MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), Jan 21 2016, 8:56 am this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE Tracy D. Knox John D. LaDue Brian E. Casey John Conway BARNES & THORNBURG LLP Paul Edgar Harold South Bend, Indiana LADUE CURRAN & KUEHN LLC South Bend, Indiana
IN THE COURT OF APPEALS OF INDIANA
B&R Oil Company, Inc. and January 21, 2016 Atlas Oil Company Court of Appeals Case No. Appellants-Defendants, 71A03-1503-PL-114 Appeal from the St. Joseph v. Superior Court The Honorable Jenny Pitts Manier, William E. Stoler, et al., Judge Appellees-Plaintiffs Trial Court Cause No. 71D05-1102-PL-34
Altice, Judge.
[1] This case arises out of a legal dispute between B&R Oil Company (B&R) and
Atlas Oil Company (Atlas) (collectively, the Oil Companies) and eighteen of
their gas station tenants (the Tenants). The Tenants claim, and the trial court Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 1 of 23 found, that an oral settlement agreement was reached at a November 2014
mediation. After the mediation, but before the written agreement was finalized,
an unrelated legal dispute arose between B&R and two of the Tenants, William
and Kathlyn Stoler (the Stolers) and Jeffery Levy, regarding the rights of first
refusal in their respective leases. Counsel for the Oil Companies and the
Tenants agreed to include language in the written settlement agreement
providing that the settlement would not release the Stolers’ and Levy’s right-of-
first-refusal claims. However, the Oil Companies subsequently refused to
execute the written agreement and insisted on a full, unconditional release of
claims, including specifically the right-of-first-refusal claims. The Tenants filed
a motion to enforce the settlement agreement and, after a hearing, the trial
court entered judgment in their favor. Specifically, the trial court concluded
that an enforceable oral settlement was reached at the November 2014
mediation and that the settlement was limited to issues raised in the instant
litigation. In other words, the Stolers’ and Levy’s right-of-first-refusal claims
remained viable.
[2] The Oil Companies now appeal and argue that the trial court erred in
concluding that the parties reached an enforceable oral settlement agreement at
the November 2014 mediation because neither the representatives of the Oil
Companies nor the representatives of the Tenants present on that date had
settlement authority. They also argue that no enforceable settlement was
reached because the parties did not agree on all material terms. The Oil
Companies further argue that the trial court abused its discretion by refusing to
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 2 of 23 permit them to cross-examine the Tenants’ counsel, John Conway, concerning
who had settlement authority for the Tenants.
[3] We affirm.1
Facts & Procedural History
[4] Atlas is a national fuel supply, logistics, and service company. B&R is a
regional distributor of oil and gas and an affiliate of Atlas. At the time relevant
to this case, B&R owned numerous retail gas stations in Indiana and Michigan,
some of which they leased to the Tenants. The Tenants were also parties to
gasoline supply agreements entered into with B&R and Atlas. This case stems
from a legal dispute between the Tenants and the Oil Companies concerning
ethanol sales between 2007 and 2009. The specifics of the dispute are not
material to the case before us, but in short, the Tenants alleged that the Oil
Companies artificially inflated the wholesale cost of ethanol they provided to
the Tenants. As a result, the Tenants alleged that they were deprived of
commissions from the sale of ethanol to which they were contractually entitled.
In 2010, the Tenants filed suit against the Oil Companies in St. Joseph Superior
Court claiming that B&R owed them commissions for the sale of gasoline.
[5] After three years of litigation, the parties met for court-ordered mediation in
February 2014. In attendance on behalf of the Oil Companies were William
1 We held oral argument in this matter on December 3, 2015. We commend counsel on the quality of their written and oral advocacy.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 3 of 23 Shaver, a non-lawyer, management-level employee of the Oil Companies; John
Ortoleva, in-house counsel for the Oil Companies; and Dean Groulx, outside
counsel for B&R. In attendance for the Tenants were attorneys Conway and
John LaDue, and Tenants William Stoler, Craig Ferrara, and Tim Cira.
During this mediation session, one of the Tenants settled his claims against the
Oil Companies. Shaver signed the written settlement agreement on behalf of
the Oil Companies. The remaining Tenants were unable to reach an agreement
with the Oil Companies, and the litigation continued.
[6] The Oil Companies later filed a motion to sanction the Tenants for not having
all of the Tenants physically present at the mediation. In their sanctions
motion, the Oil Companies alleged that, unlike the Tenants, the Oil
Companies’ party representatives were physically present at the mediation. The
trial court granted the motion and imposed a monetary sanction. On the same
date, however, the Oil Companies filed a motion to withdraw their request for
sanctions. The trial court granted the motion and vacated its order imposing
sanctions.
[7] On November 4, 2014, the parties again met to try to settle the case. Shaver,
Ortoleva, and Groulx again attended on behalf of the Oil Companies.
Attorneys Conway and LaDue attended for the Tenants, as well as Tenants
Stoler, Ferrara, and Cira. The parties disagree as to the outcome of this
settlement conference. The Tenants assert that the parties reached an
agreement as to all material terms. Conway testified that he was never told that
anyone else from the Oil Companies needed to approve the terms of the
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 4 of 23 settlement. The Oil Companies claim that the parties came to an agreement on
some issues that had previously prevented settlement, but they did not agree on
all material terms of a settlement. Specifically, the Oil Companies assert that
the parties did not agree on the nature and scope of the release to be executed.
The Oil Companies further assert that the parties agreed that there would be no
binding settlement until the agreement was reduced to writing and reviewed
and approved by Michael Evans, the president and chief operating officer of
Atlas. The trial court expressly rejected the Oil Companies’ version of events
and credited that of the Tenants.
[8] The parties agree that they reached an agreement on the following terms:
The Oil Companies would pay Tenants a lump sum of money.
The Oil Companies would make improvements to some of the Tenants’
facilities.
The Oil Companies would fund the settlement within thirty days.
The Oil Companies would dismiss a related arbitration proceeding
against Jim Wegner, one of the Tenants’ witnesses and a former
employee of the Oil Companies.
The Tenants would dismiss the litigation with prejudice.
Groulx would reduce the agreement to writing following the settlement
conference.
[9] Groulx did not deliver a first draft of the written settlement agreement (the
Written Agreement) to Conway until December 4, 2014—thirty days after the
settlement conference. Conway contacted Groulx in the interim asking about Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 5 of 23 his progress on drafting the Written Agreement. Groulx apologized for the
delay and requested wiring instructions from the Tenants, which Conway
promptly provided. Because it appeared that progress was being made toward
finalizing the settlement, the Tenants decided to waive the settlement term
requiring the Oil Companies to fund the settlement within thirty days.
[10] Sometime between December 4 and December 12, the Stolers and Levy
received notice from B&R that another company, Empire Petroleum Partners,
LLC, had agreed to purchase substantially all of B&R’s assets for $80 million.
Because the asset purchase agreement triggered the Stolers’ and Levy’s rights of
first refusal on the gas stations they leased from B&R, B&R sought to have the
Stolers and Levy either waive their rights of first refusal or match the entire $80
million purchase price.
[11] The Stolers and Levy refused to waive their rights and, instead of matching the
$80 million purchase price for all of B&R’s assets, requested that B&R provide
them with a price to purchase only their respective gas stations. When B&R
refused to do so, the Stolers and Levy brought a separate lawsuit against B&R
seeking to enforce their rights of first refusal. That suit is currently pending in
the St. Joseph Circuit Court.
[12] The first draft of the Written Agreement Groulx emailed to Conway on
December 4 contained a unilateral release of all of the Tenants’ claims against
the Oil Companies, running from the beginning of time through the “Effective
Date” of the Written Agreement, which was listed as “December ____, 2014.”
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 6 of 23 Exhibit 2B. Conway communicated to Groulx that the Tenants wanted the
release to be mutual, i.e., that the Oil Companies should also execute a general
and unconditional release of all claims against the Tenants. Groulx declined
this request, and in an email dated December 11, 2014 proposed to include a
release running from the Oil Companies to the Tenants “limited to freight, and
ethanol and motor fuel pricing issues from 2007 through 2009.” Appellant’s
Appendix at 366. Conway responded to Groulx’s email the next day, asking for
either mutual general releases or for the Tenants’ release to also be limited to
freight, ethanol, and motor fuel pricing from 2007 through 2009. In the same
email, Conway made reference to the Empire asset purchase agreement, but the
Stolers’ and Levy’s rights of first refusal were not mentioned.
[13] The Tenants subsequently accepted the draft language providing for a general
release from the Tenants and a limited release from the Oil Companies, with
one addition. In an email dated December 16, 2014, Conway indicated that
“we accepted your release language but added a sentence clarifying that
plaintiffs are not releasing any claims regarding their rights of first refusal with
respect to the Empire transaction.” Id. at 364. This sentence, which the parties
refer to as “the Carve Out,” reads as follows: “The parties agree that the release
of claims does not release any claims involving the Plaintiffs’ right of first
refusal contained in their respective leases.” Exhibit 2(B). Groulx did not object
to the inclusion of this language in the Written Agreement. Two days later, on
December 18, Conway had a telephone conference with Groulx, Ortoleva, and
another of the Oil Companies’ in-house lawyers, Philip Carbone. During the
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 7 of 23 conversation, the attorneys agreed to include the Carve Out in the written
settlement agreement.
[14] Later that same day, at 4:07 p.m., Groulx emailed the final Written Agreement
containing the Carve Out to Conway and copied Ortoleva and Carbone. In the
same email, Groulx stated that “my client is prepared to sign and fund the
settlement.” Appellant’s Appendix at 550. Seven minutes later, Conway
responded: “This agreement is acceptable and I will obtain signatures.” Id.
Twenty-three minutes later, Groulx responded: “We spoke too soon on our
end. We need to obtain approval for the proposed changes from management
at Atlas before we can finalize the settlement.” Id.
[15] The next day, in an email to Carbone on which Groulx and Ortoleva were
copied, Conway wrote that the Tenants were ready to close on the settlement
and that “[t]he resolution of the right of first refusal issue should not be tied to
the completion of the settlement as you suggested.” Id. at 555. In an email two
days later, Carbone told Conway that the Oil Companies would “not agree to
move forward with the proposed settlement unless the settlement agreement
includes provisions for the Stolers and Levy to waive the right of first refusal in
both of their respective leases.” Id. at 554.
[16] The Stolers and Levy declined to waive their rights of first refusal, and on
January 26, 2015, the Tenants filed their verified motion to enforce the
settlement agreement. The Oil Companies filed their verified response on
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 8 of 23 February 6, 2015. A bench trial was held on February 10, 2015, at which both
Conway and Groulx testified.
[17] Conway testified that he first became aware of Evans’s purported involvement
in the settlement when he received the Oil Companies’ verified response to the
motion to enforce the settlement agreement, which was signed by Evans.
Conway also testified that the Oil Companies’ representatives with settlement
authority were present at the November 4 settlement conference and that an
agreement was reached on all material terms that day. Groulx, on the other
hand, testified that Evans, and only Evans, had settlement authority on behalf
of the Oil Companies, and that the Oil Companies’ representatives had
conferred with Evans by telephone during breaks in the mediation that day.
Groulx further testified that Evans’s role had been communicated to Conway
both before and during the mediation, and that the parties had agreed only on a
framework for a proposed settlement in November 2014, and that Evans had
not approved any settlement. When confronted with the facts that Evans had
not been present at the February 2014 settlement conference and had not signed
the agreement reached that day to settle one of the Tenants’ claims, Groulx
claimed that he had conferred with Evans by telephone during breaks on that
date and that Evans had approved the resulting settlement.
[18] On March 5, 2015, the trial court entered a detailed order granting the Tenants’
motion to enforce the Written Agreement and setting forth special findings and
conclusions thereon. In the order, the trial court resolved the conflict between
Conway’s and Groulx’s testimonies in Conway’s favor, expressly finding him
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 9 of 23 to be a “credible witness.” Id. at 22. The trial court also listed specific reasons
for discounting Groulx’s testimony that Evans was the only one with authority
to enter into a settlement agreement for the Oil Companies. The trial court also
found that Conway reasonably understood Ortoleva to be the person
authorized to act as the Oil Companies’ agent for settlement purposes. The trial
court further found that the parties reached an agreement as to the material
terms of the settlement at the November 2014 mediation, and that settlement
was later memorialized in the Written Agreement. Finally, the trial court
found that the settlement was limited to issues raised in the instant litigation,
namely, freight charges and ethanol and motor fuel charges from 2007 through
2009. Thus, Stoler’s and Levy’s claims under their rights of first refusal
remained viable. The Oil Companies now appeal.
Standard of Review
[19] At the Oil Companies’ request, the trial court entered special findings and
conclusions thereon pursuant to Trial Rule 52. We therefore apply a two-tiered
standard of review, first determining whether the evidence supports the trial
court’s findings, and then whether the findings support the judgment. Infinity
Products, Inc. v. Quandt, 810 N.E.2d 1028, 1031 (Ind. 2004). We will not disturb
the findings or judgment unless they are clearly erroneous. Id.
[20] “The particular clearly erroneous standard that is to be employed depends upon
whether the appealing party appeals a negative or an adverse judgment.”
Romine v. Gagle, 782 N.E.2d 369, 376 (Ind. Ct. App. 2003), trans. denied. “A
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 10 of 23 negative judgment is one entered against a party who bears the burden of proof,
while an adverse judgment is one entered against a party defending on a given
question.” Serenity Springs v. LaPorte Cnty. Convention & Visitors Bureau, 986
N.E.2d 314, 319 (Ind. Ct. App. 2013) (quoting Garling v. Ind. Dep’t of Natural
Res., 766 N.E.2d 409, 411 (Ind. Ct. App. 2002), trans. denied). In this case, the
trial court entered judgment in favor of the Tenants, i.e., the parties bearing the
burden of proof at trial. See OVRS Acquisition Corp. v. Cmty. Health Servs., 657
N.E.2d 117, 125 (Ind. Ct. App. 1995) (noting that a party seeking to establish
the validity of a contract bears the burden of proving its existence), trans. denied.
The Oil Companies are therefore appealing an adverse judgment. Accordingly,
“we hold the trial court’s findings clearly erroneous if they are not supported by
substantial evidence of probative value.” Serenity Springs, 986 N.E.2d at 319.
Even if the evidence is substantial, we will reverse the judgment if we are left
with a definite and firm conviction a mistake has been made. Id.
[21] Additionally, to the extent that our disposition of this case turns on the
resolution of questions of law, our review is de novo. See Zukerman v.
Montgomery, 945 N.E.2d 813, 818 (Ind. Ct. App. 2011). Whether a contract
exists is ultimately a question of law. Sands v. Helen HCI, LLC, 945 N.E.2d 176,
180 (Ind. Ct. App. 2011), trans. denied.
1. Authority
[22] “Indiana strongly favors settlement agreements and if a party agrees to settle a
pending action, but then refuses to consummate his settlement agreement, the
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 11 of 23 opposing party may obtain a judgment enforcing the agreement.” Id. As a
general matter, a settlement agreement need not be in writing to be enforceable.
Id. “Settlement agreements are governed by the same general principles of
contract law as any other agreement.” Vance v. Lozano, 981 N.E.2d 554, 558
(Ind. Ct. App. 2012).
[23] The Oil Companies’ primary argument on appeal is that no binding settlement
agreement was reached at the November 2014 mediation because the
individuals present did not have settlement authority. “Authority is the power
of the agent to affect the legal relations of the principal by acts done in
accordance with the principal’s manifestations of consent to him.” Koval v.
Simon Telelect, Inc., 693 N.E.2d 1299, 1302 (Ind. 1998) (quoting Restatement
(Second) of Agency § 7 (1958)). Our Supreme Court has explained that there
are two main classifications of authority: actual authority and apparent
authority. Menard, Inc. v. Dage-MTI, Inc., 726 N.E.2d 1206, 1210 (Ind. 2000).
Actual authority is created “by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal’s account.” Scott v. Randle, 697 N.E.2d 60, 66 (Ind. Ct. App. 1998), transfer denied; see Restatement (Second) of Agency §§ 7, 33 (1958). Apparent authority refers to a third party’s reasonable belief that the principal has authorized the acts of its agent, Pepkowski v. Life of Indiana Ins. Co., 535 N.E.2d 1164, 1166- 67 (Ind. 1989); it arises from the principal’s indirect or direct manifestations to a third party and not from the representations or acts of the agent, id.; Drake v. Maid-Rite Co., 681 N.E.2d 734, 737-38 (Ind. Ct. App. 1997), reh’g denied.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 12 of 23 Id.
[24] We first address the Oil Companies’ argument that none of the representatives
present at the November 2014 mediation had authority to settle on the Oil
Companies’ behalf. Specifically, the Oil Companies argue that the only party
with actual settlement authority was Evans, and that neither Groulx nor
Ortoleva had apparent authority.
[25] With respect to actual authority, the trial court expressly rejected the Oil
Companies’ claim that Evans possessed sole settlement authority. In support of
its conclusion, the court gave several reasons for finding Groulx’s testimony to
that effect to be implausible. First, the trial court noted that Evans was not
present in person at the February 2014 settlement conference. Instead, Groulx,
Shaver, and Ortoleva attended on behalf of the Oil Companies, and Shaver, not
Evans, signed the settlement reached that day with one of the Tenants.
Moreover, the Oil Companies later filed a motion for sanctions against the
Tenants for violating a local rule requiring the presence of a representative with
full settlement authority. As the trial court noted, “[i]f Groulx’s testimony is to
be believed as to Evans’ authority, he invoked the Court’s extraordinary power
to impose a sanction for a violation of a rule he himself was guilty of violating.”
Appellant’s Appendix at 23. The court also noted that Groulx raised no objection
to the Carve Out and that it was only after Groulx stated that his clients were
ready to sign the Written Agreement that Groulx backtracked and stated that he
needed consent from management.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 13 of 23 [26] It is also noteworthy that Evans did not attend the November 2014 settlement
conference, and unlike Ortoleva, he was not copied on any of the email traffic
that followed. Indeed, Conway testified that he first became aware of Evans’s
involvement when the Oil Companies filed their response to the motion to
enforce the settlement agreement. Additionally, Evans did not appear or testify
at the evidentiary hearing in this matter. Under these facts and circumstances,
the trial court’s finding that Evans did not appropriate sole settlement authority
to himself was not clearly erroneous.
[27] Nevertheless, the Oil Companies note that the trial court made no express
finding that anyone present at the November 2014 had actual authority to settle
the case on the Oil Companies’ behalf. They note further that no evidence was
presented of any words or actions of the Oil Companies that would lead
Groulx, Ortoleva, or Shaver to believe that they had settlement authority or that
they understood that they possessed such authority. We note, however, that
such evidence is peculiarly within the knowledge of the Oil Companies, and
without an admission of actual authority, the Tenants could rely only upon
inference. By finding that Evans was not the only person with actual settlement
authority, the trial court implicitly found that that at least one other person
possessed such authority. Based on our reading of the trial court’s order as a
whole, it is apparent to us that the trial court believed that at least one of the Oil
Companies’ representatives present at the November 2014 mediation, whether
it be Groulx, Ortoleva, or Shaver, had actual settlement authority. This
inference was not clearly erroneous, and the Oil Companies’ arguments to the
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 14 of 23 contrary are simply requests to reweigh the evidence and judge witness
credibility, which we will not do on appeal.
[28] The trial court also made an express finding that Ortoleva had apparent
authority. Specifically, the trial court found that:
Defendants sent Groulx, Ortoleva and Sha[v]er to the Court- ordered mediation that occurred February, 2014. Ortoleva has not represented [the Oil Companies] in these court proceedings. The presence of Ortoleva and Sha[v]er at the Court-ordered mediation was reasonably understood by Conway, when considered in the light of all the evidence, as a representation by [the Oil Companies] that Ortoleva was a person authorized to act as [the Oil Companies’] agent and approve a settlement agreement for [the Oil Companies].
Id. at 24 (footnote omitted).
[29] The Oil Companies argue that Ortoleva’s presence at the February and
November 2014 mediations cannot support a finding of apparent authority
because apparent authority must arise from the direct or indirect
communications of the principal, not the actions of the agent. The Oil
Companies argue further that apparent authority to settle cannot arise solely
from Ortoleva’s status as the Oil Companies’ in-house attorney. In support of
this argument, the Oil Companies direct our attention to Koval, in which our
Supreme Court explained that “the sole act of retaining an attorney does not
give the attorney the implied or the apparent authority to settle or compromise
a claim in an out of court proceeding.” 693 N.E.2d at 1301. Although
retention of an attorney alone is not a manifestation by the client to third parties
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 15 of 23 that an attorney has apparent authority to settle, apparent authority may be
conferred by other actions of the client. Id. at 1304.
[30] The Oil Companies’ arguments on the subject of apparent authority
misconstrue the basis for the trial court’s findings. The trial court did not base
its finding solely on Ortoleva’s status as the Oil Companies’ in-house attorney
or on his mere presence at the mediations. Rather, it was the actions of the Oil
Companies in sending Ortoleva, Shaver, and Groulx to the mediations as their
representatives that formed the basis of the trial court’s finding that Ortoleva
was clothed with apparent authority to settle. By sending only these individuals
to the February 2014 mediation, at which the parties were required to have
representatives with full settlement authority present, the Oil Companies
represented to the Tenants that the individuals present had such authority. The
representation was bolstered when the Oil Companies filed a motion for
sanctions against the Tenants for not having representatives with full settlement
authority present at the February 2014 mediation. By making such a
complaint, the Oil Companies implicitly asserted that their representatives at
the mediation possessed such authority. In light of this sequence of events,
when the Oil Companies sent the same representatives to the November 2014
mediation, it was reasonable for the Tenants to believe that at least one of those
representatives still had settlement authority. Accordingly, the trial court’s
finding that Ortoleva had apparent authority to settle the case was not clearly
erroneous.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 16 of 23 [31] The Oil Companies also argue that no binding settlement agreement could have
been reached at the November 2014 settlement conference because the Tenants’
representatives lacked settlement authority. We note, however, that the Oil
Companies did not raise the issue of the Tenants’ settlement authority in their
response to the Tenants’ motion to enforce the settlement agreement. Nor did
counsel raise the argument at the evidentiary hearing. During cross
examination, counsel for the Oil Companies asked Conway, “[w]ho has
settlement authority on your behalf? In your case, on your behalf, who has the
authority to settle your claims?” Transcript at 52. The following exchange
ensued:
[Tenants’ Counsel]: Objection. Mr. Conway is not a party to this lawsuit.
The Court: What’s the purpose of your—
[Oil Companies’ Counsel]: The point of that is the person who has settlement authority on his half [sic], we may not even know. The—the—B&R may not know who that person is, because it may not be somebody you deal with. The point is you deal with the lawyer face-to-face.
[Tenants’ Counsel]: Your Honor, I’m going to object. Whether the [Tenants] had settlement authority is not an issue. We’re conceding we had—
The Court: I think you’re making an argument rather than a factual point. So sustained.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 17 of 23 Id.
[32] Although counsel for the Oil Companies asked about the Tenants’ settlement
authority, he did not make it clear in his response to the Tenants’ objection that
he sought to introduce such evidence to support an argument that there was no
binding agreement because the Tenants lacked settlement authority. Instead, it
appears that counsel for the Oil Companies sought to elicit such testimony
simply to demonstrate that it is not always clear who has settlement authority in
such negotiations. It is well-settled that “[a]n appellant who presents an issue
for the first time on appeal waives the issue for purposes of appellate review.”
Mid-States Gen. & Mech. Contracting Corp. v. Town of Goodland, 811 N.E.2d 425,
436 n.2 (Ind. Ct. App. 2004). Because the Oil Companies did not raise the
issue of the Tenants’ settlement authority at trial, it has been waived.
2. Material Terms
[33] The Oil Companies next argue that even if the representatives at the November
2014 mediation had settlement authority, no enforceable oral agreement was
reached on that date because the parties did not reach an agreement on all
material terms. As this court has noted, “[i]f a party cannot demonstrate
agreement on one essential term of the contract, then there is no mutual assent
and no contract is formed.” Schuler v. Graf, 862 N.E.2d 708, 715 (Ind. Ct. App.
2007) (quoting Fox Dev., Inc. v. England, 837 N.E.2d 161, 165 (Ind. Ct. App.
2005)), trans. denied. Moreover,
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 18 of 23 [p]arties may make an enforceable contract which obligates them to execute a subsequent final written agreement. However, it is necessary that agreement shall have been expressed on all essential terms that are to be incorporated in the document. In other words, the document is understood to be a mere memorial of the agreement already reached and may not contain a material term that is not already agreed on.
Sands, 945 N.E.2d at 180 (citations omitted).
[34] The Oil Companies argue that the communications between Conway and
Groulx following the November 2014 settlement conference demonstrate that
the parties did not agree on at least one material term—the scope of the
releases. According to the Oil Companies, the negotiations concerning the
language of the releases amounted to continuing offers and counter-offers,
indicating that no binding contract was formed at the November 2014
mediation. The Oil Companies argue further that the release was clearly
material, and they cite federal case law for the proposition that the details of a
release are an inherently material term in a settlement agreement.
[35] The evidence presented at trial supports the Oil Companies’ claim that the
parties continued to negotiate concerning the release language after the
November 2014 mediation. Specifically, the first draft of the Written
Agreement contained an unconditional, unilateral release of claims in the Oil
Companies’ favor. The Tenants responded by asking for mutual releases. The
Oil Companies responded by proposing that the Oil Companies would release
claims relating to relevant pricing issues from 2007 through 2009. Conway
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 19 of 23 responded that the releases should be mutual, and proposed either limiting the
scope of the Tenants’ releases in the same manner or agreeing to other language
he proposed. Finally, Conway agreed to the limited release of the Oil
Companies’ claims and proposed the Carve Out, and Groulx and Ortoleva
found this language acceptable.
[36] The fact that the parties did not immediately agree on the language of the
Written Agreement does not conclusively establish that the parties did not reach
an agreement on all material terms at the November 2014 mediation. Instead,
the ongoing negotiations may simply indicate that the parties initially disagreed
as to whether the proposed draft agreement accurately captured the material
terms of the settlement reached at the mediation. In any event, we agree that
the Tenants’ release was unquestionably material; as the Oil Companies note,
the release of the plaintiff’s claims is among the most material terms in a
settlement agreement. But the Tenants’ release of their claims was not the
subject of the post-mediation negotiations. Rather, the parties negotiated the
language of the Oil Companies’ release of its claims. Specifically, Groulx did
not include any language releasing the Oil Companies’ claims in the first draft
of the Written Agreement, and the negotiations stemmed from Conway’s
efforts to include such language. But the Oil Companies asserted no
counterclaims against the Tenants in the underlying litigation, and from our
review of the record, it does not appear that the Oil Companies had any claims
to bring against the Tenants. Under the facts and circumstances of this case, we
cannot conclude that the Oil Companies’ release of apparently nonexistent
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 20 of 23 claims is a material term. See Wolvos v. Meyer, 668 N.E.2d 671, 676 (Ind. 1996)
(noting that “only essential terms need be included in order to render a contract
enforceable”).
[37] Furthermore, the evidence supports a conclusion that the parties reached an
agreement with respect to the scope of the Tenants’ release of their claims at the
November 2014 mediation. Specifically, the trial court found that the parties
agreed that the Tenants would release the claims asserted in the underlying
litigation. The first draft of the Written Agreement provided that the Tenants
would release all claims against the Oil Companies from the beginning of time
through the Effective Date of the agreement, which was listed as “December
____, 2014.” Exhibit 2B. Presumably, the Effective Date was to be the date the
Written Agreement was executed. At the time the Written Agreement was first
drafted, the Effective Date was not critical because no new claims had arisen
following the November 2014 mediation. It was not until after the Tenants
became aware of the Empire transaction and the dispute concerning the Stolers’
and Levy’s rights of first refusal arose that it became necessary to clarify that
those claims had not been released. While the parties could have accomplished
this by agreeing to an earlier Effective Date, Conway instead proposed the
Carve Out.2 The addition of the Carve Out prompted no objections from
Groulx, Ortoleva, or anyone else at the Oil Companies, suggesting that the
2 For this reason, we are unpersuaded by the Oil Companies’ argument that Conway’s failure to change the Effective Date demonstrates that the parties did not intend to be bound until the Written Agreement was executed.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 21 of 23 Carve Out reflected the agreement previously reached at the November 2014
mediation.3 The Oil Companies’ arguments to the contrary are requests to
reweigh the evidence and judge the credibility of witnesses, which we will not
do on appeal.
3. Admission of Evidence
[38] The Oil Companies also argue that the trial court erred in refusing to permit
them to question Conway concerning who had settlement authority for the
Tenants. This court reviews the trial court’s rulings on the admission of
evidence for an abuse of discretion. Decker v. Zengler, 883 N.E.2d 839, 845 (Ind.
Ct. App. 2008), trans. denied. Accordingly, we reverse only where the decision
is clearly against the logic and effect of the facts and circumstances presented.
Id.
[39] During cross examination, counsel for the Oil Companies asked Conway,
“[w]ho has settlement authority on your behalf? In your case, on your behalf,
who has the authority to settle your claims?” Transcript at 52. Counsel for the
Tenants objected, arguing that Conway was not a party to the lawsuit. Counsel
for the Oil Companies responded that the “point of that is the person who has
settlement authority . . . we may not even know. . . . B&R may not know who
3 The Oil Companies also rely on language in the Written Agreement providing that “[t]his agreement may be signed in one or more counterparts and when taken together shall be deemed a complete agreement” for the proposition that the parties did not intend to be bound until the Written Agreement was signed. Again, we are unpersuaded. This language says nothing about the parties’ intent to be bound; rather, it simply allows the parties to sign separate copies of the Written Agreement.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 22 of 23 that person is, because it may not be somebody you deal with. The point is you
deal with the lawyer face-to-face.” Id. Counsel for the Tenants responded that
the Tenants’ settlement authority was not at issue. The court ultimately
sustained the objection, explaining that it believed that counsel for the Oil
Companies was making an argument rather than a factual point.
[40] On appeal, the Oil Companies argue that evidence concerning who had
settlement authority for the Tenants was relevant because “[w]ithout authority
to enter into a binding agreement for the absent [Tenants], the [Tenants] and
counsel who participated in the November 4th meeting could not have reached a
binding agreement.” Appellants’ Brief at 70. We note, however, that the Oil
Companies did not make an offer of proof. As this court has noted, when the
trial court rules that a witness may not testify on a certain subject, the
proponent of the testimony must make an offer of proof to preserve the ruling
for appellate review. Bedree v. Bedree, 747 N.E.2d 1192, 1196 (Ind. Ct. App.
2001), trans. denied. An offer of proof provides this court with the information
necessary to consider whether the trial court’s exclusion of the evidence was
proper. Id. The failure to make on offer of proof results in waiver of the
evidentiary issue. Id. Because the Oil Companies failed to make an offer of
proof, their argument is waived.
[41] Judgment affirmed.
[42] Riley, J., and Brown, J., concur.
Court of Appeals of Indiana | Memorandum Decision 71A03-1503-PL-114 | January 21, 2016 Page 23 of 23