I recently ran across a 1997 decision from the Florida First District Court. It provides clarity on settlements that may benefit many. The case is Long Term Management, Inc. v. University Nursing Care Center, Inc., 704 So.2d 669 (Fla. 1st DCA 1997).
This case is an involved dispute regarding a contract between two parties. It is interesting in the context of workers' compensation because many contracts are entered every day in workers' compensation. Parties engaged in litigation or dispute reach agreements for the delivery of various benefits and/or the dismissal of various claims.
Those agreements and resolutions may be of issues currently pled, or the entire case, of present benefit entitlement, past benefit entitlement, or of all benefit entitlement. Various states have come to adopt interesting characterizations for such agreements. In Florida, we have "stipulations" for specific benefits or dismissals and "settlements" for agreements that close all benefit entitlement.
For many years, Florida's statute did not allow settlement of entitlement to medical benefits except in a very narrow set of exceptional circumstances. When that statute changed, and medical care could be settled more freely, practitioners began dividing "settlement" here with adjectives like "medical open" and "medical closed." Other states have adopted similarly descriptive characterizations, one state refers to settlements as "full and final settlements." That has always seemed curious, leading me to want to ask how any other kind of "settlement" would not be oxymoronic. Some states do not allow settlement of future medical, leading them to far less interaction with Medicare and the federal government.
In Long Term Management, the trial court entered an order enforcing a settlement. The Court's analysis is interesting for two reasons. The first involves the making of a contract for the resolution of litigation. The litigation there began in 1994 and was not a personal injury or workers' compensation claim. It began with a contract for various services, and the allegedly "pretextual" or “bogus” termination of that contract. As that litigation progressed, the parties later reached another contract (settlement) to resolve their differences.
The assigned trial judge entered various orders, including a temporary injunction (an order preventing a party from taking action it might otherwise). The case is fairly complex in that regard, with various claims and counter-claims involved. It is fair to say that the parties had multiple disagreements about the terms and conditions of that original contract for services.
In 1996, another party was added to the case, and a hearing was scheduled regarding another injunction. The trial judge scheduled a hearing. As often happens, the lawyers found themselves waiting their turn on the day of the hearing and took that time to discuss their client's differences and disagreements. That opportunity to talk was apparently productive. When their turn came, they told the trial judge they had "reached a settlement," but that it was “subject to writing it down.”
The attorneys made representations to the court regarding what each would or would not do, and who owed money to whom. There were to be releases signed by all parties “identical in language and reciprocal.” The attorneys parted that day with a consensus that one party would prepare a written agreement and provide to opposing counsel. That was not the end, however.
The parties thereafter did not sign a written agreement. They could not seem to agree upon what they had agreed upon in those discussions. A motion to enforce the agreement was soon filed. The party seeking enforcement claimed that the attorney's statements in court were enforceable and “[e]xecution of a settlement document was not made a condition precedent to the settlement on the record but rather is a mere procedural formality which both parties are obliged to perform.” In other words, the absence of a writing to memorialize what was said, they argued, should not prevent enforcement. The other party argued that there was no settlement until the written document was prepared, agreed to, and signed.
The Court held a hearing on the motion to enforce the settlement. There was disagreement regarding whether the attorney's statements in court had covered all the outstanding issues; one issue in particular was notably contested, the disposition of a disputed $150,000. The Court did not deny enforcement, nor grant it. Instead, the Court concluded settlement was a possibility and announced it would take testimony regarding that $150.000 which was seemingly the remaining "bone of contention."
One party concluded that the trial judge had departed from the role of adjudication at that stage and was instead then participating in negotiations; at least one party thought the judge was morphing into a mediator. A motion to disqualify the judge was filed, and the court was recessed for consideration of the motion. When the judge returned to the courtroom, "he presented a substitute judge, and advised the proceedings would be conducted by the substitute judge." This process of disqualifying a trial judge was recently addressed in Disqualification Lessons from Pennsylvania (February 2018) and The Sleuthing Judge (October 2017)
The new judge proceeded with hearing testimony regarding the $150,000 and other settlement terms, and within a few days, enforced the settlement. The basis for that holding was the announcement of an agreement made in court back on the day the parties had that opportunity to discuss things as they waited. The enforcement order was appealed and the First District Court clarified some legal points important to settlements.
Critically, the Court reminded that settlements are contracts, and are interpreted and construed using contract law. Further, oral agreements are "fully enforceable." Despite the fact that a written memorialization will be completed, a verbal stipulation on the record "is an effective and enforceable settlement." However, to be enforceable, "a settlement agreement must be sufficiently specific and mutually agreeable as to every essential element.” In noting these points, the Court cited various prior cases (stare decisis (April 2017)) that are omitted here.
The Court in Long Term Management acknowledged that the parties used the word “settlement” with the trial judge. However, their other statements supported that "the parties intended the agreement would not be binding until reduced to writing and properly executed." The discussion on the record supported that there remained negotiations to finalize details. Thus, there was not "a clear understanding that the agreement was final and enforceable" at the time of the hearing.
There was no "settlement" in fact, though they used that word. It is the facts, not the label that control the outcome. Essentially, the parties had reached a broad agreement, but the details were to be written, exchanged and discussed, and eventually, the final agreement was to be signed. The appellate court therefore did not enforce the general agreement that was enunciated on the record.
The second reason that this analysis is of interest is the subject of "burden of proof." In the law, one party always has the burden of proving their case. In criminal law, that is familiar to anyone that has ever watched a television courtroom drama. Defendants are "innocent until proven guilty." The defendant comes to court innocent and leaves innocent unless the government proves that they are guilty. The "burden of proof" is on the government.
Similarly, the moving party (the party that wants relief from the court) in a civil proceeding has to prove they are entitled to relief. That might be an order directing another party to do something, to stop doing something, or an award of damages or workers' compensation benefits. The party seeking the relief must prove they are entitled to that relief.
The same applies when the relief sought is an order, such as the one in this case, concluding something (that the parties had a settlement agreement). Thus, the party that believed there was a settlement (Uniform Nursing Care Center or UNCC) "was required to demonstrate a meeting of the minds," meaning prove that there was a settlement (enforceable contract). Thus, the reason that Long Term Management (not the moving party) prevailed in this case may be (1) that there was no settlement reached that morning while waiting for the judge. Or, it may simply be (2) that UNCC failed to provide sufficient evidence to prove that there was.
That may seem like a subtle and perhaps hypertechnical distinction. But it is important for parties to remember the burden of proof. It is not the role of the trial court to find the truth, to investigate, or to sleuth (see The Sleuthing Judge (October 2017). It is the judge's role to hear the evidence that is presented. Then the judge applies the law that the parties raise to the evidence that the parties present. And the result is a decision. It may be a decision on perfect proof, or possibly a decision on imperfect or failed proof.
A great many struggle with that process. They are convinced that courts should find truth and assure justice. But, to do so, a judge would necessarily have to take a side in litigation. And, when a judge does so, then the judge abandons the role of the adjudicator and embarks on the path of an advocate. At least one party in this case believed that happened, causing them to seek disqualification of the original judge. Everyone should remember that as much as a party might appreciate the trial judge interceding on their behalf, they would undoubtedly be upset if the judge did so to help the other party or parties against them.
Several sound lessons from this analysis. Settlements are contracts. Contracts can be verbal. Judges should remain impartial. Evidence is critical. And, the burden of proof may be the most operative element in any decision. A worthwhile analysis by the court and a sound lesson for us all.
