Betz v. Diamond Jim's Auto Sales

• Decision Date: 16 October 2012
• Docket Number: No. 2012AP183.,2012AP183.
• Citation: 825 N.W.2d 508,2012 WI App 131,344 Wis.2d 681
• Parties: Randy L. BETZ, Plaintiff–Appellant, v. DIAMOND JIM'S AUTO SALES, Defendant–Respondent.
• Court: Wisconsin Court of Appeals

344 Wis.2d 681

825 N.W.2d 508

2012 WI App 131

Randy L. BETZ, Plaintiff–Appellant,

v.DIAMOND JIM'S AUTO SALES, Defendant–Respondent.^†

No. 2012AP183.

Court of Appeals of Wisconsin.

Submitted on Briefs Oct. 2, 2012.

Opinion Filed Oct. 16, 2012.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Timothy J. Aiken, Vincent P. Megna and Susan M. Grzeskowiak of Aiken & Scoptur, S.C., Milwaukee.

On behalf of the defendant-respondent, the cause was submitted on the brief of Lawrence J. Drabot, Sara C. Mills and Remzy D. Bitar of Crivello Carlson, S.C., Milwaukee.

Before CURLEY, P.J., FINE and BRENNAN, JJ.

FINE, J.

[344 Wis.2d 684]¶ 1 This case comes to us because Randy L. Betz and Diamond Jim's Auto Sales settled Betz's lawsuit against Diamond Jim's without the knowledge of their respective lawyers. Betz's lawyers sought fee-shifting attorney's fees from Diamond Jim's pursuant to Wis. Stat. § 100.18(11). The trial court rejected their claim in an order dated December 8, 2011. Although designated by the circuit court as “the final order of the court for the purposes of appeal,” and the order also indicated that “no further orders are contemplated by the court,” the circuit court entered an order on January 9, 2012, dismissing Betz's claims against Diamond Jim's “on the merits with prejudice.” (Uppercasing and bolding omitted.) The notice of appeal, dated January 23, 2012, names the December 8 order. Neither party contends that we do not have jurisdiction over the circuit court's January 9, 2012, order. SeeWis. Stat. RuleE 805.18(1) (“The court shall, in every stage of an action, disregard any error or defect in the pleadings or proceedings which shall not affect the substantial rights of the adverse party.”) (made applicable to appellate proceedings by Wis. Stat. RuleE 809.84). We reverse the circuit court order dismissing Betz's claims because we conclude that the settlement agreement on which the circuit court relied was void.

I.

¶ 2 Betz bought a used car from Diamond Jim's and was unhappy. He sued Diamond Jim's and asserted the following claims: (1) advertising injury, alleged to violate Wis. Stat. § 100.18; (2) intentional fraudulent misrepresentation; (3) alleged violation of Wis. Stat. § 218.0116, which regulates the licensing of automobile dealers; and (4) punitive damages. Betz's complaint sought damages and, in connection with Diamond Jim's alleged violation of §§ 100.18 and 218.0116, the costs and attorney's fees permitted for a recovery under those sections. SeeWis. Stat. §§ 100.18(11) & 218.0163(2). Betz's complaint was filed by Aiken & Scoptur, S.C., by Vincent P. Megna, Esq., and Susan M. Grzeskowiak, Esq. The law firm of Crivello Carlson, S.C., by Lawrence J. Drabot, Esq., appeared for Diamond Jim's, answered Betz's complaint, and sought dismissal of all of Betz's claims.

¶ 3 On May 17, 2010, fewer than two months after the filing of Diamond Jim's answer, Megna sent to Drabot a “Settlement Offer.” (Uppercasing and bolding omitted.) The offer sought: “$10,750.00 in damages,” and “$5,900.00 in attorney fees and costs (made payable to Aiken & Scoptur, S.C.).” The offer was not accepted, and by letter dated September 28, 2010, Drabot told Megna that he was “authorized to extend the following settlement offer to your client”: that “Diamond Jim's will repurchase the vehicle, subject to inspection and verification of condition, for reimbursement of the purchase price less mileage (calculated at $.50 per mile),” and that “Diamond Jim's will pay $2,000 towards plaintiff's attorney's fees.” Diamond Jim's offer to settle was also not accepted.

¶ 4 Thomas Letizia, who, according to his affidavit in the Record, was, at times material to this appeal, “the general manager of Diamond Jim's Auto Sales,” circumvented Aiken & Scoptur, S.C., Megna, and Grzeskowiak, and settled the case with Betz directly. His affidavit recited that he “was one of the Diamond Jim's representatives involved in settlement discussions with Randy Betz, individually, and without the participation of counsel, in April 2011.” As material, the “Settlement Agreement and Mutual Release” (uppercasing omitted) provided:

The purpose of this Agreement is the Amicable Resolution of the Action without the need for further litigation, the relinquishment by each of the parties of any claim or cause of action arising from or relating to the issues in the Action, and the mutual release of all liability.

Therefore, in consideration of the following mutual promises and releases made by the Parties as well as other good and valuable consideration, the Parties to this Agreement agree that this Agreement is entered into as a compromise of disputed claims and does not constitute of liability [ sic ] or obligation whatsoever on behalf of any of the parties pursuant to the respective claims.

The parties agree to solve the action [ sic ] pursuant to the following specified terms:

A) James Letizia and Diamond Jim's Auto Sales agree to Pay to Randy L. Betz the sum of $15,000 paid in form of check number 7114;

B) Randy L. Betz hereby agrees that [his action against Diamond Jim's] Shall be dismissed.

(Underlining in original.) The settlement agreement was dated April 4, 2011, and was signed by Betz and Thomas Letizia. The document identified Letizia as “Authorized agent for James Letizia and Diamond Jim's Auto Sales.” According to Thomas Letizia's affidavit, James Letizia owned Diamond Jim's.

¶ 5 By letter dated April 5, 2011, Drabot told Grzeskowiak that the case had been settled: “I have been advised that the parties have reached a confidentialsettlement. I am enclosing a Stipulation to Dismiss for your review and signature.” Drabot's affidavit in the Record averred that he knew nothing about Diamond Jim's settlement discussions on April 4:

On April 4, 2011, I received a telephone call from one of plaintiff's attorneys, Susan Grzeskowiak, advising that Randy Betz and Thomas Letizia, individually, had been involved in settlement discussions.

I was not involved in, nor was I aware of settlement negotiations between the parties prior to the notice from Susan Grzeskowiak, and I was not aware of or involved negotiations [ sic ] between the parties that resulted in settlement between them.

On or about April 5, 2011, I was advised that a settlement had been reached between Diamond Jim's and Randy Betz.

On April 5, 2011, I advised Mr. Betz's attorney of the settlement agreement.

(Paragraph numbering omitted.)

¶ 6 Needless to say, Betz's lawyers were dismayed, and they sought a rainbow of relief from the circuit court: attorney fees from Diamond Jim's under Wis. Stat. § 100.18, disclosure of what Drabot referred to as the “confidential settlement agreement,” and leave to amend Betz's complaint as an “intervening plaintiff” asserting a claim for an intentional interference with their contractual relationship with Betz.¹ Although initially refusing to reveal the “settlement agreement,” Drabot complied with the circuit court's direction to disclose it. Diamond Jim's sought to reform the “settlement agreement” if the circuit court ruled that it did not relieve Diamond Jim's of statutory obligations to pay Betz's attorney fees. The circuit court ruled that the agreement was a valid “unambiguous, binding contract” that released Diamond Jim's of any further obligation in connection with Betz's claims, and denied all the motions. As we have seen, the circuit court also dismissed Betz's lawsuit against Diamond Jim's.

¶ 7 Before this case started, Betz hired Megna to vindicate what he asserted was Diamond Jim's fast and loose dealing in connection with the car he bought from the dealer.² The retention agreement is dated February 12, 2010, and, as material, recites the following from Betz's viewpoint:

• “I understand that I do not have to pay any attorney fees unless my attorneys recover money for me in this case.”

• “I understand that Sec. 100.18, Wis. Stats., ____ is a fee shifting statute. This means if I win at trial or settle my case during litigation, the defendant is usually responsible for paying my attorney fees based on my attorney's hourly rate. I understand that the Law Offices of Vince Megna is accepting my case with the agreement that it will look to the defendant for payment of attorney fees pursuant to the fee shifting provision once a lawsuit has been filed.”

• “In addition to all other fees paid to the Law Offices of Vince Megna by the other side, I agree to pay the Law Offices of Vince Megna 40% of any punitive damages recovered, whether through settlement or judgment.” (Bolding omitted.)

• If a settlement is reached prior to a lawsuit being filed in my case, I understand that the defendant may not be responsible for payment of my attorney fees. In this event, the Law Offices of Vince Megna agrees to charge a flat rate attorney fee in the amount of ____.”

• “I understand that the Law Offices of Vince Megna will need to pay costs and expenses. In the event my case is lost through no fault of my own, I understand that the Law Offices [of] Vince Megna will not bring a claim against me for these costs and expenses.”

• “I understand that my attorney has the right to ‘terminate’ me as a client. The Law Offices of Vince Megna will be entitled to fees for the work done at its hourly rate and its costs, not to exceed 33 1/3% of my gross recovery.”

• “I understand that I have a right to terminate my attorneys. However, if I do so, I will be responsible for the Law Offices of Vince Megna fees and costs due on the date of termination, not to exceed 33 1/3% of my gross recovery.”

(All blank lines in original.)

II.

¶ 8 As the circuit court recognized, settlement agreements are contracts. American Nat'l Property and Cas. Co. v. Nersesian, 2004 WI App 215, ¶ 14, 277 Wis.2d 430, 440, 689 N.W.2d 922, 927. Unless ambiguous, they are enforced as they are written. Woodward Communications, Inc. v. Shockley Communications Corp., 2001 WI App 30, ¶ 9, 240...