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Associated Estates LLC v. BankAtlantic

Court of Appeals of Columbia District

July 27, 2017

Associated Estates LLC, et al., Appellants,
BankAtlantic, et al., Appellees.

          Argued October 18, 2016

         Appeal from the Superior Court of the District of Columbia (CAB-2344-06) (Hon. John M. Mott, Trial Judge)

          Yaida O. Ford for appellants. Thomas G. Corcoran Jr., Melvin White, and Laina Lopez were on the brief for appellants.

          David J. Ludlow, with whom Ryan C. Morris and Kristen A. Knapp were on the brief, for appellees.

          Before Fisher and Thompson, Associate Judges, and Ruiz, Senior Judge.

          Thompson, Associate Judge

         Plaintiffs/appellants, Associated Estates, LLC, and its managing member and corporate representative, Barrett Ware, (together, "AE") contend that the trial court (the Honorable John M. Mott) erred and abused its discretion in enforcing a settlement between AE and defendants/appellees BankAtlantic; Heartwood 88, LLC; Heartwood 87, LLC; Sunrise Atlantic, LLC; and Fidelity Tax, LLC (together, "BankAtlantic"). We affirm.


         The parties had a contract under which AE performed research and portfolio-servicing work for BankAtlantic in connection with tax lien certificates. On March 24, 2006, AE filed a complaint against BankAtlantic, alleging breach-of-contract and other claims and seeking both equitable relief and damages in excess of $19 million. In February 2012, after nearly six years of discovery and motions practice, the parties participated in a private mediation before a retired Superior Court judge in an attempt to resolve the counts of the complaint that had survived a motion to dismiss. The private mediation was unsuccessful.

         Thereafter, on February 17, 2012, Judge Mott held a case status conference for which Mr. Ware was not present. During the status conference, counsel for AE told Judge Mott that while the parties were "closer than . . . in the past, " they had not been able to reach a settlement during the private mediation. Judge Mott asked whether the parties "[w]ant[ed] to let [him] know the amounts . . . ." BankAtlantic's counsel responded that "[t]he last offers" were BankAtlantic's offer to settle the case for $1 million and AE's counter-demand of $1.8 million. AE's counsel acknowledged that those "dollar figures [we]re correct." Judge Mott then suggested a court-led settlement conference to be held on April 4, 2012.[1] Counsel for both parties agreed.

         The April 4 settlement conference began with Judge Mott inquiring about the "latest demand from the plaintiffs." Counsel for AE responded that the dollar figures remained the same. Judge Mott then referred to the $800, 000 "gulf, " said that there appeared to be "a reasonable chance to settle this matter, " and said that he would talk separately with each side, and with anyone they cared to bring along, in separate jury rooms (a format that Judge Mott later observed was a "standard procedure" that judges "are trained to employ"). No one objected.

         After seven hours of negotiations, the parties reached an oral agreement to settle the lawsuit for $1.55 million. The judge and the parties and their respective counsel then returned to the courtroom to put the terms of the agreement on the record. After Judge Mott summarized his understanding of the agreement and AE's counsel and BankAtlantic's counsel added details about the latter's agreement to prepare a first draft of a written agreement and agreed that the settlement payment would be made to the trust account of AE's counsel, Mr. Ware thanked the court. A moment later, however, in what he later described as an "outburst, " Mr. Ware said, "You all screwed me. You all screwed me."[2] Judge Mott then announced a "short break" in the proceedings and suggested that Mr. Ware step into the hallway with his counsel. When AE's counsel returned without Mr. Ware, who, he told the court, was "upset, " Judge Mott said that the proceedings were "really not done if [the court's] impression could potentially be that [Mr. Ware is] not entering into this voluntarily." Judge Mott added that he wanted to ask Mr. Ware whether he had entered into the settlement agreement voluntarily.

         When it appeared that Mr. Ware might not return to the courtroom that day, Judge Mott suggested that AE's counsel "come in some time tomorrow [or "the next day"] with Mr. Ware, and just finalize things on the record." When appellant thereafter returned to the courtroom (after what Judge Mott observed had been "nearly twenty minutes"), Judge Mott inquired, "So, Mr. Ware, is this your agreement? Is this what you want at this point? It may not be exactly what you expected or wanted, initially, but is this what you want me to do today to approve this agreement and move on?" Judge Mott told Mr. Ware that he was "not going to approve" the agreement "unless the people that are involved on both sides feel it was a voluntary decision, that they weren't forced into this in any way, " and "unless this is what you want. So it's not about what you said in the back. It's about what you want to say now." Judge Mott then added that Mr. Ware should "feel free" "to have another minute" and asked whether Mr. Ware wanted "to speak with your lawyers for just a second or do you want to tell me what you think?" Judge Mott also said that he had to "go in about five or ten minutes, to pick up my kids" but that "other than that, . . . I have time." Mr. Ware said that he would "talk to [his lawyers] for about 45 seconds or so." After a "[p]ause" in the proceedings, Mr. Ware told the court he would "take the settlement."

         Several days after the settlement conference, BankAtlantic's counsel circulated a draft of the written settlement agreement, but Mr. Ware did not sign the agreement. On May 8, 2012, AE's counsel finally informed BankAtlantic's counsel that he was "unable to tell you if or when [Mr. Ware would] sign the settlement agreement." On May 15, 2012, BankAtlantic filed its motion to enforce the settlement agreement. AE, represented by new counsel, opposed BankAtlantic's motion, attaching a declaration from Mr. Ware and arguing that the agreement should not be enforced because (1) the settlement conference was an improper ex parte communication, (2) counsel for both parties had improperly disclosed material confidences, (3) the court and AE's counsel had exerted undue influence, and (4) Mr. Ware "was not advised or informed that [AE] had the right to decline to engage in settlement discussions mediated by the trial judge."

         On September 24, 2012, Judge Mott granted the motion to enforce the settlement agreement. On October 9, 2012, AE filed a "[m]otion for [r]econsideration" of the order enforcing the settlement agreement, relying on Superior Court Civil Rules 59 (e) and 60 (b). The motion was accompanied by a "Second Declaration" of Mr. Ware. AE also filed a motion asking the court to seal that Second Declaration and a motion and accompanying affidavit asking Judge Mott to recuse himself. Judge Mott denied those various requests on October 8, 2014. On November 6, 2014, AE filed a notice of appeal in which it designated, as the orders to be reviewed, the (1) denial of the motion to recuse; (2) denial of the motion to seal, and (3) denial of the motion for reconsideration. AE has abandoned its appeal from denial of the motion to seal, but argues that this court's review should reach the order granting the motion to enforce as well as the order denying reconsideration.

         AE's primary contentions on appeal are that the trial court erred in granting the motion to enforce and abused its discretion in not setting aside the enforcement order because the agreement was the product of undue influence by AE's then-counsel and the result of a procedurally unconscionable process.


         We begin by deciding what orders are before us for review. BankAtlantic argues that because AE's Notice of Appeal did not designate the order enforcing the settlement agreement as an order being appealed, we may review only the denial of the motion for reconsideration, as to which our review is for abuse of discretion.[3] AE contends that the effect of its timely Rule 59 (e) motion is that we may review both the denial of the motion for reconsideration and the judgment enforcing the settlement agreement, notwithstanding that the latter was not listed on the Notice of Appeal. We are satisfied that AE has the better of the argument.

         The rules of this court provide, just as they did at the time AE filed its Notice of Appeal, that a "notice of appeal must . . . designate the judgment, order, or part thereof being appealed." D.C. App. R. 3 (c)(1)(B). However, at the time AE filed its appeal, Rule 3 (c)(5), reflecting a 2004 amendment, [4] further provided in pertinent part that:

Parties are encouraged to use Form 1 [which directs the appellant to enter the "[d]ate of entry of judgment or order appealed from"] . . ., though the use of a particular form is not required. Failure to provide any of the information requested on Form 1 . . . except for the specification of the party or parties taking the appeal and the designation of the judgment or order, or part thereof being appealed, will not deprive the court of jurisdiction to consider the appeal.

D.C. App. R. 3 (c)(5) (2014) (emphasis added). We said in Vines that notwithstanding our general "liberal construction" of Rule 3, the warning contained in subsection (c)(5) obliged us to limit our review to the orders designated in the appeal notice. See 935 A.2d at 1083. BankAtlantic relies on Vines in arguing that the order enforcing the settlement agreement ...

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