Sacks v. Rothberg

• Decision Date: 24 January 1990
• Docket Number: No. 88-111.,88-111.
• Citation: 569 A.2d 150
• Court: D.C. Court of Appeals
• Parties: Pauline SACKS, et al., Appellants, v. Herbert ROTHBERG, Appellee.

569 A.2d 150

Pauline SACKS, et al., Appellants, v. Herbert ROTHBERG, Appellee.

No. 88-111.

District of Columbia Court of Appeals.

Argued September 21, 1989.

Decided January 24, 1990.

Joseph A. Artabane, Washington, D.C., for appellants.

Robert Plotkin, with whom Robert E. Pokusa, Washington, D.C., was on the brief, for appellee.

Before ROGERS, Chief Judge and SCHWELB and FARRELL, Associate Judges.

ROGERS, Chief Judge:

Appellant Pauline Sacks and Marvin Sacks appeal from the involuntary dismissal pursuant to Super.Ct.Civ.R. 41(b) of their lawsuit against appellee Herbert Rothberg based on a Settlement Agreement and Promissory Note. The principal issues before the trial court concerned the anniversary date of the Note and the terms for prepayment of the Note, specifically whether appellee defaulted on the Note when he paid $4,250 on April 5, 1984, instead of $6,750, and whether the $178,800 tendered by appellee in April 1987 was sufficient to prepay the remainder of the $1,560,000 Note. Appellants contend on appeal that the trial judge erred in finding that appellee had not defaulted on April 5, 1984, since the parties intended April 15 and not April 5 to be the anniversary date of the Note. They also contend that the judge erred in finding that the parties intended the phrase "with credit given" in the prepayment provisions to entitle appellee in prepaying the Note to deduct the amount of the Note payments previously made first from the amount outstanding on the Note and, again, from the resulting figure. We affirm on the anniversary date finding and reverse the prepayment credit finding and remand the case.

I

Appellants and appellee entered into a Settlement Agreement (Agreement) in satisfaction of claims appellants had against appellee. The terms of the Agreement required, inter alia, that appellee give appellants a Promissory Note (Note) calling for payment of $1,560,000 over a twenty-year period in substantially equal monthly payments. The Note provided for prepayment at substantial reductions of the face amount of the Note. One of appellant's attorneys testified at trial that at the time of the Agreement the value of the debt was $450,000.

The Agreement and Note were both signed on April 15, 1982. However, the first page of the Agreement stated that it was entered into as of April 5, 1982, and the Note bore the typed date of April 5, 1982, on the first page before the text of the Note. Several other documents in the package of documents agreed to by the parties bore different dates.¹

The Note included a schedule of payment as follows:

Upon the Closing Date and until the second anniversary date of the Note, there shall be monthly payments of $4,250 due on the fifth day of each month aggregating $51,000 per year....

From the second until the twentieth anniversary date of the Note, there shall be payments of $6,750 due on the 5th day of each month aggregating $81,000 per year....

The Note further provided for acceleration of the debt

if any payment under this Note is not paid when due and remains unpaid for seven business days, or if Borrower is in default under the terms and provisions of the Agreement, the entire amount outstanding shall at once become due and payable at the option of the Note holder.

On the 5th day of every month after April 5, 1982, through March 5, 1984, appellee paid appellants $4,250.² On or about April 5, 1984, appellant Pauline Sacks received a check from appellee for $4,250. The day after she received the check she spoke with Anthony Nuland, one of the attorneys who had represented appellee during negotiation of the Agreement and Note, and although she thought the check was for the incorrect amount, she did not so advise Mr. Nuland; nor did she advise appellee by any other means until nearly two months later. On June 2, 1984, she sent a letter notifying appellee that she was accelerating payment on the Note because of his default in failing to pay $6,750 on April 5, 1984, and demanding $850,000 plus 15% interest pursuant to the terms of the Note.³

Pending trial, appellee gave appellants, on April 3, 1987, a check for $178,800 as prepayment in satisfaction of the Note, pursuant to paragraph 5.3(e) of the Agreement which provided:

If paid in full at any time after the fourth anniversary date of the Promissory Note, and provided that all other obligations under this Settlement Agreement have been or are contemporaneously satisfied in full, the amount payable on the date of prepayment shall be 40% of the amounts outstanding under the Promissory Note, with credit given for all amounts paid by Rothberg to the date of prepayment....

Emphasis added. Appellants refused to accept the check, contending, in view of appellee's default, that the amount was insufficient to satisfy the full prepayment amount, which they maintained was $496,800.⁴ Appellee thereafter placed the $178,800 into a court-sanctioned escrow fund and continued to make monthly payments of $6,750 from August 5, 1984 through March 5, 1987.

At trial held October 27 through 29, 1987, Pauline Sacks testified that she intended the "anniversary date" of the Note to refer to April 5 because that was her birthday and she would receive a check on her birthday for the next twenty years. Appellants' attorneys, who had drafted the package of documents in connection with the Agreement, testified that they had advised their clients against using the phrase "with credit given" in Section 5.3(e) of the Agreement, but that Pauline Sacks had insisted on its inclusion for the sake of clarity when appellee's counsel had raised a question during the all night negotiation session on April 5, 1982.

At the conclusion of appellants' case, appellee moved for a directed verdict, and the trial judge took the case under advisement. On December 3, 1987, the judge issued a memorandum and order in which he treated appellee's motion as a motion for involuntary dismissal under Super.Ct.Civ.R. 41(b), granted the motion on the grounds that appellant failed to establish a prima facie case, and requested appellee's counsel to prepare proposed findings of fact and conclusions of law. On December 17, the judge issued an Order and Opinion, adopting verbatim appellee's proposed findings of fact and conclusions of law.

II

Appellants first contend that this court should apply a strict standard of review to the trial judge's Order and Opinion because the judge adopted verbatim appellee's counsel's proposed findings. They rely on Sullivan v. Malarkey, 392 A.2d 1057 (D.C.1978), where the court stated

While our standard of review properly should be more strict when the court adopts verbatim the findings proposed by one party, see In re Las Colinas, Inc., 426 F.2d 1005, 1010 (1st Cir.1970), cert. denied, 405 U.S. 1067, 92 S.Ct. 1502, 31 L.Ed.2d 797 (1972), the essential consideration on review is whether the court's finding and conclusions ultimately represent the judge's own determinations.

Id. at 1061. See also Leftwich v. Leftwich, 442 A.2d 139, 142 (D.C.1982); Schilling v. Schwitzer-Cummins Co., 79 U.S.App.D.C. 20, 21-22, 142 F.2d 82, 83-84 (1944).⁵ Appellee responds that we should apply a clearly erroneous standard since there is no basis in the record to suggest that the trial judge did not independently review the evidence and the proposed findings. He relies on Bay General Industries, Inc. v. Johnson, 418 A.2d 1050, 1054 (D.C.1980). See D.C.Super.Ct.Civ.R. 52(a). Appellee further contends that since appellants did not object when the trial judge requested appellee to prepare proposed findings, they cannot raise this issue for the first time on appeal, citing Hill & Range Songs, Inc. v. Fred Rose Music, Inc., 570 F.2d 554, 558 (6th Cir.1978).

Difficulties arise when a judge adopts verbatim a party's proposed findings and conclusions on a record bereft of any indication either that the judge has previously ruled orally on each and every finding and conclusion that appears in the final order or that the judge, having reviewed the proposed findings and conclusions, concluded that a better document could not have been prepared. As pointed out in In re Las Colinas, Inc., supra,

a clash of interests must be recognized to exist between efficient administration that leads hard pressed judges to turn to counsel for help and the undeniable right of losing counsel to be assured that his or her position has been thoroughly considered. The court's findings must ultimately represent the judge's own determination.

426 F.2d at 1008-09 (citations omitted). While this does not mean that the clearly erroneous standard is eliminated when the trial judge adopts findings and conclusions prepared by a party,⁶ absent the "badge of personal analysis," more careful review by the appellate court is necessitated, albeit in a narrow range of doubtful cases, if the court is to be certain that important evidence has not been overlooked or inadequately considered. Louis Dreyfus & CIE. v. Panama Canal Company, supra note 5, 298 F.2d at 738-39. We are mindful of the exceptional caseload under which the trial judges labor; we take this occasion only to remind them of the difficulty which verbatim adoption of proposed findings creates for our statutory obligation to defer to factual findings of the trial court.

The trial in the instant case lasted three days. When the judge issued a Memorandum and Order on December 3, 1987, granting the motion for involuntary dismissal, and asked appellee to submit proposed findings and conclusions, he had already decided the final outcome of the case. In that Order the judge stated that he had taken the motion under advisement so as to have a transcript available. The judge's questions during the trial and his discussions with counsel during argument on appellee's motion to dismiss indicate, further, that the judge closely followed the case and the arguments of counsel. However, appellants never indicated any objection to the trial judge's...