Henry v. Merrill Lynch

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
2-22-2006
Henry v. Merrill Lynch
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-1241
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"Henry v. Merrill Lynch" (2006). 2006 Decisions. Paper 1554.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 05-1241
ROBINSON K. HENRY,
Appellant
v.
MERRILL LYNCH
On Appeal From the United States District Court
For the District of New Jersey
(Civ. No. 00-cv-3688)
District Judge: Honorable Joseph A. Greenaway, Jr.
Submitted Under Third Circuit LAR 34.1(a)
JANUARY 25, 2006
Before: ROTH, RENDELL AND AMBRO, Circuit Judges
(Filed February 22, 2006)
OPINION
_______________________
PER CURIAM
Robinson K. Henry filed this employment discrimination action in the Superior
Court of New Jersey in March 2000, against his former employer, Merrill Lynch & Co.,
Inc. (“Merrill Lynch”). Merrill Lynch removed the case to the District Court, where two
settlement conferences were conducted on February 20, 2002, and March 8, 2002. On
March 13, 2002, the District Court entered a settlement order dismissing the case. On
August 1, 2003, Jay Wegodsky, Henry’s attorney throughout the settlement negotiations,
wrote to inform the District Court that Henry had not signed the settlement agreement and
to request a status conference. The docket report indicates that a status conference was
held on September 30, 2003, but that no further activity took place until August 19, 2004,
when Merrill Lynch filed a motion to enforce the settlement agreement. In response,
Henry wrote to the District Court on September 9, 2004, opposing the enforcement
motion and asserting that no agreement existed because he had neither consented to the
terms of the proposed settlement nor authorized Wegodsky to settle on his behalf.1
Without holding a hearing, the District Court granted Merrill Lynch’s motion to compel
enforcement in an order entered December 13, 2004, and ordered Henry to execute the
settlement agreement and general release. Henry appeals from this order, proceeding pro
se.
The District Court had jurisdiction based on the parties’ diversity of citizenship
under 28 U.S.C. § 1332. We have appellate jurisdiction under 28 U.S.C. § 1291. We
review the District Court’s summary enforcement of the settlement agreement using the
same plenary standard for reviewing a grant of summary judgment. See Tiernan v.
1
This letter was not docketed, but copies were apparently sent to both Merrill
Lynch and Wegodsky. See Appellee’s Appendix at A-22.
2
Devoe, 923 F.2d 1024, 1031-32 & n.5 (3d Cir. 1991). Under that standard, we treat
Henry’s assertions before the District Court as true and will affirm the District Court’s
judgment only if the record shows that Merrill Lynch is entitled to enforcement as a
matter of law. See id.
The key issue in this case is whether a settlement agreement exists. We apply New
Jersey contract law in our review, see Edwards v. Born, Inc., 792 F.2d 387, 389 (3d Cir.
1986), noting that the fact that the parties have not executed a written agreement does not
resolve this issue. See Pascarella v. Bruck, 462 A.2d 186, 191 (N.J. Super. Ct. App. Div.
1983). We also observe that the burden of proving the existence of the settlement
agreement lies with Merrill Lynch. See Amatuzzo v. Kozmiuk, 703 A.2d 9, 12 (N.J.
Super. Ct. App. Div. 1997).
Henry argues that he did not consent to or authorize a settlement, either orally or in
writing, and that, therefore, no agreement exists. In his letter motion opposing
enforcement, Henry claimed that there was no “duly negotiated settlement agreement,”
and that Wegodsky’s contrary assertion was “either inaccurate or must have occurred
without my knowledge, consent, and/or authorization.” See Appellee’s Appendix at A-
22. On appeal, Henry claims that the discussions of settlement terms occurred between
the attorneys with the involvement of the District Judge, but without Henry’s participation
or assent, and that if the judge was told that he agreed to the settlement offer, that this was
3
a misrepresentation.2
Merrill Lynch argues that an agreement exists by virtue of Wegodsky’s authority to
settle on Henry’s behalf, and that Henry is now merely attempting to change his mind
about the terms of the settlement he previously agreed to. Both the District Court’s
original settlement order and subsequent enforcement order implicitly acknowledge the
existence of an agreement. In the settlement order, the court stated that “it has been
reported to the Court that the above-captioned matter has been settled.” See Henry v.
Merrill Lynch, Civ. No. 00-cv-03688 (order entered on March 13, 2002). In the
enforcement order, the court noted, without elaboration, that “it appear[ed] that Plaintiff
agreed to execute the confidential settlement agreement and general release.” See id.
(order entered on Dec. 13, 2004).
The general rule under New Jersey law is that the consent of the client is necessary
to settle the case unless the client specifically authorizes an attorney to settle. See
Amatuzzo, 703 A.2d at 12. An attorney may settle a lawsuit on behalf of a client if the
attorney has either actual authority (express or implied) or apparent authority. Newark
Branch, NAACP v. Township of West Orange, N.J., 786 F. Supp. 408, 423 (D.N.J. 1992);
United States Plywood Corp. v. Neidlinger, 194 A.2d 730, 734 (N.J. 1963) (per curiam).
2
Henry raises several new arguments in his appellate brief and attempts to support
these arguments with various exhibits recounting his version of events following the
second settlement conference. We agree with Merrill Lynch that most of these exhibits
should not be considered on appeal, as they were not made part of the District Court
record. See, e.g., Fassett v. Delta Kappa Epsilon, 807 F.2d 1150, 1165 (3d Cir. 1986).
4
Merrill Lynch bears the burden of demonstrating the existence of Wegodsky’s
apparent authority. See NAACP, 786 F. Supp. at 423; Mercer v. Weyerhaeuser Co., 735,
A.2d 576, 592 (N.J. Super. Ct. 1999). Apparent authority is manifested if the client “by
words or conduct communicated to the adverse attorney, engenders a reasonable belief
that the attorney possesses authority to conclude a settlement.” Amatuzzo, 703 A.2d at
12. Merrill Lynch suggests that Wegodsky’s representation of Henry since the time the
complaint was filed shows that he possessed apparent authority. However, mere retention
of an attorney is insufficient to demonstrate apparent authority to settle. See Seacoast
Realty Co. v. West Long Branch Borough, 14 N.J. Tax 197, 203 (N.J. Tax Ct. 1994).
Merrill Lynch next asserts that Henry’s being “present in Court” demonstrates
Wegodsky’s apparent authority. Without more details, such as whether the attorneys’
discussions were held in the same room or within earshot of Henry, we cannot assess
whether Henry’s “presence in Court” constitutes a “voluntary act” required to manifest
apparent authority. See Neidlinger, 194 A.2d at 734. We note that Henry’s strenuous
assertion in his opposition letter that he had no knowledge of the specific terms of the
proposed settlement appears to contradict the implication that Henry was “present.” We
refrain from further discussion of this apparent contradiction, however, as it is not our
role to make credibility determinations or determine disputed facts. See Scully v. US
WATS, Inc., 238 F.3d 497, 506 (3d Cir. 2001); Sewak v. INS, 900 F.2d 667, 673 (3d Cir.
1990).
5
Merrill Lynch contends that its counsel negotiated with the expectation that
Wegodsky had the authority to settle. We recognize that reliance by a third party is one
essential component of apparent authority. See, e.g., Sears Mortg. Corp. v. Rose, 634
A.2d 74, 80 (N.J. 1993); Bahrle v. Exxon Corp., 652 A.2d 178, 188 (N.J. Super. Ct.
1995). That reliance must be reasonable under the circumstances, however. See Shadel
v. Shell Oil Co., 478 A.2d 1262, 1265 (N.J. Super. Ct. 1984). The record in this case
does not present a clear picture of the circumstances surrounding the settlement
negotiations and hampers any evaluation of whether Merrill Lynch’s reliance was
reasonable.
In addition to its apparent authority arguments, Merrill Lynch also appears to
suggest that Wegodsky’s August 1, 2003, letter to the District Court supports a finding of
either express or implied actual authorization to settle. The letter reads, in pertinent part:
“You may recall my representation of Plaintiff in the above captioned proceedings. The
parties had tentatively consummated a settlement in Your Honor’s presence in April,
2002.” See Appellee’s Appendix at A-7. While this language may accurately reflect
Wegodsky’s perception of what occurred at the end of the second settlement conference,
it does definitively resolve the question whether Wegodsky possessed either express or
implied authorization from Henry. Neither can this letter settle any question of apparent
authority, as it was sent by Wegodsky, not Henry, and was sent to the court, not to Merrill
Lynch’s attorney. See Amatuzzo, 703 A.2d at 12; Edwards, 792 F.2d at 390-91.
6
On the record before us, without transcripts of testimony or other documents
containing relevant facts, it is impossible to determine the existence and extent of
Wegodsky’s authority in Henry’s settlement negotiations. Considered in a light most
favorable to Henry, we hold that the record evidence is not so one-sided as to support
judgment in favor of Merrill Lynch and that an evidentiary hearing is necessary in order
to establish the relevant facts. See Amatuzzo, 703 A.2d at 11; Tiernan, 923 F.2d at 1031.
Accordingly, we will vacate the District Court’s summary enforcement order and remand
for further proceedings consistent with this opinion.
7