Opinion
Civil Action No. 3:03-CV-1128-D.
September 3, 2004
MEMORANDUM OPINION AND ORDER
This dispute between Metropolitan Life Insurance Company, Inc. ("MetLife") and Ashok Daftary ("Daftary") arising from the settlement of a discrimination lawsuit, see Daftary v. Metro. Life Ins. Co., No. 3:94-CV-1338-D (N.D. Tex. May 22, 1997) (Fitzwater, J.) (" Daftary I"), aff'd, 136 F.3d 137 (5th Cir. Jan. 12, 1998) (per curiam) (unpublished table opinion), returns to this court. This time, MetLife sues Daftary seeking through claims for declaratory judgment and breach of contract to enforce a settlement agreement that it maintains it reached with Daftary to resolve the prior case. MetLife moves for summary judgment. For the reasons that follow, the court denies the motion.
I
In 1993 MetLife terminated Daftary from his position as an insurance salesman. Daftary sued MetLife in 1994 alleging race and national origin discrimination and retaliation. During mediation, MetLife and Daftary orally agreed that Daftary would dismiss the lawsuit and submit his claims to binding arbitration, with a potential minimum award of $100,000 and a maximum award of $200,000, inclusive of attorney's fees and costs. When presented with a document that reflected the terms of the agreement, Daftary refused to sign. MetLife moved to enforce the oral agreement, and the court granted the motion. Daftary I, slip op. at 2. Daftary appealed, and the Fifth Circuit affirmed. See Daftary v. Metro. Life Ins. Co., 136 F.3d 137 (5th Cir. Jan. 12, 1998) (per curiam) (unpublished table opinion).
In 2002 Daftary initiated the arbitration process provided for in the Daftary I settlement and filed a statement of claim against MetLife. Before the arbitration hearing — during an October 31, 2002 conversation between Daftary's attorney, Joy M. Thomas, Esquire ("Thomas"), and MetLife's attorney, Robert J. Wood, Jr., Esquire ("Wood") — Thomas offered to dismiss Daftary's claims with prejudice in exchange for $150,000. Wood telephoned Thomas the next day and accepted the offer. Wood and Thomas memorialized the oral agreement in a November 1, 2002 letter that stated:
This is a written memorialization of our settlement in the amount of $150,000. On behalf of Mr. Daftary, you conveyed to me yesterday Daftary's offer that he would dismiss all claims against MetLife with prejudice for $150,000, and I, on behalf of MetLife, accepted Daftary's offer in a telephone conversation with you this morning. Accordingly, we have now entered into a binding agreement on behalf of our respective clients to settle all of Daftary's claims against MetLife as outlined above. I will forward a draft settlement agreement to you next week.
Please sign below to finalize this memorandum and return it to me by fax.
P. App. 11. Thomas and Wood each signed the letter. See id. When MetLife presented Daftary a formal settlement agreement, however, he refused to sign and demanded $169,000 to dismiss his claims.
The letter is attached to MetLife's complaint and amended complaint as Exhibit A.
MetLife filed the instant lawsuit seeking a judgment declaring that Daftary has settled his claims for $150,000 and asserting that he breached the agreement and should be compelled to release his claims in exchange for that sum. It also seeks its attorney's fees and costs. Shortly after Daftary filed suit, the parties submitted a July 18, 2003 joint status report in response to the court's order directing that they participate in the Fed.R.Civ.P. 26(f) planning process and present a joint scheduling proposal. In the report, Daftary stated the following:
[Daftary's] position with regard to settlement is that, without a written agreement signed by [him] personally, and not merely [his] counsel, [he] cannot be forced to accept the terms of settlement stated in [the November 1, 2002 letter], because his verbal authorization to his counsel was insufficient absent a written settlement agreement with his signature.
P. App. 59.
MetLife moves for summary judgment, contending that the evidence establishes that Daftary — through his counsel, Thomas — orally agreed to settle Daftary I. Daftary opposes the motion, asserting that he did not authorize his attorney to settle the case for $150,000, that he never agreed to the settlement amount, and that his attorney misunderstood his willingness to settle for $150,000.
II A
In moving for summary judgment, MetLife relies, in pertinent part, on Daftary's statement in the July 18, 2003 joint status report that he verbally authorized his counsel to settle, but that this authority was insufficient absent a written settlement agreement that he personally signed. MetLife also cites Wood's testimony concerning his settlement negotiations with Thomas and the November 1, 2002 letter confirming the terms of the settlement, which Thomas and Wood both signed. It contends that this evidence establishes that Daftary orally agreed to settle his lawsuit, he authorized his attorney to settle, his attorney made a settlement offer that MetLife accepted, attorneys for both parties signed a letter that confirmed the agreement, and Daftary reneged on the basis — rejected in Daftary I — that he cannot be bound absent his signature on a written agreement. MetLife maintains that Daftary breached the agreement when he repudiated it, and that it is entitled to specific performance and to its attorney's fees under Texas law.
Daftary opposes MetLife's motion on the grounds that he never agreed to the settlement agreement and never authorized his attorney to communicate the settlement offer to MetLife, that there was a miscommunication between him and his counsel, and that he did not repudiate a settlement agreement because none was reached. In support of his opposition, he relies on his affidavit, in which he avers that he advised Thomas on October 30, 2002 that he was willing to settle for $150,000 ($100,000 of which would not be taxable to him), net of all attorney expenses and court costs, Daftary Aff. at ¶ 2(E); when Thomas telephoned him on October 31 to inform him that MetLife would settle for $150,000, he asked her to confirm whether that amount was net of all attorney expenses and court costs or a gross amount, and that his express agreement would have been based on such a confirmation, id. at ¶ 2(F); he left a voice mail with her on November 1 because he had yet to understand the material terms of the offer, id. at ¶ 3; after 41 days without receiving any communication from Thomas, he received from her on December 11 a letter and the proposed settlement agreement that MetLife prepared, id. at ¶ 7; on December 16 and 18 he reminded her that he was unwilling to settle for anything other than $150,000, net of all attorney costs and court costs, id. at ¶ 8; and that he continues to believe no settlement was reached with MetLife and he is prepared to participate in the court-enforced arbitration process, id. at ¶¶ 9-10.
Daftary did not file an appendix, as required by N.D. Tex. Civ. R. 56.6(a). Because the affidavit is brief and is the only evidence submitted in opposition to MetLife's motion, the court has disregarded this procedural defect.
MetLife objects to Daftary's affidavit and moves to strike it, contending, inter alia, that it is an impermissible attempt to vary his judicial admission in the joint status report that he verbally authorized his attorney to settle the case. Citing Edwards v. Texas-New Mexico Power Co., 259 F. Supp.2d 544 (N.D. Tex. 2003) (McBryde, J.), Daftary asserts that this court should "follow its usual practice," deny the motion to strike, and give the evidence the weight it deserves. D. Resp. Mot. Strike at [2]. In his response to MetLife's summary judgment motion, Daftary argues that the statement in the joint status report is not a judicial admission and cannot be used as evidence that he agreed to the settlement.
MetLife also moves to strike the affidavit and Daftary's summary judgment response on the basis that they are untimely. MetLife filed its summary judgment motion on December 19, 2003. Daftary's response was due on January 8, 2004, see Rule 7.1(e), but he did not respond until February 5, 2004. Although the response and affidavit are untimely, the timing of the filing has not interfered with the decisional process of the court. MetLife's February 19, 2004 motion to strike is therefore denied to the extent based on the assertion that Daftary's response and affidavit were untimely.
MetLife also moves to strike Daftary's March 19, 2004 response to its objections and motion to strike, contending that the response is untimely. Although MetLife is correct, the court denies the motion for the same reason: the timing of the filing has not interfered with the decisional process of the court. MetLife's April 5, 2004 motion to strike is therefore denied as well.
The court disagrees with Daftary that a motion to strike is improper. The correct procedure is to file a motion to strike when evidence submitted in support of or opposition to summary judgment is inadmissible. See Auto Drive-Away Co. of Hialeah v. Interstate Commerce Comm'n, 360 F.2d 446, 448-49 (5th Cir. 1966). The court declines to accept Daftary's argument or to follow the procedure set out in Edwards.
B
The court declines to strike the pertinent portions of Daftary's affidavit on the ground that they are contrary to a binding judicial admission. "A judicial admission is a formal concession in the pleadings or stipulations by a party or counsel that is binding on the party making them." Martinez v. Bally's La., Inc., 244 F.3d 474, 476 (5th Cir. 2001). A statement "may be considered a judicial admission if it was made intentionally as a waiver, releasing the opponent from proof of fact." Id.
The court holds that Daftary's statement in the joint status report is not a judicial admission. The statement was not made as an intentional waiver, releasing MetLife from its burden of proving that Daftary authorized Thomas to settle. Cf. id. at 477 (holding that plaintiff's attorney made judicial admission when, during plaintiff's deposition, attorney asserted that plaintiff was not seeking damages for physical injury). That it was not so intended is corroborated by the fact that it is a mistaken (by both parties) response to the court's June 19, 2003 order. In the order, the court instructed the parties to state their respective positions regarding settlement of the instant lawsuit, not concerning whether they had settled Daftary I. The order stated, in relevant part:
[The parties] must include in the proposal — under a separate heading — a status report that sets out the progress made toward settlement and the present status of the settlement negotiations.
June 19, 2003 Order at 2. The court therefore declines to treat Daftary's statement as a binding judicial admission and to strike from his affidavit evidence that would be contrary to such an admission.
MetLife also objects to ¶ 1 of Daftary's affidavit, arguing that it is conclusory and states a legal opinion that Daftary is not qualified to give. The court overrules the objection because the statement is neither conclusory nor states a legal opinion.
MetLife also asserts a best evidence objection to ¶¶ 4, 5, and 6 of the affidavit to the extent Daftary discusses the content of three letters he sent to Thomas during the settlement discussions. Assuming arguendo that these paragraphs are inadmissible, their contents do not affect the court's decision.
III
The court next turns to the merits of MetLife's motion for summary judgment. Because MetLife will bear the burden at trial of proving its claims for breach of contract and declaratory relief, to be entitled to summary judgment it "must establish `beyond peradventure all of the essential elements of the claim[s] [.]'" Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)).MetLife contends that Daftary authorized his counsel to settle his lawsuit before arbitration and that it is impermissible to argue subsequently that, without his written agreement, the settlement reached between MetLife's attorney and his attorney is invalid. Daftary responds that he never voluntarily or knowingly authorized his attorney to enter into settlement agreements and that he never consented to settle for $150,000, including expenses.
"An employee must knowingly and voluntarily consent to a settlement agreement under which he waives the right to pursue his action." Sanders v. Mary Kay Inc., 1999 WL 20834, at *1 (N.D. Tex. Jan. 13, 1999) (Fitzwater, J.) (citing Alexander v. Gardner-Denver Co., 415 U.S. 36, 52 n. 15 (1974)). The settlement need not be in writing. Id.
Daftary contends he cannot be bound by the settlement letter because he did not authorize Thomas to enter into this agreement. MetLife maintains that an attorney is presumed to have authority to enter settlement agreements on behalf of her client and that a settlement can be vacated by the client only based on evidence demonstrating that the attorney did not have valid consent.
The law is settled that an attorney of record may not compromise, settle or consent to a final disposition of his client's case without express authority. . . . However, this general principle must be considered in connection with the rule that an attorney of record is presumed to have authority to compromise and settle litigation of his client, and a judgment entered upon an agreement by the attorney of record will be set aside only upon affirmative proof of the party seeking to vacate the judgment that the attorney had no right to consent to its entry.Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386, 390 (5th Cir. 1984) (quoting St. Amand v. Marriott Hotel, Inc., 430 F. Supp. 488, 490 (E.D. La. 1977)). A party who gives the attorney "general authority to settle cases assigned to him, without making him aware of specific limits on this authority, . . . would be estopped to deny this authority where the attorney exceeded what the client regarded as the limits." Smedley v. Temple Drilling Co., 782 F.2d 1357, 1360 (5th Cir. 1986) (citing Mid-South Towing Co., 733 F.2d at 391).
Despite the presumption in favor of MetLife's position, Daftary has adduced affirmative proof that would permit a reasonable trier of fact to find that he did not explicitly authorize his attorney to enter into the settlement agreement. In his affidavit, he states that he had already rejected previous offers from MetLife when, on October 31, 2002, he contacted Thomas and advised her of his willingness to accept a settlement of $150,000, net of fees, conditioned on the non-taxability to him of the first $100,000. The following day, Thomas called Daftary and informed him that MetLife was willing to settle the case for $150,000. According to Daftary, during this conversation, he inquired whether this sum was net of fees. Additionally, he avers that he did not enter into the settlement agreement and continues to believe that no settlement agreement was reached. Viewing this evidence in a light most favorable to Daftary, as the court must, see, e.g., Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000), the court concludes that Daftary has adduced evidence that raises a genuine issue of material fact whether he authorized Thomas to settle the case for $150,000, including fees. MetLife has not demonstrated beyond peradventure that Daftary is liable on its claims for declaratory judgment and breach of contract.
* * *
Accordingly, the court denies MetLife's motion for summary judgment.