Court Opinion

ID: 9908044
Source: CourtListenerOpinion
Date Created: 2023-12-07 17:09:54.842135+00
Date Added: 2024-06-11T11:49:14.699399
License: Public Domain

J-A11033-23

                                   2023 PA Super 259

  JOHN G. KING                                 :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
  CHRISTOPHER P. DRISCOLL                      :
                                               :
                       Appellant               :   No. 1291 WDA 2022

                Appeal from the Order Entered October 14, 2022
               In the Court of Common Pleas of Allegheny County
                       Civil Division at No: GD 21-004533

BEFORE: BENDER, P.J.E., STABILE, J., and PELLEGRINI, J.*

OPINION BY STABILE, J.:                              FILED: DECEMBER 7, 2023

       Christopher P. Driscoll (Driscoll) appeals from the order entered in the

Court of Common Pleas of Allegheny County (trial court) granting the petition

to enforce settlement filed by Driscoll’s former business partner, John G. King

(King).    According to Driscoll, the settlement agreement was not binding

because it had been sent by his attorney to King without Driscoll’s prior

authorization.       In our initial review of the settlement order, this Court

remanded the case back to the trial court for additional findings as to whether

Driscoll in fact authorized his attorney to send the proposed agreement to

____________________________________________

* Retired Senior Judge assigned to the Superior Court.
J-A11033-23

King.1   The trial court entered new findings in response, determining that

Driscoll’s attorney indeed had such authority.       See Trial Court 1925(a)

Opinion, 9/13/2023, at pp. 4-9. As the trial court’s findings are supported by

the record, we affirm.

       The relevant facts and procedural history of the case have been

previously summarized by this Court as follows:

       Driscoll and King are each 50% owners of two LLCs that operate
       a restaurant and its building in Bellevue near Pittsburgh. When
       their business relationship soured, Driscoll wanted out of the
       business and asked King if he would be willing to buy Driscoll’s
       membership shares. As a result, both parties obtained counsel to
       negotiate the buy-out of Driscoll’s shares in March 2021. King
       hired Attorney David Fuchs and Driscoll hired Attorney Daniel
       Conlon. The two attorneys began negotiations in March 2021 but
       were unable to reach an agreement. The negotiations resumed
       several weeks later in May 2021.          During this round of
       negotiations, Attorney Conlon emailed Attorney Fuchs a term
       sheet summarizing their negotiations and asked, “if we are in
       agreement on all terms.” Attorney Fuchs responded by adding
       handwritten notes to the term sheet, and Attorney Conlon
       incorporated those notes into another draft that he sent to
       Attorney Fuchs a few days later. Attorney Fuchs emailed him back
       with a “redlined” copy of the agreement “with mostly clarifications
       and a few details.” The next day, which was May 20, 2021,
       Attorney Conlon replied that he accepted most of the changes and
       had “sent the agreement to Driscoll for his review,” while also
       highlighting those changes in the draft that he did not accept.
       Attorney Fuchs responded that same day: “Client has approved
       your redline. Please get your client’s signature and send me a
       clean copy for my client to sign.”

____________________________________________

1 This Court explained in King v. Driscoll, 296 A.3d 1178, 1186 (Pa. Super.

2023), that it could not adjudicate the validity of the settlement agreement
until the trial court first made findings of fact as to Driscoll’s authorization.

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     Attorney Fuchs believed that they had an agreement but when
     Attorney Conlon did not send him back a clean copy for King to
     sign, Attorney Fuchs followed up with another email asking him to
     send a “clean version so we can get this done.” Again, however,
     there was no response. Finally, when Attorney Fuchs tried again
     a few weeks later, Attorney Conlon emailed him a letter in which
     he asserted that “the parties have neither negotiated nor reached
     a settlement agreement.” Attorney Conlon emphasized that he
     never represented that they had reached a settlement agreement,
     noting that in his last email, he wrote that he was sending the
     agreement to Driscoll for his review. Attorney Conlon also claimed
     that during a May 21st phone call, he told Attorney Fuchs that
     Driscoll needed a copy of the restaurant’s RRF application before
     he would sign off on the agreement.

     On June 16, 2021, King filed a petition to enforce settlement
     alleging that the parties, through their attorneys, had reached an
     agreement on all material terms despite never signing the
     agreement. Because Driscoll disputed that an agreement was
     reached, the trial court held an evidentiary hearing. At the
     hearing, Attorney Conlon testified that he negotiated the
     agreement on behalf of Driscoll but never had his express
     authority to agree to the terms of the agreement without Driscoll’s
     final approval. Attorney Conlon also claimed throughout his
     testimony that Driscoll would not sign a final agreement unless he
     first obtained the restaurant’s RRF application. Driscoll reiterated
     the same as he continually claimed throughout his testimony that
     Attorney Conlon could not finalize the agreement unless he
     obtained the RRF application that King submitted on the
     restaurant’s behalf to the Small Business Administration.

     Disputing that the RRF application was ever an integral part of the
     negotiations, King emphasized that neither the term sheet nor the
     draft agreements contained any mention about the application
     being an essential term of the agreement. On top of that, King
     called an accountant as a witness to show that the funds received
     from the SBA – $370,000 – had to be used for operating expenses
     and could not be used to pay Driscoll. Consequently, King
     characterized Driscoll’s claim concerning the RRF application as a
     misleading, after-the-fact excuse for getting the agreement that
     he and Driscoll reached through their attorneys’ extensive
     negotiations and exchange of term sheets and draft agreements.
     On July 21, 2022, the trial court granted King’s petition to enforce
     settlement.     In its two-page memorandum explaining its

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      reasoning, the trial court did not address whether Attorney Conlon
      had Driscoll’s express authority to finalize the agreement without
      first obtaining the RRF application.       Rather, the trial court
      concluded that, even though the agreement was never signed,
      “[t]he accepted redline version in conjunction with the term sheet
      establish[ed] the essential terms of the parties’ agreement.”

      Following the trial court’s decision, Driscoll timely moved for post-
      trial relief under Pa.R.Civ.P. 227.1. King responded by reasserting
      his arguments at trial but did not otherwise contend that Driscoll’s
      filing was improper. After the motion was denied, Driscoll filed
      this appeal.
                                      ****

      On appeal, Driscoll raises two main arguments for why the trial
      court erred in concluding that the parties reached an agreement.
      First, he disputes that the attorneys’ negotiations resulted in a
      binding, enforceable agreement. In particular, he focuses on the
      May 20th email that Attorney Conlon sent to Attorney Fuchs in
      response to the “redlined” draft of the agreement. In that email,
      Attorney Conlon wrote that he accepted most of Attorney Fuchs’s
      changes and that he was sending the agreement to Driscoll for his
      review. Attorney Conlon, however, did not accept all of the
      changes, as he highlighted those with which he did not agree.
      Driscoll contends that this email shows not only that the attorneys
      had not yet agreed on all the necessary terms, but also that he
      had not yet approved the agreement.

      Second, and related to the first part, Driscoll contends that he
      directed Attorney Conlon to obtain a copy of the restaurant’s RRF
      application. Driscoll asserts that this was an essential part of the
      parties’ negotiations and that he would not give his final approval
      to any agreement unless he first obtained and reviewed the
      application. Because he never received the application, he never
      gave Attorney Conlon the express authority he would have needed
      to finalize the agreement.

King v. Driscoll, 296 A.3d 1178, 1180-84 (Pa. Super. 2023) (footnotes and

internal citations omitted).

      “When reviewing a trial court’s decision to enforce a settlement

agreement, our scope of review is plenary as to questions of law, and we are

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free to draw our own inferences and reach our own conclusions from the facts

as found by the court.” Salsman v. Brown, 51 A.3d 892, 893–94 (Pa. Super.

2012) (citation omitted). On appeal, the evidence must be interpreted in the

light most favorable to the prevailing party. See id. This Court is bound by

the trial courts findings of fact, as long as they are supported by competent

record evidence. See id. The same is true as to the trial court’s credibility

determinations, as the trial court had the opportunity to view and assess the

witnesses first-hand. See Lewis v. Lewis, 234 A.3d 706, 711 (Pa. Super.

2020) (citation omitted).

      A settlement agreement is enforceable in the absence of a formalized

writing where all the elements of a contract are met and the parties have

orally “come to a meeting of the minds on all essential terms[.]” Commerce

Bank/Pennsylvania v. First Union Nat. Bank, 911 A.2d 133, 147 (Pa.

Super. 2006). However, while the settlement agreement need not be reduced

to writing, an attorney must still have authority to settle their client’s case.

See Baribault v. Zoning Hearing Bd. Of Haverford Twp., 236 A.3d 112,

122 (Pa. Cmwlth. 2020). Indeed, “[t]he ordinary employment of an attorney

to represent a client with respect to litigation does not confer upon the

attorney the implied or apparent authority to bind the client to a settlement

or compromise, and the attorney cannot do so in the absence of such express

authority.” Id. (Citations omitted).

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      For an attorney to be granted authority to bind a client to a settlement

agreement, express permission must be granted in definite terms:

      The rationale for this rule stems from the fact that parties settling
      legal disputes forfeit substantial legal rights, and such rights
      should only be forfeited knowingly. See, e.g., Starling, 3 A.2d
      at 388 (“apparent or implied authority does not extend to
      unauthorized acts which will result in the surrender of any
      substantial right of the client, or the imposition of new liabilities
      or burdens upon him”). As such, a client’s attorney may not settle
      a case without the client’s grant of express authority, and such
      express authority can only exist where the principal specifically
      grants the agent the authority to perform a certain task on the
      principal’s behalf. See Restatement (Second) of Agency § 7 cmt.
      c (1958).

Reutzel v. Douglas, M.D., 870 A.2d 787, 790 (Pa. 2005).

      Where the validity of a settlement agreement is disputed based on an

attorney’s lack of authority, the agreement may only be deemed valid if the

attorney’s express authority has been proven. See Brannam v. Reedy, 906

A.2d 635, 640 (Pa. Cmwlth. 2006) (citing Redevelopment Auth. of the City

of Phila. v. L & A Creative Art Studio, Inc., 294 A.2d 606, 607 (Pa. Cmwlth.

1972)).

      In the present case, the parties’ dispute concerns whether Driscoll had

approved a draft of a settlement agreement sent to and accepted by King on

May 20, 2021.     Although Driscoll had not signed a final version of the

document, King contends that it was nevertheless a binding contract because

Driscoll had agreed to all the material terms conveyed by his attorney.

      The materiality of the RRF application is critical to our disposition

because it settles the issue of whether Driscoll’s attorney (Conlon) had express

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authority to settle the case. Since Driscoll admits that he had agreed to all

the terms that Conlon ultimately conveyed to King on May 20, 2021, it follows

that if the disclosure of the RRF application was not a material term at that

time, then its omission would be irrelevant, and the negotiation concluded

once King accepted that version of the agreement on the same date.

      As discussed above, King and Driscoll have presented conflicting

interpretations of the record with respect to whether a settlement was

contingent on the RRF application. Driscoll and his attorney (Conlon) both

testified that Conlon was only authorized to settle the matter if an agreement

required King’s disclosure of that document.         See Evidentiary Hearing

Transcript, 2/14/2022, at p. 26; Evidentiary Hearing Transcript, 12/20/21, at

pp. 12, 16-18.     Conlon described this as “the central issue during the

negotiations,” and a “vital point” as of May 20, 2021, when all other material

terms had been agreed to. Id, at pp. 20, 30.

      But according to King, the settlement was not contingent on Driscoll’s

receipt of the RRF application, and the parties’ mutual acceptance of the

material terms on and before May 20, 2021 made the draft settlement binding.

King pointed to the unrefuted testimony of J. Michael Sabatini, a CPA who

testified before the trial court that RRF funds may only “be used in operations”

such as payroll, supply costs, and maintenance of the restaurant. Evidentiary

Hearing Transcript, 2/14/2022, at p. 5.      Such funds could not legally be

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dispersed to a business owner for personal profit or the purposes of a buy-

out. See id., a p. 21.

      King also emphasized that the communications between his attorney

(David Fuchs) and Driscoll’s attorney in May 2021 had resulted in a final

agreement.     On May 12, 2021, Fuchs emailed Colon following ongoing

negotiations, declaring, “We have an agreement.” Between that date and May

20, 2021, the attorneys repeatedly exchanged draft settlement agreements

which indisputably contained revisions in the form, but not the substance, of

the versions submitted by the other side. It was not until weeks later that

Driscoll denied the existence of a final agreement in writing, citing the

allocation of RRF funds as a reason to “reevaluate the sale price for his interest

in the Companies[.]” Evidentiary Hearing Transcript, 12/20/2021, at p. 34.

      The trial court construed the evidence in favor of King, discounting

Driscoll’s claim that any final agreement would be contingent on his receipt of

the RRF application. In its supplemental opinion, the trial court concluded that

Conlon had been given express authority to settle the case, and that the

attorneys’ exchange of final draft agreements had bound their respective

clients. The trial court found that Driscoll’s focus on the RRF grant was only

an excuse to avoid finalizing the settlement with King after an agreement had

already been reached. See Trial Court 1925(a) Opinion, 9/13/2023, at pp. 8-

9.

                                      -8-
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      The trial court reasoned that if Driscoll had truly considered the RRF

application’s disclosure to be a material term, then it would have been

mentioned at least once in the several draft agreements circulated by Driscoll’s

counsel and reviewed by Driscoll himself:

      If the RRF grant were a material term to the agreement, it would
      be expected that in at least one of the draft term sheets or
      agreements, all of which were prepared by Driscoll's counsel,
      mention of the funds and the application would appear. However,
      it is undisputed that no document prepared by Driscoll as part of
      the resolution of this matter makes any mention of those
      documents. Indeed, both Driscoll and his counsel testified
      that [Driscoll] was provided copies of all the agreements
      and documents circulated between the parties in this
      matter.     Notably, Driscoll has not produced any evidence
      demonstrating that the RRF application or funds were material in
      any way to the settlement reached in this matter. Therefore, it is
      clear to the Undersigned that there was a meeting of the minds
      between the parties which resulted in an agreement being
      reached.

Id. (internal record citations omitted, emphasis added).

      We find that all the trial court’s factual findings are supported by the

record. Central to the trial court’s findings are that Driscoll and his attorney

both testified to the fact that Driscoll was kept well informed about

developments in the settlement negotiations, and that he approved of all

drafts of the settlement agreements sent to King. See Evidentiary Hearing

Transcript, 12/20/2021, at p. 48; Evidentiary Hearing Transcript, 2/14/2022,

at p. 29. This would include the draft of the agreement that King accepted on

May 20, 2021.

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      While there is conflicting evidence as to whether Driscoll had directed

King to make receipt of the RRF application a settlement condition, it was for

the trial court to resolve that conflict, and this Court is bound by the trial

court’s finding of fact in that regard.   See Salsman, 51 A.3d at 893–94.

Driscoll’s attempt to prove the import of the RRF application through his own

statements and those of his attorney, was rejected by the trial court as a

credibility determination that we find is supported by the record and now is

binding on this Court. See Lewis, 234 A.3d at 711. As such, we discern no

reason to disturb the trial court’s conclusion that the attorneys for King and

Driscoll negotiated a binding settlement agreement and that the disclosure of

the RRF application was immaterial prior to the conclusion of their

negotiations.

      Order affirmed.

DATE: 12/7/2023

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