Read v. Baker

• Decision Date: 12 September 1977
• Docket Number: Civ. A. No. 4580.
• Citation: 438 F. Supp. 732
• Parties: Walter A. READ, Plaintiff, v. George P. BAKER et al., Defendants.
• Court: U.S. District Court — District of Delaware

438 F. Supp. 732

Walter A. READ, Plaintiff, v. George P. BAKER et al., Defendants.

Civ. A. No. 4580.

United States District Court, D. Delaware, Wilmington.

September 12, 1977.

COPYRIGHT MATERIAL OMITTED

John B. Kennedy of Kennedy & Kennedy, Wilmington, Del., for plaintiff.

Robert K. Payson of Potter, Anderson & Corroon, Wilmington, Del., for defendants.

LATCHUM, Chief Judge.

This civil action, seeking damages for alleged wrongful discharge, libel and slander, has been pending in this Court since February 8, 1973. The plaintiff has been represented during the course of this litigation by four different attorneys. After considering defendants' motion for summary judgment, the Court, on March 25, 1977, dismissed or granted judgment in favor of the defendants on plaintiff's claim for wrongful discharge, on his claim based on the publication of allegedly slanderous and libelous statements made during the course of a 1971 judicial proceeding in the United States District Court for the Eastern District of Pennsylvania and on his claims based on the publication of allegedly slanderous or libelous statements made prior to February 8, 1971. Read v. Baker, et al., 430 F.Supp. 472, 477-78 (D.Del.1977).

A pre-trial stipulation was approved at a pre-trial conference on April 4, 1977, and a jury trial was scheduled, on the issues outlined by the Court, 430 F.Supp. at 478, to commence on June 13, 1977. (Docket Items 43 & 44). Although the parties had submitted proposed jury instructions, counsel for the parties advised the Court on June 1, 1977, that they had agreed upon a compromise and settlement and that trial was unnecessary. Whereupon the jury trial was cancelled and counsel were advised to consummate the agreement of settlement promptly.

On August 22, 1977, plaintiff's present attorney filed his notice of appearance (Docket Item 51) and advised the Court that he was in no position to proceed to trial. Defendants' counsel advised the Court that the defendants intended to move in these proceedings for specific performance of the compromise and settlement agreement.

On August 25, 1977, defendants filed an equitable "counterclaim" alleging that although the case had been compromised and settled, the plaintiff had refused to consummate the settlement agreement and therefore the defendants seek specific performance of the agreement. (Docket Item 52). On September 2, the plaintiff answered the counterclaim, generally denying that a settlement had been reached and pleaded four affirmative defenses, viz.: (1) the counterclaim failed to state a cause of action against plaintiff, (2) the defendants failed to comply with Rule 15(a), F.R.Civ.P., in that they did not seek leave of Court to amend their original answer,¹ (3) plaintiff's attorney had no authority to effect a settlement, and (4) defendants have an adequate remedy at law by an independent action for alleged breach of contract. (Docket Item 53).

Having heard arguments of counsel on the validity of the affirmative defenses, this is the Court's memorandum opinion ruling on those matters.

The equitable counterclaim here asserted alleges (1) that the defendants' agent made an offer on June 1, 1977, to plaintiff's then attorney of record to compromise and settle plaintiff's claims in this litigation for the sum of $1,250., (2) that on the same date plaintiff's then attorney with the express authority of the plaintiff accepted said offer of the defendants, (3) that plaintiff has refused the tender of the sum of $1,250 and has otherwise failed to perform the agreement, (4) that unless plaintiff is required to specifically perform the settlement agreement, defendants will suffer irreparable harm for which there is no adequate remedy at law.

1. First Affirmative Defense.

Plaintiff's first affirmative defense, that the equitable counterclaim fails to state a claim upon which relief may be granted, is without merit. Accepting the truth of the allegations of the counterclaim, which the Court is bound to do at this stage of the proceedings, it is clear that the pleading alleges the essentials of a compromise, an agreement to terminate, by mutual concessions, a claim which is unliquidated. The pleading contains the offer, the acceptance and consideration; these allegations are sufficient under Rule 8(a), F.R.Civ.P. because they give a short, plain statement of the terms of the oral contract which contains the elements of a binding agreement. Furthermore, the pleading alleges that the compromise was entered into by plaintiff's then attorney of record who had express authority from the plaintiff to settle the case. Under Delaware law, an attorney of record in a pending action who agrees to a compromise of a case is presumed to have lawful authority to make such an agreement and the client bears the burden of rebutting that presumption. Aiken v. National Fire Safety Counsellors, 36 Del.Ch. 136, 127 A.2d 473, 475 (1956); Strattner v. Wilmington City Electric Co., 3 Pennewill 453, 53 A. 436, 437 (Del.Super.1901).

2. Second Affirmative Defense.

Plaintiff in the second affirmative defense contends that the defendants in filing the counterclaim failed to comply with Rule 15(a), F.R.Civ.P. in that they did not seek leave of court to file an amended answer. There is likewise no merit to this defense.

Compromises and settlements are a judicially favored manner for terminating litigation. Petty v. General Accident Fire & Life Assurance Co., 365 F.2d 419, 421 (C.A. 3, 1966); Rome v. Archer, 41 Del.Ch. 404, 197 A.2d 49, 53 (1964); J. W. P. v. R. E. P., 301 A.2d 318, 320 (Del.Ch.1973); Steigman v. Beery, 203 A.2d 463, 464 (Del.Ch.1964). Moreover, "an agreement to settle a lawsuit, voluntarily entered into, is binding upon the parties, whether or not made in the presence of the court, and even in the absence of a writing." Green v. John H. Lewis & Co., 436 F.2d 389, 390 (C.A. 3, 1970); Good v. Pennsylvania R. R. Co., 384 F.2d 989, 990 (C.A. 3, 1967). Such a settlement is enforceable summarily, upon motion, by a district court in a case pending before it. Berger v. Grace Line, Inc., 343 F.Supp. 755, 756 (E.D.Pa.1972), aff'd 474 F.2d 1339 (C.A. 3, 1973); Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1372 (C.A. 6, 1976); Meeting & Expositions, Inc. v. Tandy Corp., 490 F.2d 714, 717 (C.A. 2, 1974); McKenzie v. Boorhem, 117 F.Supp. 433, 435 (W.D.Ark.1954); Beirne v. Fitch Sanitarium, 167 F.Supp. 652, 655 (S.D.N.Y.1958). The power of a trial court to enter a judgment enforcing a settlement agreement in a case pending before it has its basis in the policy favoring the settlement of disputes and the avoidance of costly and time-consuming litigation. Autera v. Robinson, 136 U.S.App.D.C. 216, 219, 419 F.2d 1197, 1200 (1969). The power to enforce a pre-trial settlement agreement, upon motion or petition, does not rest directly on the federal rules of procedure, but rests upon the authority of the Court to enter judgment by consent, All States Investors Inc. v. Bankers Bond Co., 343 F.2d 618, 625 (C.A. 6, 1965), on what has consistently been recognized as the trial court's inherent power to summarily enforce settlement agreements entered into by the parties' litigant in a pending case. Kukla v. National Distillers Products Co., 483 F.2d 619, 621 (C.A. 6, 1973).

While the defendants have called their last filed pleading a "counterclaim" that is not determinative of whether defendants must obtain leave of court to file it. What is determinative is the effect of the pleading. It is perfectly proper in a situation such as this for a party by motion or petition to move to enforce in equity a compromise agreement in an action pending before the court. Berger v. Grace Line, Inc., supra. Such a motion or petition does not require approval of the court before filing. Thus, the Court is free to treat defendants' counterclaim as a motion or petition to enforce in equity the alleged compromise agreement. The Court is entitled to so consider the filed counterclaim as a part of this Court's inherent power to enforce compromise settlements, voluntarily entered into, in cases pending before the Court.

However, if the Court, aside from its inherent power, were to consider an applicable federal procedural rule, it would appear that an equitable counterclaim could be allowed by the Court as a supplemental pleading under Rule 13(e) since the claim to be enforced accrued after defendants' answer was filed. Approval would be liberally granted in order to advance the overriding interest in terminating litigation through compromise settlements. Accordingly, the second defense will be dismissed.

3. Third Affirmative Defense.

As a third affirmative defense, plaintiff claims that his former attorney had no authority to effect a settlement. This, of course, creates a dispute of fact which this Court may not resolve...