Court Opinion

ID: 2665834
Source: CourtListenerOpinion
Date Created: 2014-04-04 08:11:37.897202+00
Date Added: 2024-06-11T13:01:42.226461
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

 NUNO CASANOVA,

           Plaintiff,

           v.                                                Civil Action No. 05-496 (JMF)
 MARATHON CORPORATION, et al.,

           Defendants.

                        FINDINGS OF FACT AND CONCLUSIONS OF LAW

       This case was referred to me, upon consent of the parties, for all purposes including trial.

Currently pending and ready for resolution is Chesapeake1 Electrical System’s Motion to Enforce

Settlement [#233] (“Mot.”). For the reasons discussed below, the motion will be granted.

                                       FINDINGS OF FACT

       1.        This is an action in which the plaintiff, Nuno Casanvoa, is attempting to recover

                 damages for an injury that he suffered while working on a construction site.

       2.        Over the complicated history of this litigation, there have been several cross and

                 counterclaims among the defendants.2 For present purposes, the most significant

                 is the crossclaim by Marathon Corporation (“Marathon”) against Chesapeake

                 Electrical System.

       3.        On April 29, 2005, Marathon filed its answer to Casanova’s complaint and its

       1
           Hereafter “Chesapeake.”
       2
           See generally Casanova v. Marathon Corp., 570 F. Supp. 2d 53 (D.D.C. 2008).
              crossclaim against Chesapeake. Chesapeake, however, did not file its answer to

              that crossclaim until May 29, 2007, two years later.

       4.     On August 15, 2007, this court granted Marathon’s motion to strike Chesapeake’s

              answer to Marathon’s crossclaim “on the grounds that Chesapeake violated Rule

              6(b) of the Federal Rules of Civil Procedure by failing to accompany the late-filed

              answer with a motion for leave to file it that established excusable neglect as

              required by that rule.” Casanova v. Marathon Corp., 499 F. Supp. 2d 32 (D.D.C.

              2007).

       5.     Chesapeake then sought reconsideration of that decision but I denied its motion on

              December 10, 2007. Casanova v. Marathon Corp., 246 F.R.D. 376 (D.D.C. 2007).

              Thus, Chesapeake has been precluded from defending itself against Marathon’s

              crossclaim that Chesapeake’s negligence entitles Marathon to recover from

              Chesapeake Marathon’s costs in defending itself against Casanova’s claims.

       6.     As of December 10, 2007, there have, therefore, existed at least3 the following

              claims: 1) Casanova’s claims against Chesapeake and Marathon for his injuries,

              and 2) Marathon’s claims against Chesapeake for its costs in defending itself

              against Casanova’s claims. While the former was, at that point, headed for trial,

              because of this court’s August and December, 2007 decisions, the latter claim was

              deemed conceded.

       3
         There were other defendants known as the “dump truck” defendants, but by the time the
parties were engaged in the negotiations that are the subject of this opinion, only Marathon and
Chesapeake remained as defendants. See Casanova v. Marathon Corp., No. 05-CV-496, 2008
WL 4356950 (D.D.C. Sept. 24, 2008).

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7.    Charles Krikawa (“Krikawa”) is the attorney for Casanova. In April, 2008 the

      parties engaged in mediation before retired Judge Fitzpatrick. Those efforts

      failed. The offer made to plaintiff, $435,000, was unacceptable to plaintiff

      because he was unable to work out the lien asserted by his workmen’s

      compensation insurance carrier.

8.    There were additional settlement negotiations in December, 2008 after a pre-trial

      conference. The theme of these discussions was the same as previous attempts at

      settlement: the only two remaining defendants, Marathon and Chesapeake,

      wanted to settle what Krikawa called “the entire case,” meaning all claims

      Casanova had against Marathon and Chesapeake.

9.    In 2008, during these discussions, Krikawa spoke to Warren Stephens

      (“Stephens”), attorney for Chesapeake, and Joseph Cunningham (“Cunningham”),

      attorney for Marathon.

10.   Krikawa made it clear that his client would take $540,000 to settle the case and

      communicated that offer in separate phone calls to Stephens and Cunningham.

      Cunningham, representing Marathon, indicated that he did not think defendants

      could meet that demand.

11.   On September 14, 2009, a status conference was held. Immediately following the

      status conference, as counsel were leaving the courtroom, the parties again

      discussed the possibility of settlement. Mot. at 3.

12.   During that discussion, Stephens recollects that Cunningham said that he

      (Stephens) could settle the case if he could get $150,000 from Marathon.

                                        3
      Stephens recollects that Cunningham said: “What about our claim for fees and

      expenses?” Stephens recollects that he told Cunningham that “this is a global

      settlement–we won’t settle unless it includes Marathon’s claims against

      Chesapeake.” Stephens then recollects Cunningham saying that his client,

      Marathon, would not go for that. Stephens told Cunningham to give him

      $150,000 for the settlement and to talk to his client.

13.   Cunningham’s recollection of what occurred is different. He specifically recalls

      (“it sticks in my mind”) that as they left the courtroom, Stephens was imploring

      him to come up with a specific amount, $150,000. Cunningham recalls Stephens

      being almost dictatorial, premised on the belief that the defendants had to get rid

      of plaintiff’s case. Cunningham insists that he said to Stephens that Marathon’s

      crossclaim was not going to go away.

14.   Cunningham then got approval from the carrier for his client for the $150,000,

      and Cunningham told Stephens of that.

15.   On September 15, 2009, Cunningham sent a letter to Stephens. Mot. at Exhibit 2.

      In the letter, Cunningham indicated that Marathon’s carrier had approved the

      acceptance of Stephens’ offer to jointly settle the case with Casanova for a

      contribution of $150,000 by Marathon if Chesapeake made up the difference “to

      fully settle the case,” and if Stephens provided confirmation that Chesapeake’s

      carrier was in receivership in Texas but was still able to pay the balance of the

      agreed upon settlement amount. Id.

16.   Within a day or two, on either September 15, or September 16, 2009, Stephens

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      called Krikawa and said that he had combined authority to settle the entire case

      for $440,000, with the understanding that Krikawa had to satisfy the workers’

      compensation lien that was being asserted by the insurance carrier that had paid

      Casanova workmen’s compensation.

17.   Krikawa then spoke to his client and his client’s wife, in order to get a sense of

      how they wanted him to negotiate with counsel for the insurance carrier.

18.   Krikawa called the attorney for the insurance carrier, and they negotiated over the

      next two weeks, culminating in an offer being made by the insurance carrier to

      Casanova.

19.   Krikawa then spoke to Casanova and Casanova’s wife and they gave him

      authority to accept the $440,000 that Stephens had previously offered, subject to

      the carrier’s lien. Krikawa then called Stephens at about 4 p.m. on September 29,

      2009 and left a message on Stephens’ voice mail accepting the offer of $440,000.

20.   During the period from September 15 to September 29, 2009, Krikawa did not

      speak or otherwise communicate with Cunningham.

21.   Krikawa always understood that the offer being made to him by Stephens was a

      joint offer on behalf of both remaining defendants.

22.   During these discussions, no one spoke to Krikawa of any claims remaining

      outstanding.

23.   Meanwhile, on September 17, 2009, Stephens sent Cunningham a letter in

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               response to his September 15, 20094 letter. Mot. at Exhibit 3. In the letter,

               Stephens indicated that settlement could not be guaranteed, but that Marathon

               would not be required to pay more than $150,000.00. Id. Stephens also stated that

               Highland, Chesapeake’s carrier, was in receivership but had sufficient funds to

               settle the case. Id. Finally, Stephens wrote “that a settlement of the case

               extinguishes all claims by all parties, specifically including any claims Marathon

               may have against Chesapeake.” Id.

       24.     On September 23, 2009, Cunningham and Stephens again spoke by telephone.

               Mot. at Exhibit 4.

       25.     On September 24, 2009, Cunningham sent Stephens a letter in response to his

               September 17, 2009 letter. Mot. at Exhibit 4. In the letter, Cunningham indicated

               that he did not agree with Stephens’ statement in his letter that settlement of the

               case with Casanova would extinguish all other claims, including, of course, the

               claim that Marathon had against Chesapeake based on this Court’s order of

               August 7, 2007. That order precluded Chesapeake from defending itself against

               Marathon’s crossclaim that would have led to an eventual judgment on that

               crossclaim against Chesapeake, awarding Marathon its costs for defending itself

               against Casanova’s claim. Cunningham also stated that if Chesapeake refused to

               pay Marathon’s defense costs, the offer to contribute $150,000.00 towards

               settlement with Casanova would be rescinded. Id.

       4
          In the letter, Stephens references a letter from Cunningham dated September 17 but as
there is no such letter, the court presumes this was a typographical error and that Stephens
intended to reference Cunningham’s September 15 letter.

                                                 6
26.   On September 30, 2009, Stephens sent a letter to Cunningham in response to his

      September 24, 2009 letter. Mot. at Exhibit 5. In the letter, Stephens indicated that

      in the conversation that took place on September 14, 2009 immediately following

      the status hearing in court, “it was made very clear and was fully understood” that

      the $150,000.00 amount contributed by Marathon would resolve all outstanding

      issues, including any claim Marathon had against Chesapeake. Id. Stephens also

      told Cunningham that Casanova had already accepted their offer. Id. Finally,

      Stephens indicated that Cunningham knew that these were the terms of the offer

      as evidenced by the fact that Cunningham had previously indicated that

      Marathon’s management wasn’t happy that the defense costs had been waived. Id.

27.   On September 30, 2009, Cunningham sent Stephens a letter in response to his

      earlier letter on the same day. Mot. at Exhibit 6. In the letter, Cunningham denied

      the accuracy of Stephens’ interpretation of their previous conversation. Id.

      Cunningham also denied that he had waived Marathon’s defense costs. Id.

      According to Cunningham, no offer had been made and no acceptance had been

      given. Instead, Cunningham indicated that the parties were still negotiating. Id.

      Finally, Cunningham stated that Marathon would still contribute $150,000.00

      towards settlement with Casanova but that Marathon retained the right to seek

      attorneys fees and costs against Chesapeake. Id.

28.   On October 1, 2009, Stephens sent Cunningham a letter in response to his

      September 30, 2009 letter. Mot. at Exhibit 7. In the letter, Stephens indicated that

      Cunningham had told him that Marathon’s adjuster had been fired for agreeing to

                                       7
               settle the case with Casanova for $150,000.00. Id.

       29.     Stephens had authority to negotiate a settlement with Casanova on behalf of both

               Chesapeake and Marathon. Proof of that authority appears first in Cunningham’s

               September 15, 2009 letter, in which he referenced “the balance of the settlement

               figure [Stephens] finally negotiate[d] with plaintiff’s attorney” and second in

               Stephens’ October 1, 2009 letter to Cunningham, in which he stated that “[b]ased

               upon Marathon’s contribution, [he] was authorized to negotiate a settlement with

               the plaintiff.” Mot. at Exhibits 2, 7.

                                 RULINGS ON LEGAL ISSUES

I.     Questions Presented

       Casanova, through his communications with Stephens, negotiated a settlement with

Chesapeake and Marathon, in exchange for a certain amount of money. Based on that

agreement, Casanova then negotiated a lien with his workmen’s compensation carrier, assuming

a new obligation as a result of the settlement that he thought he had achieved with the

defendants. Stephens, acting on behalf of Chesapeake, negotiated a deal with Casanova whereby

Casanova would accept $440,000.005 in satisfaction of all his claims. Stephens believed,

however, that Chesapeake’s contribution of $290,000.00 to the settlement with Casanova

absolved any obligation Chesapeake had to satisfy any outstanding judgment the court would

ultimately enter against Chesapeake as a result of its failure to timely file an answer to

       5
          Although this figure is not referenced in the documents submitted by the parties in
relation to Chesapeake’s pending motion to enforce settlement, both parties concede that
Krikawa was offered this amount by Stephens, on behalf of Chesapeake and Marathon. See Mot.
at 4; Defendant Marathon’s Opposition to Co-Defendant Chesapeake’s Motion to Enforce
Settlement at 6. Furthermore, Krikawa also testified to that effect.

                                                  8
Marathon’s cross claim. Finally, Cunningham, acting on behalf of Marathon, agreed to

contribute $150,000.00 to the settlement of Casanova’s claims. Cunningham believed, however,

that settling Casanova’s claims would have no effect on any outstanding judgment that Marathon

would ultimately secure against Chesapeake.

       The questions presented, therefore, are as follows: 1) Did Stephens, acting on behalf of

Chesapeake have actual authority to negotiate a settlement with Casanova on behalf of both

Chesapeake and Marathon? 2) Was there a valid and enforceable agreement between (a)

Casanova and Chesapeake and Marathon and (b) Chesapeake and Marathon? 3) If there was no

valid agreement between Marathon and Chesapeake, is Casanova still entitled to enforcement of

his contract with them? 4) Does Marathon still have the right to enforce the judgement it

received against Chesapeake?

II.    Stephens Had Actual Authority To Negotiate a Settlement With Casanova On Behalf Of
       Both Chesapeake and Marathon

       Casanova dealt with Stephens, who acted with actual authority on behalf of his own

client, Chesapeake, and who acted with actual authority on behalf of Cunningham’s client,

Marathon. Cunningham gave him that authority, the authority to bind Marathon upon the terms

and conditions proposed by Stephens, i.e., the payment of $440,000.00, with the understanding

that Casanova would then negotiate a settlement between himself and his workmen’s

compensation carrier. As to Casanova, there was, therefore, an offer by a lawyer who had actual

authority to represent both his client, Chesapeake, and its co-defendant, Marathon. The

agreement reached, therefore, was made by counsel for a party, who unquestionably had actual

authority to bind both his client and Marathon. This agreement contained certain and definite

                                                9
terms that admitted of no ambiguity: in exchange for $440,000.00, Casanova would settle his

claims against Marathon and Chesapeake but would take full responsibility for paying the

workmen’s compensation carrier lien. It would be hard to imagine a better text book example

illustrating the principles of offer and acceptance and showing how an agent binds his principal

by negotiating with a third party within the limits of the actual authority the agent has.

       Even where the agent’s authority is only apparent, “a court may consider whether a third

party ‘reasonably relied upon conduct of the principal (including acquiescence) or conduct of the

agent for which the principal is responsible,’” although the burden rests at all times with the third

party to “show that the reliance was to his or her detriment.” Gonzalez v. Internacional De

Elevadores, S.A., 901 A.2d 227, 238 (D.C. 2006) (internal quotations and citations omitted). See

also Wagshal v. Selig, 403 A.2d 338, 344-45 (D.C. 1979) (“‘[a] third party seeking to hold a

principal on the apparent authority of the agent must show acts or statements of the principal

known to the third party and on which the third party reasonably relied to his detriment.’”)

(internal quotation omitted). Here, from the beginning of their negotiations after the September

14, 2009 status conference, Cunningham and Stephens never did anything to dissuade Krikawa

from reasonably believing that either one of them could bind the other by making a joint offer on

both their behalfs to settle the case. Krikawa relied upon their conduct in presenting to his client

and then accepting on his client’s behalf an offer that he most reasonably believed came jointly

from Marathon and Chesapeake.

III.   Although There Was No Meeting Of the Minds Between Chesapeake and Marathon and
       Therefore No Contract Between Them, They Are Nevertheless Estopped From Denying
       the Existence Of a Contract As To Casanova

       The conclusion that there never was a contract between Chesapeake and Marathon is

                                                 10
compelling. As Stephens understood it, by negotiating a settlement with Casanova on behalf of

both defendants, Chesapeake simultaneously escaped payment of the judgment previously

awarded Marathon. Cunningham, on the other hand, believed that Marathon was only obliged to

contribute to the settlement with Casanova but retained its right to enforce the judgment against

Chesapeake for attorneys fees. Because there was such a fundamental misunderstanding, there

was therefore no mutual assent to the terms of the agreement–the sine qua non of a contract

under District of Columbia law. See Malone v. Saxony Coop. Apartments, 763 A.2d 725, 729

D.C. 2000) (“For there to be an enforceable contract, there must be mutual assent of the parties to

all the essential terms of the contract.”). Hence, at first glance, the parties do not appear to be

bound. Such a conclusion, however, does a glorious injustice to Casanova.

       Casanova negotiated an agreement in perfect good faith with a lawyer who had actual

authority to act for both defendants. Furthermore, Casanova changed his position, abandoning

his right to go to trial and settling the lien. Letting both defendants escape from that agreement

punishes Casanova and robs him of the deal he made because of confusion that the defendants

created, confusion that could have been avoided had they only made their intentions clear. To

visit upon Casanova the consequences of Stephens’ and Cunningham’s misunderstanding

punishes the one person who is absolutely blameless. Such an unconscionable result truly insults

the most fundamental concepts of fairness.

       Moreover, if there was any doubt as to that conclusion– and there isn’t– Casanova has a

textbook case for promissory estoppel, a doctrine clearly recognized in the District of Columbia.

See Bender v. The Design Store Corp., 404 A.2d 194, 195-96 (D.C. 1979) (“First, was there a

promise? Second, should the promisor have expected the promisee to rely on the promise: And

                                                  11
did the promisee so rely to his detriment? Finally, would injustice result from a failure to enforce

the promise?”). There was an offer made by a person who had authority to make it, and in

reliance upon it, Casanova changed his position by (a) surrendering his right to pursue his claim

against the defendants and (b) undertaking to negotiate the lien and pay all of it out of his share.

Undoing that when Casanova acted in the utmost good faith upon reliance on those who

unquestionably had the power and authority to make the deal they did would be inequitable to the

point of being unconscionable. How could one possibly justify negating a contract that

unquestionably came into existence between Casanova and Chesapeake and Marathon because,

unbeknownst to Casanova, Chesapeake and Marathon had failed to express their intent to each

other? Chesapeake and Marathon should not escape the liability they undertook to accept

because their minds never met as to their agreement inter se. It is impossible to justify negating

the clear terms of a contract freely entered into that is unquestionably enforceable because the

parties on one side of that contract failed to express the terms of their agreement clearly to each

other. The Court must therefore conclude that there was a valid contract between Casanova and

Chesapeake and Marathon and that judgment must be entered in Casanova’s favor pursuant to its

terms.6

          6
         An inaccurate written contract may be reformed where there has been no detrimental
reliance by a third party, as long as the parties’ intent was identical:

               Where both parties have an identical intention as to the terms to be
               embodied in a proposed written . . . contract . . . and a writing
               executed by them is materially at variance with that intention,
               either party can get a decree that the writing shall be reformed so
               that it shall express the intention of the parties, if innocent third
               persons will not be unfairly affected thereby.

Restatement (First) of Contracts § 504 (1932) (emphasis added). Analogously, this means that

                                                 12
IV.    Marathon No Longer Has the Right To Enforce the Judgment Against Chesapeake

       Since the deal made between the defendants and Casanova cries out for enforcement, the

question becomes who should bear the burden of paying Casanova. If the deal is enforced as

Chesapeake understood it, then, as explained above, Chesapeake would escape the order that, in

effect, would require it to pay Marathon’s defense costs or at least escape the necessity of

appealing from that order and trying to get it reversed. If, on the other hand, the deal is enforced

as Marathon understood it, then Chesapeake would be compelled to pay defense costs that it

claimed it believed it would not have had to pay if it paid Casanova its share of what Casanova

wanted and ultimately agreed to accept.

       Having heard the testimony, I cannot say that I find unreasonable or unfair the

supposition by Stephens that he believed that his client was escaping all liability if it paid its

share of what was owed to Casanova. While I appreciate that Cunningham believed in equal

good faith that the deal he made with Chesapeake was independent of the liability that

Chesapeake had under the order, as between the two, acceptance of Stephens’ understanding

reaches a fairer result than acceptance of Cunningham’s. Lawyers get paid to be careful and to

take what may appear to be extraordinary pains to protect their clients from contingencies that

may appear to be far-fetched and unlikely. In this case, it appears to me that when two lawyers

are discussing a settlement that will relieve their clients of a shared obligation to a third party and

one of those lawyers fails to mention whether an outstanding and potential judgment between

Casanova’s rights cannot be surrendered to the confusion that was created by Stephens’ and
Cunningham’s failure to clearly articulate what they intended when they communicated the offer
to Krikawa. Cf. Aetna Casualty & Surety Co. v. Kemp Smith Co., 208 A.2d 737, 740 (D.C.
1965) (reliance in District of Columbia on Restatements).

                                                  13
them will or will not be affected by the payment of monies to the third party, the risk of

subsequent confusion should fall on the beneficiary of that potential judgment, rather than the

opposing party. Lawyers, particularly the experienced ones involved in this case, seek to absolve

their clients from all potential liability when they settle; very few lawyers leave their clients open

to additional liability when they ask their clients for money. This notion is captured by the words

“final settlement.” It would appear to me therefore that counsel for Marathon should have made

it clear that Chesapeake’s liability to Marathon survived the payment to Casanova before he

committed himself and his client (Marathon) to making the offer to Casanova that Casanova

ultimately accepted. Had he only done so we would not be where we now are.

       Moreover, while that result seems harsh, the alternative–denying Casanova the settlement

to which he is unquestionably entitled– is unconscionable. Between Casanova and Marathon, the

equities all favor the former. If burden has to fall anywhere, it has to fall on Cunningham,

because he could have prevented the misunderstanding with Stephens by specifying the precise

deal that Marathon was accepting from Chesapeake.

       I will therefore order that judgment be entered in accordance with this Opinion as

follows:

       1.      Judgment will be entered in favor of plaintiff in the amount of $440,000 with the

               understandings that (1) plaintiff shall be solely responsible for satisfying any

               workmen’s compensation claim that is or will be asserted as a lien on any such

               judgment and (2) that Chesapeake shall pay $290,000 of that judgment and

               Marathon the remaining $150,000.

       2.      Each party shall pay its own fees and costs, meaning that Chesapeake is relieved

                                                  14
    of any obligation to pay Marathon’s defense costs as required by this court’s order

    of August 7, 2007.

SO ORDERED.

                                                        Digitally signed by
                                                        John M. Facciola
                                                        Date: 2010.06.01
                                                        17:30:42 -04'00'
                                         _____________________________
                                         JOHN M. FACCIOLA
                                         UNITED STATES MAGISTRATE JUDGE

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