Red Arrow Ventures, Ltd. v. Miller

• Decision Date: 23 March 1998
• Docket Number: No. 46A05-9701-CV-9,46A05-9701-CV-9
• Citation: 692 N.E.2d 939
• Parties: RED ARROW VENTURES, LTD., Thomas W. Hayes, Claudia Langman, and Carol P. Eastin, Appellants-Defendants, v. Juanita Ellen MILLER f/k/a Juanita Ellen Gradowski, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 939

692 N.E.2d 939

RED ARROW VENTURES, LTD., Thomas W. Hayes, Claudia Langman, and Carol P. Eastin, Appellants-Defendants, v. Juanita Ellen MILLER f/k/a Juanita Ellen Gradowski,

Appellee-Plaintiff.

No. 46A05-9701-CV-9.

Court of Appeals of Indiana.

March 23, 1998.

Atley C. Price, Braje & Nelson, Michigan City, for Appellants-Defendants.

Mark A. Lienhoop, Newby, Lewis, Kaminski & Jones, LaPorte, Lee Dabagia, Sweeney, Dabagia, Donoghue, Thorne, Janes & Pagos, Michigan City, for Appellee-Plaintiff.

OPINION

BARTEAU, Judge.

Defendants Red Arrow Ventures, Ltd., Thomas Hayes, and Claudia Langman appeal the trial court's judgment that granted Plaintiff Juanita Miller's Motion to Enforce Settlement Agreement. We restate the issues that the defendants present for our review:

1. Whether the trial court's judgment was supported by sufficient evidence.

2. Whether the trial court properly awarded the plaintiff attorney fees.

3. Whether the trial court erred when, during the Motion to Enforce Settlement Agreement hearing, it refused to disqualify plaintiff's counsel from representing the plaintiff.

Affirmed in part and reversed in part.

FACTS ¹

The facts most favorable to the judgment follow. On June 5, 1992, Miller filed a complaint against the defendants. The complaint alleged that the defendants had breached their promise to make payments on a promissory note which they had executed in favor of Miller. On December 23, 1992, the defendants filed an answer to Miller's complaint. The answer denied most of the complaint's allegations and also asserted a counterclaim against Miller.

On December 17, 1993, the trial court ordered that the parties participate in mediation. On September 21, 1994, a mediation session was held, but it did not produce a settlement of the parties' dispute. The parties then proceeded to litigate their dispute in a bench trial. The trial lasted three days and occurred in May of 1996. At the end of the trial, the judge informed the parties that, although he would be ruling against the defendants, he had not yet determined what amount of damages would be awarded to Miller.

About an hour after the trial had concluded, the defendants' attorney, Steven Ruffalo, met with Miller's attorney, Lee Dabagia, at the latter's office. The two attorneys discussed whether a settlement might be reached between the parties. Suggesting an amount of money that the plaintiff might be willing to accept from the defendants in settlement, Dabagia "tendered a figure" to Ruffalo. R. 1641. In response, Ruffalo suggested that he might be able to convince the defendants to settle for the tendered amount.

Later that day, Ruffalo discussed Dabagia's tendered amount with the defendants. Ruffalo then informed Dabagia, by telephone, that the tendered amount was not satisfactory to Defendant Langman.

Two days later, the attorneys again spoke with each other by telephone. During their conversation, Dabagia told Ruffalo that Miller would accept $21,000 in settlement. Ruffalo responded that the defendants were satisfied with the $21,000 amount. Ruffalo then faxed Dabagia a letter, dated May 17, 1996, which stated, in relevant part:

Dear Lee:

As we discussed today, the parties have agreed to settle their dispute for a lump sum payment of $21,000 from Claudia Langman and Tom Hayes to Juanita Gradowski/Miller.

Tom and Claudia will be talking with a banker on Monday, in connection with obtaining a loan to make the payment. I will call you Monday to give you a status report on the loan. Since the money will be by means of the bank financing, my clients anticipate that it will take thirty (30) to sixty (60) days for the loan to be processed and funded.

R. 1742. In reply, Dabagia, on May 20, 1996, faxed and mailed to Ruffalo a letter which stated, in relevant part:

Dear Steve:

I acknowledge receipt of your letter facsimile transmission dated May 17, 1996, confirming that the parties ... have agreed to settle all disputes for a lump sum payment of $21,000.00 from Claudia As further agreed, payment of the agreed settlement by your clients will be made no later than July 17, 1996.

Langman and Tom Hayes to Juanita Gradowski-Miller.

R. 1744. After this letter was sent, Ruffalo asked Dabagia to tell the trial judge that a settlement had been reached and that judgment should not be entered. Then, on June 4, 1996, Ruffalo sent Dabagia a letter which stated, in relevant part:

Dear Lee:

Please let this letter confirm that the terms of the parties' agreement are accurately set forth in your letter of May 20, 1996. I trust that you have contacted [the trial judge] to advise him of our accord so as to insure that no judgment is entered in connection with this matter.

....

[P]lease forward to me the appropriate Stipulation to Dismiss so that I can obtain my client's signature and forward the Stipulation together with payment on to you in due course.

R. 1746. Dabagia subsequently prepared a stipulation to dismiss and sent six copies of it, along with a letter dated June 5, 1996, to Ruffalo.

Between July 16 and July 18 of 1996, Dabagia telephoned Ruffalo, inquiring into the status of the settlement. Ruffalo said that he was preparing a mutual release agreement, and he faxed it to Dabagia soon after their telephone conversation. Dabagia then faxed Ruffalo a letter which expressed Dabagia's satisfaction with the mutual release agreement and requested that Ruffalo send Dabagia "the settlement check together with [the defendants'] signatures on the Release and Stipulations of Dismissal...." R. 1759.

After this, Dabagia attempted, without success, to contact Ruffalo during the next few days. Dabagia finally spoke with Ruffalo around July 30, 1996. At that time, Ruffalo told Dabagia that the defendants "didn't want to pay the settlement[.]" R. 1644. Dabagia then filed, on Miller's behalf, a Motion to Enforce Settlement Agreement. A hearing on this motion was held on August 30, 1996, and September 16, 1996. At the end of the hearing, the trial court granted the Motion to Enforce Settlement Agreement and issued a written judgment which stated, in relevant part:

Having heard testimony of the witnesses, examined all admitted exhibits and after consideration of oral argument made by counsel, the Court now finds that the Plaintiff's Motion to Enforce Settlement Agreement should be granted and that Plaintiff should further be awarded attorney fees in the sum of ONE THOUSAND DOLLARS....

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED, that the Motion to Enforce Settlement Agreement filed by Plaintiff ... is hereby granted and judgment is now entered against the Defendants ... in the sum of TWENTY-ONE THOUSAND DOLLARS ... together with interest from this date forward....

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that all other claims, counter-claims and cross-claims made and pending in this action are hereby dismissed, said judgment enforcing the Settlement Agreement and awarding attorney fees representing a final judgment among the parties on all issues herein.

R. 249.

THE ENFORCEABILITY OF SETTLEMENT AGREEMENTS IN INDIANA

I.

According to the defendants, the evidence does not support a finding that the parties' attorneys arrived at a settlement agreement. We will address this argument in Section IV.

The defendants also argue that any settlement agreement which might have existed between the parties' attorneys is not enforceable because it was not consented to by the defendants. In their appellate brief, the defendants support their argument with the authority of Klebes v. Forest Lake Corp., 607 N.E.2d 978 (Ind.Ct.App.1993), trans. denied and Gravens v. Auto-Owners Ins. Co., 666 N.E.2d 964 (Ind.Ct.App.1996), trans. denied. The defendants seem to cite these cases for

the following proposition: a settlement agreement into which an attorney enters is not enforceable against his client who has not consented to be bound by it. The defendants imply that Klebes and Gravens require us to resolve this appeal by determining whether they indeed consented to be bound by the settlement agreement.

II.

Klebes and Gravens seem to be at variance with the rule--previously established and long held by Indiana courts--that a settlement agreement into which an attorney enters may be enforced against his client who has not consented to be bound by it. The state of the law before Klebes and Gravens, and the state of the law since these cases, have been well explained by Judge Robert Miller in Koval v. Simon-Telelect, Inc.:

Indiana law views an attorney as a powerful agent. An attorney has apparent authority to dismiss a case, to allow judgment against the client, and to do all things ordinarily done with respect to the litigation for which the attorney was hired.

At least until September 1996, the law of Indiana with respect to the authority a party grants its attorney through the retention agreement remained as set forth years ago; with the probable exception of the need to modify pronouns to reflect today's profession, that statement of Indiana law remained unchanged by later decisions:

The attorney for the plaintiff was in court, objecting to the proposed dismissal. His authority is not only presumed, but conclusively established by written contracts of employment.... "In the general management of a suit the attorney has a very extensive authority. * * * The conduct of a suit except in a matter arising in the argument or hearing before the court is exclusively under the control of the attorney of record in it." The authority which an attorney exercises under a general retainer is not the subject of uncertainty. "He is more than the mere agent as to the business committed to his care. He is the sole manager."

Miedreich v. Rank, 40 Ind.App. 393, [396-97,] 82 N.E. 117, 118 (1907) (citations omitted); accord, Thompson v. Pershing, 86 Ind. 303[, 310] (1882) ("The allegation in the complaint, that the attorney of the appellant had [no] authority to make the...