the trial court a copy of the signed
3 An excerpt from the February 11 hearing shows that on February 8, .2013, Jacobson filed a
motion to enforce the Ramirez agreement. Upon learning of the four month delay in
No. 70741-8-1/4
agreement in Spanish and a copy of the agreement translated into English. Chavez also
presented a copy of the settlement check for $4,000, which designated Chavez
Landscaping LLC as the payor and Gilberto Ramirez as the payee. The check was issued
on September 4, 2012, and posted on that same date. The backside of the check shows
Gilberto Ramirez's signature endorsing the check.
In Chavez's declaration submitted with the motion to enforce, Chavez stated that
in a previous lawsuit unrelated to the present one, he had been involved in a dispute with
an employee named Gil Ortiz. In 2011, Jacobson had drafted an agreement to settle that
case. In the present lawsuit, Chavez alleged that he saw Ramirez at a community
gathering. According to his declaration, Chavez told Ramirez he would pay Ramirez the
amount he wished, and they agreed to meet again the next day. Chavez later asked his
office manager to translate the 2011 Gil Ortiz agreement into Spanish and change the
name from Gil Ortiz to Gil Ramirez. The next day, Chavez stated, Ramirez read the
agreement and signed it. Thereafter, when Chavez told Jacobson he had settled with
Ramirez, Jacobson told Chavez that "there were some legal things to handle."4
In response, the plaintiffs sought an order denying enforcement of the Ramirez
agreement, contending the agreement violated both the Rules of Professional Conduct
(RPC) and the Civil Rules (CR). The plaintiffs additionally sought sanctions against
Chavez and Jacobson for violations of the RPC, CR 11, and the discovery rules. The
plaintiffs submitted declarations from Rios, Cruz, McLaughlin, and Frawley.
communicating the existence ofthe settlement agreement, the trial court decided to not "deal with
the substance ofthe agreement" that day and, according to the plaintiffs, denied Chavez's motion
to enforcethe agreement. CP at 159. Chavez does not seek review ofthis ruling on appeal, and
the parties have not provided a developed record on that motion.
4 CP at 189.
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The trial court denied enforcement of the Ramirez agreement, finding that the
manner in which it was obtained was inappropriate. The court imposed sanctions in the
amount of $5,000 against Chavez and Jacobson for Jacobson's discovery violations and
for their failure to disclose the Ramirez agreement.
Chavez appeals.
ANALYSIS
Ramirez Agreement
Chavez contends that the trial court erred by declining to enforce the Ramirez
agreement. He asserts that CR 2A does not bar enforcement ofthe agreement because
there is no genuine dispute over its material terms or existence. We disagree. Through
their submission of evidence demonstrating that Ramirez's assent was induced by
Chavez's and Jacobson's wrongful acts, the plaintiffs presented a material question of
fact as to the validity of Ramirez's assent. Accordingly, we find that there remains a
genuine dispute over the existence, or formation, ofthe Ramirez agreement.
CR 2A provides:
No agreement or consent between parties or attorneys in respect to
the proceedings in a cause, the purport of which is disputed, will be
regarded by the court unless the same shall have been made and assented
to in open court on the record, or entered in the minutes, or unless the
evidence thereof shall be in writing and subscribed by the attorneys denying
the same.
CR 2A applies to preclude enforcement of an agreement when "(1) the agreement
was made by the parties or attorneys 'in respect to the proceedings in a cause[,]' and (2)
the purport of the agreement is disputed." In re Patterson, 93 Wn. App. 579, 582, 969
P.2d 1106 (1999) (alteration in original) (quoting In re Marriage of Ferree. 71 Wn. App.
35, 39, 856 P.2d 706 (1993)).
No. 70741-8-1/6
The purport of an agreement is disputed within the meaning of CR 2A ifthere is a
genuine dispute over the existence or material terms of the agreement. Patterson. 93
Wn. App. at 583. The party moving to enforce a settlement agreement carries the burden
of proving there is no genuine dispute as to the material terms or existence of the
agreement. Brinkerhoff v. Campbell. 99 Wn. App. 692, 696-97, 994 P.2d 911 (2000). If
the moving party meets its burden, "the nonmoving party must respond with affidavits,
declarations, or other evidence to show there is a genuine issue of material fact."
Patterson. 93 Wn. App. at 584.
We review a decision regarding the enforcement of a settlement agreement de
novo. Lavigne v. Green, 106Wn.App. 12,16, 23 P.3d 515(2001). "The trial court follows
summary judgment procedures when a moving party relies on affidavits or declarations
to show that a settlement agreement is not genuinely disputed." Condon v. Condon. 177
Wn.2d 150, 161-62, 298 P.3d 86 (2013). The trial court must view the evidence in the
light most favorable to the nonmoving party and "determine whether reasonable minds
could reach but one conclusion." Ferree. 71 Wn. App. at 44. "[I]f the nonmoving party
raises a genuine issue of material fact, a trial court abuses its discretion if it enforces the
agreement without first holding an evidentiary hearing to resolve the disputed issues of
fact." Brinkerhoff. 99 Wn. App. at 697.
We apply general principles of contract law to settlement agreements. Lavigne.
106 Wn. App. at 20. An essential element to the valid formation of a contract is the parties'
objective manifestation of mutual assent. Keystone Land &Dev. Co. v. Xerox Corp., 152
Wn.2d 171, 177, 94 P.3d 945 (2004). "The whole panoply of contract law rests on the
principle that one is bound by the contractwhich he voluntarily and knowingly signs.'" H.
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P. Fowler Co. v. Warren. 17 Wn. App. 178, 180, 562 P.2d 646 (1977) (quoting National
Bank v. Eguitv Investors. 81 Wn.2d 886, 912-13, 506 P.2d 20 (1973)). Thus, where a
party has signed a contract, he or she is presumed to have objectively manifested assent
to its contents. See Skagit State Bank v. Rasmussen. 109 Wn.2d 377, 381-84, 745 P.2d
37 (1987); Tiart v. Smith Barney. Inc.. 107 Wn. App. 885, 897, 28 P.3d 823 (2001).
However, that rule will not apply where another contracting party committed fraud, deceit,
misrepresentation, coercion, or other wrongful acts. See Yakima Cnty. (W. Valley) Fire
Prot. Dist. No. 12 v. City of Yakima. 122 Wn.2d 371, 389, 858 P.2d 245 (1993) (citing
Skagit State Bank. 109 Wn.2d at 381-84); Tiart. 107 Wn. App. at 897.
Here, the plaintiffs submitted evidence that, when viewed in the light most
favorable to the plaintiffs, tends to establish that Chavez and Jacobson committed such
wrongful acts. In Cruz's declaration, Cruz stated that Chavez had contacted him directly,
encouraging him to settle his claims without the assistance of counsel. Chavez proposed
that in exchange for a money settlement, Cruz would sign a document "that would come
from his attorney," which would end their dispute.5
According to Cruz's declaration, Chavez told Cruz that Jacobson said if they
settled, Cruz would no longer need to contact his attorney, and that, in fact, Cruz should
not contact his attorney. Alarmed by this contact, Cruz notified Frawley, who, in turn,
notified Jacobson that this contact was inappropriate. However, as Cruz stated, Chavez
approached Ramirez with the same proposal he had made to Cruz. Ramirez informed
Cruz that Chavez approached Ramirez outside of Frawley's presence and communicated
to Ramirez the same instructions that he had given Cruz: that, according to Jacobson, if
5 CP at 260.
No. 70741-8-1/8
they settled, there would be no need for Ramirez to contact his attorney. After Ramirez
signed the settlement, he ceased contact with the remaining plaintiffs and Frawley.
Through the advice of Jacobson, Chavez urged Ramirez to sign a contract without
the assistance of counsel, and, in what may have appeared as benign advice, falsely
informed him that Frawley's involvement was no longer needed. Viewing Cruz's
declaration in the light most favorable to the plaintiffs, we hold that the plaintiffs
demonstrated the presence of a genuine issue of material fact as to whether Chavez
committed deceptive, coercive, or otherwise wrongful acts in inducing Ramirez's assent
to be bound by the agreement.
Indeed, the evidence shows that Jacobson's acts may have been contrary to RPC
4.2.6 RPC 4.2 forbids an attorney from communicating directly with a represented party.
The purpose of the rule "is to prevent situations in which a represented party is taken
advantage of by adverse counsel." In re Disciplinary Proceeding Against Carmick. 146
Wn.2d 582, 597, 48 P.3d 311 (2002). Comment 4 to RPC 4.2 states, in pertinent part,
that "[a] lawyer may not make a communication prohibited by this Rule through the acts
of another." The evidence shows that Jacobson may have made prohibited
communication by providing Chavez the release paperwork and instructing Chavez to
contact Ramirez directly in an effort to obtain a settlement without the involvement of
Ramirez's counsel.
RPC 4.2 provides:
In representing a client, a lawyer shall not communicate about the subject
ofthe representation with a person the lawyer knows to be represented by another
lawyer in the matter, unless the lawyer has the consent of the other lawyer or is
authorized to do so by law or a court order.
8
No. 70741-8-1/9
Because there remains a material question of fact as to the validity of Ramirez's
assent, the plaintiffs have proved that the existence of the Ramirez agreement is
genuinely disputed. We hold that the trial court did not err in declining to enforce the
agreement.7
Attorney Sanctions
Chavez appeals the trial court's imposition of sanctions against Jacobson and
Chavez for their discovery violations committed in obtaining Rios's employment records.
The trial court awarded sanctions against Chavez and Jacobson to compensate Frawley
for reasonable costs incurred in investigating the discovery violations and bringing the
matters before the trial court. Chavez makes no contention that the trial court abused its
discretion or that the sanctions were excessive. Instead, it appears that he argues that
the trial court erred by imposing sanctions because a settlement agreement between Rios
and Chavez purportedly relieved Chavez of this responsibility.8
According to a settlement agreement with Rios, Rios agreed to execute a
"[gjeneral [rjelease of all claims in existence on this day this agreement is executed,
including claims for prevailing party counsel fees and for the benefit of all defendants."9
Chavez argues that this language released Chavez and Jacobson from liability for the
7Chavez additionally contends that he was deprived of "a full CR 56(c) 28-day notice" when the
trial court ruled on the enforceability of the settlement agreement only after a five-day hearing
notice. Br. of Appellant at 29. But Chavez scheduled the hearing to take place within two weeks
of filing his motion. On June 11, 2013, Chavez filed the motion to enforce the Ramirez settlement
and scheduled the motion hearing to take place on June 25, 2013. Chavez cannot now argue
that he was deprived of adequate notice. Moreover, Chavez cites to no relevant legal authority
to support his argument that CR 56(c) procedures apply to a motion to enforce a settlement
agreement. His claim is unavailing.
8Chavez raised this argument for the first time to the trial court in his motion for reconsideration.
9 CP at 86.
9
No. 70741-8-1/10
discovery violations for which they were sanctioned. But Chavez has cited to no relevant
legal authority to support this argument.
A trial court has broad discretion when imposing discovery sanctions pursuant to
CR 26(g). Mayer v. Sto Indus.. Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006). A
reviewing court will find that the trial court abused its discretion if a trial court's findings
are not clearly supported by the record. Magana v. Hyundai Motor Am.. 167 Wn.2d 570,
583, 220 P.3d 191 (2009). Here, the trial court's findings are supported by the record.
The evidence demonstrates that on numerous occasions, Jacobson falsely represented
to McLaughlin that he was the attorney representing Rios. The trial court appears to have
found that Jacobson's misrepresentation constituted a violation of CR 26(g).10
The evidence also shows that Jacobson failed to give notice to the plaintiffs of the
discovery requests served on McLaughlin to depose and subpoena, in violation of CR
30(b)(1)11 and CR 45(b)(2).12
The trial court did not abuse its discretion in imposing sanctions for Jacobson's
discovery violations.
Attorney Fees on Appeal
The plaintiffs request reasonable attorney fees on appeal for the expense incurred
in responding to the issue of discovery sanctions. Because the plaintiffs are entitled to
reasonable attorney fees under RAP 18.1(a) and CR 26(g), we grant their request.
10 Pursuant to CR 26(g), discovery requests made by a represented party must be signed by at
least one attorney of record. The attorney's signature "constitutes a certification that he has read
the request."
11 CR 30(b)(1) requires that a party seeking to depose a person give reasonable notice in writing
to all other parties to the action.
12 Pursuant to CR 45(b)(2), "A subpoena commanding production of documents and things . . .
shall be served on each party in the manner prescribed by rule 5(b)."
10
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Under RAP 18.1(a), this court may grant attorney fees if applicable law permits the
right to such recovery. In Washington Motorsports Ltd. Partnership v. Spokane Raceway
Park, Inc., 168 Wn. App. 710, 719, 282 P.3d 1107 (2012), relying on the Supreme Court's
decision in Magana. 167 Wn.2d 570, we granted a request for attorney fees pursuant to
RAP 18.1(a) and CR 26(g). Accordingly, because we affirm the trial court's discovery
sanctions against Chavez and Jacobson, we find it appropriate to award attorney fees to
the plaintiffs for responding to this issue on appeal.13
Affirmed.
WE CONCUR:
fcfefcaf,
13 The plaintiffs refer to the arbitrator's award in their briefing on appeal, and the award is noted
in the supplemental clerk's papers. Chavez filed a motion to strike such references. Where a
party seeks a trial de novo following an adverse arbitration decision, "[t]he trial de novo shall be
conducted asthough no arbitration proceeding had occurred." MAR 7.2(b)(1). During the trial de
novo "[n]o reference shall be made to the arbitration award." MAR 7.2(b)(1). This appeal does
not concern review of a trial de novo. Moreover, Chavez cites to no legal authority in support of
his proposition that reference to the arbitration award is prohibited at the appellate level. We deny
Chavez's motion to strike.
11