ATTORNEY FOR APPELLANTS
Daniel G. Suber
Valparaiso, Indiana
ATTORNEY FOR APPELLEE
Jerry T. Jarrett
Gary, Indiana
__________________________________________________________________
IN THE
SUPREME COURT OF INDIANA
__________________________________________________________________
MICHAEL GEORGOS and )
PANGERE CORPORATION, )
)
Appellants (Defendants Below), ) Indiana Supreme Court
) Cause No. 45S03-0207-CV-401
v. )
) Indiana Court of Appeals
CLAUDE JACKSON, ) Cause No. 45A03-0106-CV-216
)
Appellee (Plaintiff Below). )
__________________________________________________________________
APPEAL FROM THE LAKE COUNTY SUPERIOR COURT
The Honorable Gerald N. Svetanoff, Judge
Cause No. 45DO4-9708-CT 00651
__________________________________________________________________
ON PETITION FOR TRANSFER
__________________________________________________________________
June 26, 2003
BOEHM, Justice.
We hold that an order directing the parties to consummate a mediation
settlement agreement, without more, is not a final judgment, and that an
attorney attending a mediation settlement conference may bind the client to
a settlement agreement despite the client’s absence.
Factual and Procedural Background
Claude Jackson was injured in a collision with a truck driven by
Michael Georgos, an employee of Pangere Corporation, and sued both Georgos
and Pangere (collectively “Defendants”).[1] The trial court ordered
mediation. Although the order does not appear in the record, it is clear
that the mediation was to be conducted under the Indiana Alternative
Dispute Resolution Rules. Rule 2.7(B)(2) provides:
All parties, attorneys with settlement authority,
representatives with settlement authority, and other necessary
individuals shall be present at each mediation conference to
facilitate settlement of a dispute unless excused by the court.
Jackson did not appear at the mediation. No party contends that his
attendance was excused by the trial court. His attorney and an attorney
representing both Defendants were present. Jackson’s attorney stated at
the mediation that he had the authority to settle, and Jackson has never
disputed that this authority existed as of that time. The mediation
resulted in a document signed by both attorneys and the mediator. It reads
in its entirety:
C O N F I D E N T I A L
MEDIATION SETTLEMENT AGREEMENT
Come now the parties, by counsel, for mediation on November 2,
1998. Mediation of the claims resulted in the following settlement:
1. Defendants’ insurer will pay the plaintiff $94,500.00 in
exchange for a full release.
2. Plaintiff agrees to be responsible for all liens.
3. Costs of mediation will be shared equally by the parties.
/s/ Frederick J. Ball
Attorney for [Defendants]
/s/ Robert L. Lewis
Attorney for [Jackson]
/s/ Daniel W. Glavin, Mediator
Date: November 2, 1998
The mediator reported to the court that the case had been settled.
At the time of the mediation Jackson had already incurred medical expenses
of approximately $85,000.00. At some point after the mediation Jackson
advised the Defendants that he had repudiated the settlement. The
Defendants then filed a “Motion to Enforce Mediation Settlement Agreement.”
Jackson responded that at the time of the mediation both he and his
attorney had believed that the limit on the policy covering the Defendants
was $100,000 but they had subsequently learned that the limit was $1
million. Based on this factual predicate, Jackson asserted a variety of
legal theories (fraud, mistake, etc.) he contended warranted voiding the
settlement agreement.
On August 2, 1999, the trial court granted the Motion to Enforce, but
did not dismiss the complaint. Apparently treating the grant of the motion
as a final judgment, almost five months later, on December 31, 1999,
Jackson filed a Trial Rule 60(B)(8) “Motion for Relief from Judgment,”
asserting that because ADR Rule 2.7(B)(2) required the parties as well as
the attorneys to be present at a mediation, any agreement reached in the
absence of the parties was a nullity. The trial court agreed with Jackson
and on February 22, 2000, granted Jackson’s motion for relief from
judgment. The case went to trial and on April 9, 2001, the jury returned a
verdict for Jackson in the amount of $462,000. The Defendants appealed,
asserting among other things that the trial court lacked jurisdiction to
grant the “Motion for Relief from Judgment” because it was filed too late
to be granted as a motion to correct errors or for reconsideration of a
final judgment, and, if viewed as a Trial Rule 60 motion, stated no ground
for relief under that rule.[2]
The Court of Appeals reversed. The Court of Appeals first held that
the August 2 order enforcing the settlement agreement was a final judgment.
Accordingly, the Court of Appeals reasoned that the trial court lost
jurisdiction over the case after thirty days when the time for appeal or a
motion to correct errors lapsed on September 1, 1999. The Court of Appeals
also held that Jackson’s Trial Rule 60 motion was improperly granted
because it raised no facts not known at the time of the August 2 order. As
a result, the dispute was resolved by the August 2 order, and the Court of
Appeals ruling reinstated the order granting the Motion to Enforce. This
Court granted transfer on July 19, 2002. For the reasons given below, we
reach the same result as the Court of Appeals, but for different reasons.
I. Appealability of Order Enforcing Settlement Agreement
The Court of Appeals concluded that the grant of the Defendant’s
Motion to Enforce Mediation Settlement Agreement was appealable as a final
judgment and also under Trial Rule 54(B). For the reasons given below, we
conclude it was neither.
Succinctly stated, a final judgment “disposes of all issues as to all
parties thereby ending the particular case.” Doperalski v. City of
Michigan City, 619 N.E.2d 584, 585 (Ind. Ct. App. 1993). It leaves nothing
for future determination. Thompson v. Thompson, 259 Ind. 266, 269, 286
N.E.2d 657, 659 (1972). This doctrine is now formalized in Indiana Rule of
Appellate Procedure 2(H), which provides that a judgment is final if, “(1)
it disposes of all claims as to all parties . . . .” Ind. Appellate Rule
2(H). The order did not call itself a judgment, and did not enter judgment
for $94,500. Rather, it merely ruled on a motion and directed the parties
to “take all measures to consummate the settlement . . . within (30) thirty
days . . . .”
Both the parties and the trial court treated Jackson’s motion for
relief from judgment as properly filed under Trial Rule 60(B)(8). The
Court of Appeals concluded that because the parties and the trial court
treated the trial court’s August 2 order as a final judgment, whatever
defects existed in the ruling as a final judgment were cured. We do not
agree that the views of the parties or the trial court resolve this issue.
Whether the order was a final judgment governs the appellate courts’
subject matter jurisdiction, and unlike most contentions, lack of
jurisdiction is not waived by the parties. Neither the parties nor the
trial court can confer appellate jurisdiction over an order that is not
appealable either as a final judgment or under Trial Rule 54(B). To the
contrary, the lack of appellate jurisdiction can be raised at any time, and
if the parties do not question subject matter jurisdiction, the appellate
court may consider the issue sua sponte. Albright v. Pyle, 637 N.E.2d
1360, 1363 (Ind. Ct. App. 1994).
The trial court’s grant of the Motion to Enforce was not a final
judgment because it did not end the case. The relief requested by the
Defendants was that the trial court uphold the validity of the settlement,
and order Jackson to enter into a joint stipulation of dismissal. By its
terms, the motion asked the trial court to order Jackson to sign the
settlement agreement, which had already been signed by his attorney, and
asked that the trial court order the Defendants to pay Jackson the agreed
amount. In granting the Defendant’s motion, the trial court order directed
Jackson, “to take all measures necessary to consummate the settlement . . .
within 30 days.” This did not dismiss the case, and left open what would
happen if, as in fact turned out to be the case, Jackson did not comply
with the directive to consummate the settlement.
A disposition of all claims requires more than the entry of a ruling
on a motion without entry of judgment. See Constantine v. City-County
Council of Marion County, 267 Ind. 279, 280, 369 N.E.2d 636, 637 (1977)
(entry granting a motion to dismiss under Rule 12(B)(6) for failure to
state a claim was not a final judgment, given the right under Trial Rule
12(B)(8) to replead); compare Parrett v. Lebamoff, 179 Ind. App. 25, 26-27;
383 N.E.2d 1107, 1108-09 (1979) (entry stating grounds for dismissal,
dismissing claim, and awarding costs to plaintiff was a final judgment). A
judgment that fails to determine damages is not final. First Fed. Sav. &
Loan Ass’n v. Stone, 467 N.E.2d 1226, 1231 (Ind. Ct. App. 1984).
The Court of Appeals concluded that even if the August 2 order was not
a final judgment it met the requirements of an order appealable under Trial
Rule 54(B) because “had it been carried out, [it] would have led to the
entry of an ultimate determination . . . between Jackson and the
Appellants.” Georgos v. Jackson, 762 N.E.2d 202, 206 (Ind. Ct. App. 2002).
We disagree that this is sufficient. Many orders, if carried out, will
ultimately lead to a final judgment. Under this phrasing of the issue many
orders would be at least arguably appealable even though they are plainly
not final judgments and are subject to various contingencies, including
whether the parties do in fact carry the order out. But even if it were
the case that this order ended all disputes between Jackson and the
Defendants, it would not be appealable under Rule 54(B). Trial Rule 54(B)
certification of an order that disposes of less than the entire case must
contain the magic language of the rule. This is intended to provide a
bright line so there is no mistaking whether an interim order is or is not
appealable. As we recently held in Martin v. Amoco Oil Co., 696 N.E.2d 383
(Ind. 1998), an order becomes final and appealable under Rule 54(B) “only
by meeting the requirements of T.R. 54(B). These requirements are that the
trial court, in writing, expressly determine that there is no just reason
for delay and, in writing, expressly direct entry of judgment.” Id. at
385. The trial court made no Rule 54(B) finding here. As a result the
August 2 order was not final under Trial Rule 54.
Even though the trial court’s August 2, 1999, ruling granting the
Defendants’ Motion to Enforce was an interlocutory order, it was arguably
appealable as of right under Appellate Rule 14(A)(2) because it required
the execution of a document. However, there is no requirement that an
interlocutory appeal be taken, and Jackson may elect to wait until the end
of litigation to raise the issue on appeal from a final judgment. In re
Newman, 174 Ind. App. 537, 545-46, 369 N.E.2d 427, 432 (1977) (though party
may have had an interlocutory appeal of right for payment of money, it was
not waived and could be raised in appeal from final judgment).
For all of these reasons, the August 2, 1999, order was not required
to be appealed and the issues Jackson raises are properly before us in this
appeal from the final judgment entered after the jury trial.
II. The Effect of Mediation Settlement Agreement
Jackson does not argue that his attorney lacked the actual authority
to enter into a settlement at the mediation. Rather he contends that ADR
Rule 2.7(B)(2), which requires the parties to be present at a mediation,
rendered unenforceable any settlement in Jackson’s absence. We agree that
the rule required Jackson’s presence, but do not agree that his absence
invalidates his attorney’s agreement to settle the case.
In Koval v. Simon Telelect Inc., 693 N.E.2d 1299 (Ind. 1998), this
Court held that an attorney has the inherent authority to bind a client in
an in court proceeding, and a mediation session under the ADR rules is “in
court” for this purpose. Id. at 1306-07. Jackson attempts to distinguish
Koval because Koval did not involve a mediation conducted in violation of
the ADR rules. The “violation” Jackson cites is Jackson’s own failure to
attend the mediation. As Chief Justice Brook observed, a party may not
take advantage of errors of its own making. Jackson further distinguishes
Koval on the basis that Koval did not involve a mediation under the ADR
rules. Koval expressly did not differentiate between settlement agreements
made within or outside the scope of the ADR Rules. It was not clear from
the record in Koval, which was a certified question from the federal court,
“whether the mediation was . . . administered . . . pursuant to . . . or .
. . wholly outside the rules.” Koval, 693 N.E.2d at 1307 n.12. But the
opinion in Koval made clear that the authority of the attorney depended on
whether the proceeding was governed by the ADR Rules. If so, the
proceeding is “in court” for purpose of the doctrine that an attorney
appearing in court has inherent power to settle the case. There is no
dispute that the mediation was under the ADR Rules in this case.
Accordingly, under Koval, the attorney at the mediation session had
inherent authority to settle. But this presents no issue in Jackson’s case
because actual authority is conceded. The issue is not whether the
attorney was authorized, but whether, despite that authority, the
settlement is unenforceable because of Jackson’s absence.
Indiana strongly favors settlement agreements. Scott v. Randle, 697
N.E.2d 60, 65 (Ind. Ct. App. 1998). And it is established law that if a
party agrees to settle a pending action, but then refuses to consummate his
settlement agreement, the opposing party may obtain a judgment enforcing
the agreement. Klebes v. Forest Lake Corp., 607 N.E.2d 978, 982 (Ind. Ct.
App. 1993); Brant Constr. Co. v. Lumen Constr. Inc., 515 N.E.2d 868, 876
(Ind. Ct. App. 1988). Settlement agreements are governed by the same
general principles of contract law as any other agreement. Ind. State
Highway Comm’n v. Curtis, 704 N.E.2d 1015, 1018 (Ind. 1998). Jackson
argues for an exception to this principle for agency doctrines incident to
settlement agreements reached at mediation sessions. Under basic
principles of agency law Jackson is bound by the settlement agreement. The
Restatement (Second) of Agency states that:
If an agent of a disclosed . . . principal makes an authorized
contract with a third person, the liability of the principal thereon
depends upon the agreement between the agent and the other party as to
the parties to the transaction.
Restatement (Second) of Agency, § 146 (1958). The Restatement further
states that “[u]nless otherwise agreed, a disclosed . . . principal is a
party to a contract . . . made by his agent within his authority.” Id. at
§ 147. In this case it is undisputed that Jackson’s attorney had the
authority to settle, and of course Jackson, the principal, was disclosed.
Jackson contends that an attorney’s authority to bind the client to a
settlement agreement is nevertheless constrained by ADR Rule 2.7. He
contends that ADR Rule 2.7(B)(2) invalidates settlements entered into under
mediations pursuant to ADR Rules if a party is not present and refuses to
sign an agreement reached by the party’s authorized attorney. We do not
agree that Rule 2.7 suggests that result. The purposes of the requirement
that parties and their attorneys be present at a mediation are several
fold. They include assuring that the authority to settle is available at
the mediation, but they also include facilitating settlement by creating an
environment where the parties and their attorneys hopefully receive and
appreciate the points of view of the other parties and the mediator. ADR
2.1 (role of mediator is to assist parties in “exploring areas of
compromise, and finding points of agreement . . . .”); State v, Carter, 658
N.E.2d 618, 623 (Ind. Ct. App. 1995) (goals of mediation include
identifying areas of agreement and reducing misunderstandings). Thus, even
if no settlement is agreed, the understandings reached may facilitate a
settlement in the future. Attendance at the mediation may help to elevate
the parties’ sense of the fairness of the proceeding, and that purpose is
frustrated if an agreement is reached in their absence. But to permit a
party to avoid an agreement by failing to attend is to reward disregard of
the rules. If an agreement is reached at the meeting, these purposes are
fully served even with a party’s unexcused absence. For that reason, and
the strong policy in favor of settlements, we hold that although the
agreement may be vulnerable to other attacks, if an attorney agrees in
writing at a mediation session to settle a claim, neither the presence of
the client nor ratification by the client is required to bind the client to
the settlement agreement. The attorney faced with an absent client can of
course refuse to agree. That risks exposure to the penalties for
nonattendance or lack of authority that are provided in ADR Rule 2.10, but
that course is ordinarily preferable to incurring an obligation on the part
of the client to which the client did not agree. If, as here, the issue is
not lack of authority, but a mistaken assumption that led the client to
confer actual authority, the grounds for relief from that circumstance are
found in bodies of law other than the ADR Rules.
Jackson also challenges the validity of the agreement because it was
not signed by the parties. ADR Rule 2.7(E)(2) states that “[i]f an
agreement is reached, in whole or in part, it shall be reduced to writing
and signed by the parties and their counsel.” This Court has emphasized
the importance of reducing any agreement reached to a signed written
agreement. In Vernon v. Acton, 732 N.E.2d 805 (Ind. 2000), we stated that:
Requiring written agreements, signed by the parties, is more likely to
maintain mediation as a viable avenue for clear and enduring dispute
resolution rather than one leading to further uncertainty and
conflict. Once the full assent of the parties is memorialized in a
signed written agreement, the important goal of enforceability is
achieved.
Id. at 810. The requirement of signature by the attorneys and parties is
designed to avoid disputes over what was or was not agreed to at the
mediation. Subsequent cases interpreting Vernon have reached the same
conclusion. Spencer v. Spencer, 752 N.E.2d 661, 664 (Ind. Ct. App. 2001);
Reno v. Haler, 734 N.E.2d 1095, 1098 (Ind. Ct. App. 2000). Thus there is
no disputing the importance of a signed settlement agreement.
The Rule’s provision that the agreement is to be signed by both the
attorney and the party is consistent with the requirement of ADR Rule
2.7(B) that both the attorney and the party are to be present.
Nevertheless, where the agent of the party is cloaked with the authority to
enter into the settlement agreement, and the party’s presence is unexcused,
the attorney’s signature is sufficient. To hold otherwise would give an
incentive to frustrate the mediation by boycott in hopes of renegotiating
after the mediation in return for the signature of the absent party. That
action would of course be sanctionable under ADR Rule 2.10, so it is not
risk-free. But we see no reason to reward or create an incentive to
disregard the rules by permitting the improperly absent party, Jackson, to
turn his absence to his advantage. In any event, it seems that Jackson’s
presence at the mediation would have made no difference. At that time both
Jackson and his attorney were under the impression that the policy limit
was $100,000. Jackson offers no reason to believe that had Jackson been
present at the mediation there would have been no agreement, or that he
would not have signed the written settlement agreement along with his
attorney.
We recognize that enforcing the settlement agreement gives Defendants’
insurer a windfall due to opposing counsel’s misunderstanding as to the
applicable insurance limits. In this appeal the only issues raised are the
effect of Jackson’s absence from the mediation. We are not presented in
this appeal with the contentions Jackson advanced in the trial court for
avoiding the agreement based on that misunderstanding. We note, however,
that because the August 2 order was not a final judgment, Defendants are
not correct that any motion for “reconsideration”[3] needed to be filed
within thirty days. Hubbard v. Hubbard, 690 N.E.2d 1219, 1221 (Ind. Ct.
App. 1998) (a trial court may reconsider previous orders until final
judgment is entered).
In sum, we hold that when an attorney attends a mediation under the
ADR Rules and executes a settlement agreement, that is sufficient to bind
the client who fails to attend without excuse.
Conclusion
This case is remanded to the trial court with instructions to enter
judgment pursuant to the terms of the settlement agreement.
SHEPARD, C.J., and DICKSON, and SULLIVAN, JJ., concur.
RUCKER, J. concurs in result.
-----------------------
[1] This suit was originally filed by Luther Stewart, a passenger in
Jackson’s car. Stewart filed a complaint against Georgos, Pangere, and
Jackson, and Jackson cross-claimed against Georgos and Pangere. Stewart
then settled his claim, and is not a party to this appeal. The cross-claim
by Jackson against Georgos and Pangere remains.
[2] The appeal also contends the jury verdict was excessive, and that the
trial court abused its discretion by allowing an undisclosed expert witness
to testify.
[3] We understand this contention to be based on Trial Rule 59 and the time
constraints applicable to a motion to correct errors. Defendants cite
Chapin v. Hulse, 599 N.E.2d 217 (Ind. Ct. App. 1992), which held that after
the trial court denied a motion to correct errors it had no jurisdiction to
entertain a motion to reconsider that denial. In Jackson’s case, there was
no motion to correct errors. If we view the motion denominated as a TR 60
motion to be in substance a motion to reconsider the August 2 order, it was
properly before the trial court because the trial court retained
jurisdiction after the interlocutory order and there is no time limit on
motions to reconsider interlocutory orders. At the hearing on the Rule
60/reconsideration motion, Jackson conceded the issues Jackson originally
advanced to avoid the agreement were correctly decided, and he does not
present them in this appeal.