MID-MONMOUTH REALTY ASSOCIATES v. METALLURGICAL INDUSTRIES, INC.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MID-MONMOUTH REALTY ASSOCIATES,

a New Jersey General Partnership,

Plaintiff-Appellant,

v.

METALLURGICAL INDUSTRIES, INC., a

New Jersey Corporation; METALLURGICAL

INTERNATIONAL, INC., a New Jersey

Corporation; BRIA COMMUNICATIONS

CORPORATION, a New Jersey Corporation;

IRA L. FRIEDMAN; LAWRENCE FRIEDMAN;

PHILADELPHIA MANUFACTURERS' MUTUAL

INSURANCE COMPANY; AFFILIATED F.M.

INSURANCE COMPANY; CONSOLIDATED MUTUAL
INSURANCE COMPANY; FACTORY INSURANCE

ASSOCIATION; GREATER NEW YORK INSURANCE

GROUP; GREATER NEW YORK MUTUAL INSURANCE

COMPANY; INDUSTRIAL RISK INSURERS; AETNA

CASUALTY & SURETY COMPANY; and KEMPER

INSURANCE,

Defendants,

and

CNA INSURANCE,1

Defendant-Respondent.

November 16, 2016

Before Judges Fuentes, Simonelli and Gooden Brown.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2422-00.

Richard L. Zucker argued the cause for appellant (Lasser Hochman, LLC, attorneys; Mr. Zucker and Jodi Lee Alper, on the briefs).

George R. Hardin argued the cause for respondent (Hardin, Kundla, McKeon & Poletto, P.A., attorneys; Mr. Hardin, of counsel and on the brief; Arthur A. Povelones, Jr. and Cynthia Lee, on the brief).

PER CURIAM

Plaintiff Mid-Monmouth Realty Associates appeals from the December 18, 2008 Law Division order, which enforced a settlement with defendant CNA Insurance. For the following reasons, we affirm.

We derive the following facts from the record. Plaintiff owns property in Tinton Falls, which was contaminated with various hazardous substances used by its tenant, Metallurgical Industries, Inc. (Metallurgical), in the course of Metallurigical's business operations. On May 22, 2000, plaintiff filed a complaint against Metallurgical, its principals, Ira and Lawrence Friedman, and several insurance companies. As to the insurance companies, plaintiff sought a declaratory judgment and indemnification in connection with remediation expenses. Defendant, who was an "excess" insurer, filed an answer, denying liability and asserting several defenses.

Before a mediator, on April 19, 2006, plaintiff and defendant agreed to certain terms of a settlement, but not the monetary amount defendant would pay. According to plaintiff, the settlement required defendant to pay a monetary amount in exchange for a release. The precise terms of the release were not agreed upon, but in light of the nominal considerations defendant was paying, plaintiff contemplated a standard release limited to the allegations of this action and the Metallurgical site.

According to defendant, all counsel agreed that the release: (1) would only be a "site" release as opposed to a "policy buy-back" or "environmental release" under the policies; (2) would extend only to the primary and excess policies with the absolute pollution exclusion, and to the three excess policies that did not have an absolute pollution exclusion; and (3) would not extend to "all policies known or unknown" because plaintiff did not wish to release any primary policies of which it had no knowledge. All that remained was the amount defendant would pay in exchange for the release.

On April 20, 2006, plaintiff made a demand for $25,000. Defendant accepted the demand on June 7, 2006. In the meantime, on May 10, 2006, plaintiff's counsel advised the court that plaintiff was "in serious, ongoing" settlement discussions with defendant and that plaintiff had communicated a firm settlement demand and was awaiting defendant's response. At a June 23, 2006 status conference, plaintiff's counsel advised the court that the matter was "about settled," and only two insurance carriers remained in the case.

In September 2006, plaintiff filed a motion to vacate a settlement reached four years earlier with the Friedmans, which the court granted. Vacating the settlement revived both plaintiff's claims against the Friedmans for damages and the Friedmans' claim for insurance coverage against all insurers, including defendant.

On October 19, 2006, defense counsel sent plaintiff's counsel a proposed settlement agreement and release. The proposed agreement contained a provision requiring plaintiff to indemnify defendant against any additional claims for defense or indemnity made in connection with the contamination. This provision would effectively protect defendant from any claim by the Friedmans.

On January 8, 2007, plaintiff's counsel requested two substantive changes to the proposed settlement agreement and release: (1) elimination of the indemnification provision; and (2) limiting the release to a single site. Plaintiff's attorney also requested other, less significant changes.

On March 21, 2007, defense counsel sent plaintiff's counsel a revised settlement agreement and release, which incorporated all of the changes to which plaintiff agreed on January 8, 2007. On June 4, 2007, plaintiff's counsel advised the court that plaintiff had "settled in principle" with defendant, and expected "consummation of the settlement within ten days." On June 8, 2007, plaintiff's counsel confirmed that plaintiff agreed to the revised settlement agreement and release.

On August 8, 2007, defense counsel proposed two minor changes to the settlement agreement and release, specifically, to a prefatory "whereas" clause, and to the definition of "a CNA company." On August 29, 2007, plaintiff's counsel confirmed that plaintiff agreed to the proposed changes, but stated that plaintiff would not sign a release until defendant paid its outstanding share of the deposition fee for plaintiff's expert. Defendant made the payment on October 26, 2007. Meanwhile, on August 27, 2007, plaintiff's counsel advised the court that plaintiff expected to conclude the settlement with defendant within ten days.

On November 8, 2007, defense counsel sent plaintiff's counsel a revised settlement agreement and release, which incorporated the proposed changes to which plaintiff agreed on August 29, 2007. Defense counsel also proposed a revision to the definition of "environmental claims" in section 1.7, which would have the effect of releasing any "claims arising out of the trans-shipment of any contaminants or pollutants, in the course of remediation of the site, from the site to any other site for treatment or disposal."

Plaintiff's counsel never responded to the proposed revision. Ultimately, on February 5, 2008, plaintiff's counsel advised defense counsel that the release was "on hold" because plaintiff was concerned that its remediation costs would be greater than previously anticipated, meaning plaintiff wanted more money from defendant.

Defendant filed a motion to enforce the settlement. In opposition, plaintiff argued

In light of [defendant's] continued refusal to agree to a release specifically confined to the Metallurgical site, as well as other information concerning the Metallurgical site and potential remediation costs involved, [plaintiff] is no longer agreeable to settlement with [defendant] on the terms that had previously been discussed, but to which [defendant] never in fact agreed payment of a nominal sum certain by [defendant] in exchange for a release limited to the Metallurgical site.

In a comprehensive December 16, 2008 oral opinion, the court granted the motion, finding as follows

the parties had agreed to all essential terms of the agreement after setting forth the terms of the agreement with the mediator and subsequently agreeing on the dollar amount to be paid. This was accomplished as of June 7, 2006. The only remaining issue was the specific language to be used in the release.

As of November 8, 2007 the parties had clearly resolved all major issues and had reached the point of making minor changes in the language. It was at this point that plaintiff apparently began to have second thoughts about the amount for which it had settled and that the potential cost of [cleanup] might be much greater.

The [c]ourt finds that the parties had reached a full and final settlement in 2006 regarding the amount the plaintiff would accept and the essential terms upon which the amount would be accepted. The fact that the parties continued to address ancillary issues such as the payment of an expert or [the] indemnification of Ira Friedman, did not alter those essential terms.

Moreover, since the plaintiff never accepted [defendant's] additional request regarding removed pollutants, it never became part of the agreement. It is clear to the [c]ourt that the plaintiff fully intended to accept the settlement offer in 2006. And it was only later when the plaintiff began to rethink the wisdom of its decision that it attempted to place the settlement "[on] hold" by refusing to execute the release as negotiated between the parties.

As stated by the [c]ourt in Hagrish [v. Olson, 254 N.J. Super. 133, 138 (App. Div. 1992)], "execution of a release was a mere formality not essential to the formation of the contract of settlement."

The [c]ourt is therefore satisfied that a valid and binding settlement was reached between the parties with the exception of any provision relating to the removal of pollutants. And that the settlement agreement as entered between the parties should be enforced.

The court entered an order on December 18, 2008, enforcing "the terms of the settlement agreement dated [November 8, 2007] with the exception of the release for any problems involving removed pollutants[.]"

On appeal, plaintiff contends that the court erred in enforcing the settlement because the parties never agreed to the scope of the release, which was an essential term of the settlement. Plaintiff argues that the revision defense counsel proposed on November 8, 2007 was a counteroffer, which plaintiff did not accept, thus negating the existence of an enforceable settlement.

"On a disputed motion to enforce a settlement," a trial court must apply the same standards "as on a motion for summary judgment." Amatuzzo v. Kozmiuk, 305 N.J. Super. 469, 474 (App. Div. 1997). In reviewing the grant or denial of summary judgment, we apply the same standard that governs the trial court, which requires denial of summary judgment when "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Townsend v. Pierre, 221 N.J. 36, 59 (2015) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)).

New Jersey has a "strong public policy in favor of the settlement of litigation." Gere v. Louis, 209 N.J. 486, 500 (2012). "Therefore, our courts have actively encouraged litigants to settle their disputes[,]" Puder v. Buechel, 183 N.J. 428, 438 (2005), recognizing that they are most informed of their own interests, and are best positioned to resolve their disputes in a manner that is acceptable to them. Gere, supra, 209 N.J. at 500.

"A settlement agreement between parties to a lawsuit is a contract[,]" Nolan v. Lee Ho, 120 N.J. 465, 472 (1990), and thus governed by principles of contract law. Brundage v. Estate of Carambio, 195 N.J. 575, 600-01 (2008). Unlike in other contract cases, however, because of the strong public policy in favor of settlements "our courts 'strain to give effect to the terms of a settlement wherever possible.'" Id. at 601 (quoting Dep't of Pub. Advocate v. N.J. Bd. of Pub. Util., 206 N.J. Super. 523, 528 (App. Div. 1985)). Moreover, "any action which would have the effect of vitiating the provisions of a particular settlement agreement and the concomitant effect of undermining public confidence in the settlement process in general, should not be countenanced." Dep't of Pub. Advocate, supra, 206 N.J. Super. at 528.

"Where the parties agree upon the essential terms of a settlement, so that the mechanics can be 'fleshed out' in a writing to be thereafter executed, the settlement will be enforced notwithstanding the fact the writing does not materialize because a party later reneges." Lahue v. Pio Costa, 263 N.J. Super. 575, 596 (App. Div.) (quoting Bistricer v. Bistricer, 231 N.J. Super. 143, 145 (Ch. Div. 1987)), certif. denied, 134 N.J. 477 (1993). The addition of terms to effectuate the settlement that do not alter the basic agreement will not operate to avoid enforcement of an agreement to settle a litigated matter. Bistricer, supra, 231 N.J. Super. at 148, 151. Moreover, "the failure to execute release documents does not void the original agreement, or render it deficient from the outset. Execution of a release is a mere formality, not essential to formation of the contract of settlement." Jennings v. Reed, 381 N.J. Super. 217, 229 (App. Div. 2005). See also Hagrish, supra, 254 N.J. Super. at 138 (holding that the "failure to execute release documents did not void the original agreement, nor did it render it deficient from the outset").

According to plaintiff, the essential terms of the settlement agreement were defendant's payment of $25,000 in exchange for a release of all claims relating to the allegations of this action and the Metallurgical site. The record confirms that the parties agreed to those essential terms on June 7, 2006. Thus, an enforceable contract existed as of that date. The only remaining issue was the wording of the release. The parties resolved that issue by August 29, 2007, when plaintiff accepted the revisions defense counsel had proposed on August 8, 2007. All that remained at that time was the signing of the settlement agreement and release.

We reject plaintiff's argument that the November 8, 2007 proposed revision was a counteroffer. "A qualified or conditional acceptance containing terms and conditions not found in the original proposal may operate as a counter-offer but does not constitute an acceptance and does not result in the formation of a valid contract binding upon the parties." Carlin v. City of Newark, 36 N.J. Super. 74, 89 (Law Div. 1955) (citations omitted).

"A counter-offer is an offer made by an offeree to [the] offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer." Restatement (Second) of Contracts 39(1) (1981). "A counteroffer operates as a rejection because it implies that the offeree will not consent to the terms of the original offer and will only enter into the transaction on the terms stated in the counteroffer." Berberian v. Lynn, 355 N.J. Super. 210, 217 (App. Div. 2002), aff'd in part, modified in part, 179 N.J. 290 (2004). Therefore, there is no binding contract at the time of a counteroffer. Morton v. 4 Orchard Land Trust, 180 N.J. 118, 130 (2004). If the offeror then accedes by explicit assent or by action, a contract is then formed according to the terms of the counteroffer. Whiteman Food Prods. Co. v. Prodotti Alimentari, 31 N.J. Super. 277, 279 (App. Div. 1954).

Prior to November 8, 2007, the parties had agreed upon all of the essential terms of the settlement and release. The November 8, 2007 proposed revision was not a counteroffer, as it did not and could not alter the essential terms of the original agreement. Moreover, defendant did not insist on the inclusion of the proposed revision in the agreement or refuse to consent to the terms of the original offer. Accordingly, we conclude there was an offer and an acceptance, and thus the formation of a binding, enforceable settlement prior to the November 8, 2007 proposed revision. Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992). Plaintiff was not entitled to renege on the settlement simply because it no longer believed the monetary amount was sufficient. Jennings v. Reed, 381 N.J. Super. 217, 232 (App. Div. 2005) (enforcing settlement notwithstanding party's second thoughts); N.J. Mfrs. v. O'Connell, 300 N.J. Super. 1, 7 (App. Div.) (holding that "[a] party is bound to the contract it made at the time, even if it turns out to be a poor deal"), certif. denied, 151 N.J. 75 (1997); Dep't of Pub. Advocate v. N.J. Bd. of Pub. Util., 206 N.J. Super. 523, 530 (App. Div. 1985) (holding that "second thoughts are entitled to absolutely no weight as against our policy in favor of settlement").

Affirmed.

1 The caption identifies defendant as CNA Insurance; however, the answer filed below states respondent's correct name is Continental Casualty Company. There is nothing in the record indicating a correction of the caption.