J-S08013-17


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

WELLS FARGO BANK, N.A.                   :   IN THE SUPERIOR COURT OF
                                         :         PENNSYLVANIA
                   Appellant             :
                                         :
            v.                           :
                                         :
BETTE ANN PUHARIC AND MARK               :
PUHARIC                                  :
                                         :
                   Appellees             :       No. 955 WDA 2016

                  Appeal from the Order Entered June 2, 2016
              In the Court of Common Pleas of Allegheny County
                     Civil Division at No(s): GD06-29346


BEFORE: GANTMAN, P.J., FORD ELLIOTT, P.J.E., and SOLANO, J.

MEMORANDUM BY GANTMAN, P.J.:                    FILED JANUARY 30, 2018

     Appellant, Wells Fargo Bank, N.A. (“Bank”), appeals from the order

entered in the Allegheny County Court of Common Pleas, which granted the

petition of Appellees, Bette Ann Puharic and Mark Puharic, to enforce the

parties’ Settlement Agreement. We affirm.

     The relevant facts and procedural history of this case are as follows.

On or about October 1, 1995, Appellees applied for a line of credit from

Bank. Bank issued Appellees a line of credit for $50,000.00 with an interest

rate of 17.50%.    On December 7, 2006, Bank filed a complaint against

Appellees, alleging they were in default on their account and had not made

any payment since October 24, 2005. Bank sought judgment in the amount

of $74,197.65, plus per diem interest.

     At a judicial conciliation held on September 2, 2015, the parties
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reached a settlement. The Settlement Agreement provides, in relevant part:

        THIS SETTLEMENT AGREEMENT is made this 2nd day of
        September, 2015 by and between [Bank] and [Appellees],
        by their respective counsel on their behalf.

        WHEREAS, [Bank] instituted the above-referenced suit
        against [Appellees] seeking recovery of $74,197.65 plus
        per diem interest for monies loaned by [Bank] to
        [Appellees] (the “Judgment Amount”).

        WHEREAS, a pretrial conference is scheduled for
        September 2, 2015 and trial is scheduled for September
        21, 2015.

        WHEREAS, to avoid the uncertainties of litigation, the
        parties hereto desire to settle this matter on the terms and
        conditions hereinafter stated.

        NOW, THEREFORE, the parties hereto, intending to be
        legally bound hereby, agree as follows:

        1. [Bank] agrees to accept $22,000 in full and final
        satisfaction of its claim, provided that (a) $5,500 is paid no
        later than September 10, 2015, and (b) $16,500 is paid
        within 90 days of the date hereof.

        2. In the event that [Appellees] fail to timely make either
        of the two payments referenced in paragraph 1 above,
        then [Appellees] consent to the entry of judgment against
        them in the amount of the Judgment Amount, less such
        amounts as are paid by [Appellees] to [Bank] hereafter.
        For said purposes, [Appellees] agree that there are no
        defenses, offsets or counterclaims with respect to said
        indebtedness.

                                 *    *    *

        6. The terms of this Stipulation shall be binding upon and
        inure to the benefit of [Bank] and [Appellees], their heirs,
        executors, successors, and assigns.

        7. This Stipulation constitutes the entire agreement
        between [Bank] and [Appellees]. No changes, alterations,

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            or amendments are valid except upon written agreement
            of [Bank] and [Appellees], their attorneys, heirs,
            executors, successors, or assigns.

                                    *    *    *

(Settlement Agreement, filed 9/8/15, at 1-3; R.R. at 11-13) (emphasis

added). Appellees timely paid the initial $5,500.00 on September 9, 2015,

but they did not make the second payment of $16,500.00 by the agreed-

upon date of December 2, 2015.

        On January 25, 2016, Bank’s counsel contacted Appellees’ counsel

about the overdue payment.          Specifically, Bank’s counsel stated: “The

remaining $16,500 due under our [S]ettlement [A]greement was due by

December 2, 2015, but it has not been received. As you know, the effect of

a default would be to allow us to enter judgment in the full amount of the

debt.    Please advise as to the status of this payment.        All rights are

reserved.”     (Petition to Enforce Settlement Agreement, filed 2/1/16, at

Exhibit B-7; R.R. at 29).

        Appellees’ counsel responded that he would contact Appellees “ASAP”

and thanked Bank’s counsel for the courtesy.       (Id.)   About one half-hour

later, Appellees’ counsel replied to Bank’s counsel stating Appellees could

pay the $16,500.00 by Thursday or Friday of that week by check or wire

transfer.    Appellees’ counsel inquired: “Please advise if this is acceptable,

and that receipt of the payment will result in the satisfaction being filed.”

(Id. at Exhibit B-6; R.R. at 28).


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     On Thursday, January 28, 2016, Appellees’ counsel reached out to

Bank’s counsel again, confirming that Appellees could pay the $16,500.00

the next day, Friday, January 29, 2016. Appellees’ counsel asked if Bank’s

counsel had heard back from Bank yet about whether the “deal [was] still

on.” (Id. at Exhibit B-4; B-5; R.R. at 26-27). Bank’s counsel replied that

Bank had “told [him the deal is] still in place if the money can be wired by

tomorrow. I can give you wiring instructions.” (Id. at Exhibit B-3; R.R. at

25). Bank’s counsel subsequently provided wiring instructions for counsel’s

IOLTA account.    (Id. at Exhibit B-2; R.R. at 24).     Appellees paid the

$16,500.00 due via wire transfer on Friday, January 29, 2016, as agreed.

     On Monday, February 1, 2016, Bank’s counsel contacted Appellees’

counsel by phone and e-mail to explain that Bank’s counsel had “made an

error when [he] indicated that [Bank] was prepared to accept the late

payment [and] got this mixed up with another matter.” (Id. at Exhibit C;

R.R. at 30). Appellees’ counsel replied that Appellees had “obviously relied

on the representation that the late payment would be accepted as payment

in full.” (Id.) On February 4, 2016, Bank’s counsel sent Appellees’ counsel

a check made payable to Appellees for $16,500.00 and a letter stating: “I

am returning the $16,500 check made payable to your client.      It was not

timely paid. As I noted earlier, my email was in error.” (Id. at Exhibit D;

R.R. at 31). To date, Appellees have not cashed the check.

     On February 16, 2016, Appellees filed a petition to enforce paragraph


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1 of the Settlement Agreement. Bank filed an answer on February 17, 2016,

to Appellees’ petition to enforce the Settlement Agreement. In their brief in

opposition, Bank included an affidavit from Amanda Layton, Bank’s loan

adjuster, which stated, inter alia, she had not received the e-mail string

between Bank’s counsel and Appellees’ counsel until March 24, 2016. Ms.

Layton explained how Bank’s counsel had attempted to forward the e-mail

string to her at the time of the e-mails but had inadvertently forwarded the

e-mails to the incorrect e-mail address.    Ms. Layton further explained she

had had a brief conversation with Bank’s counsel on January 25, 2016,

regarding Appellees’ overdue payment. On February 1, 2016, Ms. Layton e-

mailed Bank’s counsel, stating: “go ahead and enter the default judgment

for an amount of $62,375.25 and record abstracts.”              (Bank’s Brief in

Opposition to Appellees’ Petition to Enforce, filed 5/31/16, at 4; R.R. at 50).

Ms. Layton certified that she had not ever authorized Bank’s counsel to

accept the $16,500.00 as full satisfaction, after Appellees had defaulted

under the Settlement Agreement, and was unaware of the ongoing

discussions between Bank’s counsel and Appellees’ counsel or their

agreement to extend the payment date.

      Following oral argument, the court entered an order on June 2, 2016,

directing Bank to accept the $16,500.00 as payment in full and ordering the

Department    of   Court   Records   to   mark   the   matter   as   settled   and

discontinued. On June 8, 2016, Appellees filed a praecipe to mark the case


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as settled and discontinued. Bank filed a motion for reconsideration on June

17, 2016.   Bank timely filed a notice of appeal on June 27, 2016, and a

praecipe to withdraw the motion for reconsideration on July 18, 2016. The

court did not order Bank to file a concise statement of errors complained of

on appeal pursuant to Pa.R.A.P. 1925(b), and Bank filed none.

      Bank raises the following issues on appeal:

         DID THE TRIAL COURT ERR WHEN IT GRANTED
         [APPELLEES’] PETITION TO ENFORCE AGREEMENT
         BECAUSE THE RULING OF THIS TRIAL COURT DIRECTLY
         CONFLICTS      WITH    THE    SUPREME    COURT    OF
         PENNSYLVANIA HOLDING IN REUTZEL V. DOUGLAS,
         [582 PA. 149, 870 A.2d 787 (2005)] WHICH PROVIDES AN
         ATTORNEY IS NOT AUTHORIZED TO ENTER INTO
         SETTLEMENT AGREEMENTS WITHOUT THE EXPRESS
         AUTHORITY OF THE CLIENT, ESPECIALLY WHERE THE
         CLIENT DID NOT EVEN HAVE KNOWLEDGE OF THE
         PROPOSED SETTLEMENT AGREEMENT?

         IF A LENDER HAS A RIGHT TO ENTER JUDGMENT AGAINST
         A BORROWER BASED ON THE FAILURE TO MAKE A TIMELY
         PAYMENT, IS THE BORROWER PERMITTED TO TENDER AN
         UNTIMELY PAYMENT TO THE LENDER, SO LONG AS THE
         BORROWER TENDERS THE PAYMENT BEFORE THE LENDER
         HAS ENTERED JUDGMENT (I.E., BEATS LENDER TO THE
         PUNCH) UNDER THE DOCTRINES OF EITHER SUBSTANTIAL
         PERFORMANCE OR WAIVER?

(Bank’s Brief at 4).

      Review of a trial court’s decision to enforce a settlement agreement

involves the following principles:

         The enforceability of settlement agreements is determined
         according to principles of contract law. Because contract
         interpretation is a question of law, this Court is not bound
         by the trial court’s interpretation. Our standard of review
         over questions of law is de novo and to the extent

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         necessary, the scope of our review is plenary as [the
         appellate] court may review the entire record in making its
         decision. With respect to factual conclusions, we may
         reverse the trial court only if its findings of fact are
         predicated on an error of law or are unsupported by
         competent evidence in the record.

         The law of this Commonwealth establishes that an
         agreement to settle legal disputes between parties is
         favored. There is a strong judicial policy in favor of
         voluntarily settling lawsuits because it reduces the burden
         on the courts and expedites the transfer of money into the
         hands of a complainant. If courts were called on to
         reevaluate settlement agreements, the judicial policies
         favoring    settlements    would     be   deemed    useless.
         Settlement agreements are enforced according to
         principles of contract law.        There is an offer (the
         settlement figure), acceptance, and consideration (in
         exchange for the plaintiff terminating his lawsuit, the
         defendant will pay the plaintiff the agreed upon sum).

         Where a settlement agreement contains all of the
         requisites for a valid contract, a court must enforce the
         terms of the agreement. This is true even if the terms of
         the agreement are not yet formalized in writing. Pursuant
         to well-settled Pennsylvania law, oral agreements to settle
         are enforceable without a writing. An offeree’s power to
         accept is terminated by (1) a counter-offer by the offeree;
         (2) a lapse of time; (3) a revocation by the offeror; or (4)
         death or incapacity of either party. However, once the
         offeree has exercised his power to create a contract by
         accepting the offer, a purported revocation is ineffective as
         such.

Step Plan Services, Inc. v. Koresko, 12 A.3d 401, 408-409 (Pa.Super.

2010).   See also Salsman v. Brown, 51 A.3d 892, 893-94 (Pa.Super.

2012) (quoting Bennett v. Juzelenos, 791 A.2d 403, 406 (Pa.Super.

2002)) (reiterating relevant standard and scope of review).

     For purposes of disposition, we combine Bank’s issues. Bank argues


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its counsel agreed to a late payment under the Settlement Agreement

between Bank and Appellees, without Bank’s consent.             Bank claims its

attorney had to have Bank’s express authority to bind Bank to an extension

of the payment deadline.       Bank claims its counsel mistakenly agreed to

accept the late payment because counsel confused this case with another

matter.    Bank highlights Ms. Layton’s affidavit stating how she instructed

Bank’s counsel to enter a default judgment for the full judgment amount

($74,197.65), less Appellees’ payment of $5,500.00 already made under the

Settlement Agreement. Bank maintains it was completely unaware of any

conversations between its counsel and Appellees’ counsel to accept the late

payment, because Bank’s counsel had inadvertently forwarded the e-mail

string to the incorrect e-mail address. Bank also suggests Appellees could

not   have    “substantially   performed”   under    the   original    Settlement

Agreement, absent Bank’s express assent to extend the payment deadline.

Bank contends it did not waive its right to enforce paragraph 2 of the

Settlement Agreement simply because Bank failed to seek a default

judgment     against   Appellees   immediately   after   Appellees    missed   the

December 2, 2015 due date. Instead, Bank insists the law presumes “time

is of the essence,” where the contract sets forth specific dates, so the lack of

a “time is of the essence” clause in the original Settlement Agreement

affords Appellees no relief.    Bank concludes the trial court erred when it

granted Appellees’ petition to enforce the Settlement Agreement, despite the


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“unauthorized” late payment; and this Court must reverse and remand for

further proceedings. We disagree.

       As a general rule, counsel must have express authority from the client

to settle a case. Reutzel, supra at 154, 870 A.2d at 789-90 (citing Rizzo

v. Haines, 520 Pa. 484, 500-01, 555 A.2d 58, 66 (1989)). “The rationale

for this rule stems from the fact that parties settling legal disputes forfeit

substantial legal rights, and such rights should only be forfeited knowingly.”

Reutzel, supra at 154, 870 A.2d at 790 (stating attorney must have

express authority from client to settle client’s case; reversing this Court’s

use of “apparent authority” as basis to enforce settlement, particularly

where counsel had stated during negotiations that he did not have his

clients’ consent to settle; limiting use of “apparent authority” in Rothman v.

Fillette, 503 Pa. 259, 469 A.2d 543 (1983) to similar facts, under those

principles of equity and agency which drove Rothman1 conclusion, i.e.,

client’s counsel’s fraud and unlawful conduct). Where an attorney purports

to settle a case without his client’s express consent, courts will look to

____________________________________________


1
  Rothman involved a situation where Mr. Rothman’s attorney settled Mr.
Rothman’s case with the Fillettes’ insurance company by forging Mr.
Rothman’s signature and then the attorney pocketed the settlement
proceeds. The Rothman Court reasoned that, as between Mr. Rothman and
the innocent insurance company, Mr. Rothman should bear the loss because
he had hired the fraudulent attorney, put him in a position of trust and
confidence, and enabled him to perpetrate the wrongdoing. Rothman was
a peculiar case that did not override the general rule on express authority to
settle a case.



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“principles of equity and agency” to decide if counsel’s unauthorized actions

should bind his client to the alleged settlement.    See Reutzel, supra at

158, 870 A.2d at 792 (holding same principles of equity and agency

underlying Rothman did not apply in this case to bind plaintiffs to terms of

alleged settlement of their case, where facts and equities of these cases

were distinguishable).

      Nevertheless, an attorney has the authority to do acts, which are

incidental to a transaction, usually accompany it, or are reasonably

necessary to accomplish it. See generally Starling v. West Erie Avenue

Building & Loan Ass’n, 333 Pa. 124, 3 A.2d 387 (1939).             See also

Pennsylvania R. Co. v. City of Pittsburgh, 335 Pa. 449, 456, 6 A.2d 907,

912 (1939) (explaining attorney has power to bind his client to acts in

management of regular course of litigation).

      “Both at law and in equity, forfeitures are strongly disfavored and

strictly construed.”   Liazis v. Kosta, Inc., 618 A.2d 450, 455 (Pa.Super.

1992), appeal denied, 536 Pa. 630, 637 A.2d 290 (1993). “Our court seeks

to avoid forfeitures particularly where there has been considerable part

performance.”   Id.    Courts developed the equitable doctrine of substantial

performance to do justice and avoid imposition of a forfeiture on those who

have honestly tried to perform their contracts. First Mortg. Co. of Pa. v.

Carter, 452 A.2d 835, 837 (Pa.Super. 1982).

         We must weigh the purpose to be served, the desire to be
         gratified, the excuse for deviation from the letter, the

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        cruelty of enforced adherence. Then only can we tell
        whether literal fulfillment is to be implied by law as a
        condition. This is not to say that the parties are not free
        by apt and certain words to effectuate a purpose that
        performance of every term shall be a condition of
        recovery. That question is not here. This is merely to say
        that the law will be slow to impute the purpose, in the
        silence of the parties, where the significance of the default
        is grieviously out of proportion to the oppression of the
        forfeiture.

Id. (internal quotation marks and citations omitted). See also Atlantic LB,

Inc. v. Vrbicek, 905 A.2d 552 (Pa.Super. 2006) (applying doctrine of

substantial performance in favor of tenants in commercial lease dispute).

     Instantly, Bank and Appellees entered into a Settlement Agreement to

resolve their dispute over an outstanding line of credit Appellees had with

Bank. Pursuant to the Settlement Agreement, Appellees timely made their

first installment payment.     When Bank’s counsel contacted Appellees’

counsel on Monday, January 25, 2016, about the overdue second payment,

Appellees authorized their counsel to promise payment in full by check or

wire transfer before the end of that week.     During that week, Appellees’

counsel again contacted Bank’s counsel to confirm Appellees’ second

payment and asked if Bank’s counsel had heard back from Bank yet about

whether the “deal [was] still on.” Bank’s counsel replied that Bank had “told

[him the deal is] still in place if the money can be wired by tomorrow

[Friday]. I can give you wiring instructions.” Bank’s counsel subsequently

provided wiring instructions for his IOLTA account.      Appellees paid the

balance of $16,500.00 via wire transfer on Friday, January 29, 2016.

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     On Monday, February 1, 2016, Bank’s counsel contacted Appellees’

counsel by phone and e-mail to explain that Bank’s counsel had “made an

error when [he] indicated that [Bank] was prepared to accept the late

payment [and] got this mixed up with another matter.” Appellees’ counsel

replied that Appellees had “obviously relied on the representation that the

late payment would be accepted as payment in full.”         That same day,

Appellees filed a petition to enforce the parties’ Settlement Agreement. On

February 4, 2016, Bank’s counsel sent Appellees’ counsel a check made

payable to Appellees for $16,500.00 and a letter stating: “I am returning the

$16,500 check made payable to your client. It was not timely paid. As I

noted earlier, my email was in error.” To date, Appellees have not cashed

the check.

     In granting Appellees’ petition to enforce the Settlement Agreement,

the court reasoned:

        The gist of Bank’s argument is that its counsel was without
        authority to accept the $16,[5]00 paid after the due date
        in the written agreement. It emphasizes the traditional
        rule that [a]ttorneys, without specific authority cannot bind
        their client to a settlement agreement.            [Appellees
        counter] that the settlement agreement had already been
        reached, and this was simply an implementation of the
        agreement and that grace offered by counsel for Bank was
        well within his authority. …

        I found [Appellees’] argument persuasive and entered the
        order that is now on appeal.

(Trial Court Opinion, dated October 17, 2016, at 3-4). The record supports

the court’s decision.   See Salsman, supra; Step Plan Services, Inc.,

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supra.

     Here, Bank and Appellees entered into a Settlement Agreement on

September 2, 2015.       The terms of the Settlement Agreement required

Appellees to pay a total of $22,000.00 as full satisfaction for their debt in

two installments: $5,500.00 by September 10, 2015, and $16,500.00 by

December 2, 2015.       The Settlement Agreement further established that

Appellees consented to entry of judgment against them for the full Judgment

Amount ($74,197.65) if they failed to make either installment payment in a

timely manner. Appellees paid the initial installment on time, but they did

not make the second payment by December 2, 2015.

     In furtherance of the Settlement Agreement, Bank’s counsel contacted

Appellees’ counsel on Monday, January 25, 2016. Prior to this contact, Bank

had not enforced its right to enter judgment against Appellees for the full

amount owed per the Settlement Agreement. During the course of the e-

mails exchanged between the parties’ counsel from January 25 to January

29, Bank’s counsel confirmed that Bank had expressly authorized him to

keep the Settlement Agreement in effect and accept payment of the second

installment by week’s end.       Relying on the representations of Bank’s

counsel,   Appellees   wire-transferred   the   second   and   final   installment

payment to Bank’s counsel’s IOLTA account on Friday, January 29, 2016.

     Significantly, this case does not involve a situation where Bank’s

counsel entered into the Settlement Agreement without Bank’s express


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authority.     Compare Reutzel, supra; Rothman, supra.              Rather, the

parties in this case had already expressly settled their dispute for a sum

certain to “avoid the uncertainties of litigation.” None of the authority Bank

cites applies to scenarios where counsel, by courtesy, extends a grace period

to a bona fide settlement agreement.2              Importantly, Appellees acted

promptly after Bank’s counsel contacted them about the remaining balance.

By January 29, 2016, Appellees had wired Bank’s counsel the amount due,

which constituted full performance. Given these circumstances, particularly

in light of Bank’s counsel’s representation of express authority to accept the

second payment in full satisfaction of the debt, principles of equity and

agency support the trial court’s decision to enforce the parties’ Settlement

Agreement.3       See Reutzel, supra; Starling, supra.          Accordingly, we

affirm.

        Order affirmed.

        Judge Solano did not participate in the consideration or decision of this

case.
____________________________________________


2
  Many of the cases Bank cites are non-binding federal authority. See
Eckman v. Erie Ins. Exchange, 21 A.3d 1203 (Pa.Super. 2011) (stating
we are not bound by federal court decisions, except U.S. Supreme Court).
3
  Paragraph 7 of the Settlement Agreement also expressly gave counsel for
both parties the right to modify the agreement in writing, which theoretically
allowed counsel to agree to a grace period. (See Settlement Agreement at
¶ 7; R.R. at 12) (stating: “No changes, alterations, or amendments are valid
except upon written agreement of [Bank] and [Appellees], their attorneys,
heirs, executors, successors, or assigns”) (emphasis added).



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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 1/30/2018




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