News & Noteworthy

Authored - NJ Contract Law Update - More Governmental-Settlement Uncertainties
FEBRUARY 19, 2013 | Windels Marx - Commercial Litigation

In a settlement dispute that arose out of a public disciplinary matter, In Re Gliottone, 2013 WL 275956 (N.J.App. Div. Jan. 25, 2013), the Court implicitly highlighted the differential results one can expect in private and governmental settlements respectively. Ostensibly, the analysis in Gliottone involved standard contract issues. However, reading between the lines, it appears that in a close question, the facts might have supported a finding of a settlement, if the matter had been a private matter rather than a public one.

The facts and judicial conclusions were these:

1. Appellant (Gliottone) admitted infractions which led to his removal or suspension, depending upon one's perspective.

2. Appellant's separation from work totaled eleven months as of the time an ostensible settlement was reached.

3. More specifically, on July 16, 2010, eleven months after the separation from work, the Appellee's counsel (representing Mercer County) sent the following email:

  • "I know this is way late but I was finally given authorization today to settle this matter if your client is still willing to accept a six month suspension. I apologize again for the delay. If you[r] client is willing to accept, please let me know asap so I can schedule him for a return to work physical and drug test and get him back to work."

4. In response, Appellant's attorney eventually wrote:

  • "He will accept the six months. Let's work out the rest of the agreement. I'll call [the ALJ] now and tell him to stop whatever he is doing [because] we have settled the matter."

5. Two major series of problems then arose:

  • (a) The County would not consent to the proposed settlement; the consent supposedly was conditioned on the Warden agreeing; and Appellant's attorney supposedly 'knew the process'.
  • (b) A term found to be material--how would the extra five months be treated, beyond the maximum allowable six-month suspension--had not been discussed or agreed upon.

The discrepant results (between settlement and adjudication) were extreme. Rather than a six-month suspension including past separation time, and rather than Appellant even having the opportunity to simply forgo any entitlements to the other five months, the Appellant was terminated. It appears at least debatable that the underlying conduct arguably could have supported either result.

The Appellate Division focused on contract law rather than government-settlement limitations. Discussing the enforceability of the settlement agreement, the Court concentrated on lack of apparent authority. The Court also considered the principal's acts taken to establish the agent's authority. The Court also focused on the failure to address the 'five additional months' as a material term. For all these reasons, the Appellate Division held the agreement unenforceable; or, more specifically, gave deference to the agency's conclusion that the settlement was not enforceable.

Because of the need for attorneys to be able to rely upon each other when making settlement 'deals'--such as the unconditional one ostensibly reflected in the above exchange (an exchange between parties who would have been aware of the other issues, such as the 'additional five months')--the most logical conclusion to be drawn from Gliottone is that the Court was influenced at least subconsciously by the governmental setting. As stated in my November 26, 2012 article regarding the Contract Applicators case: "apparent authority cannot supersede the limitations on a government's requisite formalities in approving...contractual undertakings". This author respectfully suggests that had the attorneys' email exchange involved private litigation, the Court likely would have found a way to sustain the settlement.

The moral of the story is that when dealing with governmental litigation, a settlement should 'defensively' be assumed to be a potential governmental contract, like any other; and any ostensible offer and acceptance that would be binding in the private settlement sphere should be taken with a grain of salt until there is official agency approval. Be wary in this context as to what constitutes 'official agency approval'; even the head of an agency may never have approval-authority that supersedes an official resolution of the full agency.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

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