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Kosmann v. Dinius

Supreme Court of Idaho

May 14, 2019

DAVID A. KOSMANN, Plaintiff-Appellant,
v.
KEVIN DINIUS, an individual; DINIUS & ASSOCIATES, PLLC, an Idaho professional limited liability company, Defendants-Respondents.

          Appeal from the District Court of the Third Judicial District of the State of Idaho, Canyon County. Hon. Gene A. Petty, District Judge.

         The judgment of the district court is affirmed in part and reversed in part.

          Messerly Law, PLLC, Boise, for Appellant. Loren K. Messerly argued.

          Anderson, Julian & Hull, LLP, Boise, for Respondents. Yvonne A. Dunbar argued.

          MOELLER, JUSTICE.

         David Kosmann appeals from a judgment of the district court. He asserts that the district court erred in enforcing an oral settlement agreement reached in mediation between Kosmann, Kevin Dinius, and Dinius & Associates, PLLC (collectively "Dinius"). Kosmann also assigns error to the trial court for (1) awarding attorney fees to Dinius as a sanction against Kosmann and his attorney, (2) declining to impose sanctions against Dinius and his attorney, and (3) striking an untimely memorandum and declaration in support of his motion to reconsider. He further requests that the Court award him attorney fees on appeal. For the reasons stated below, we affirm in part and reverse in part.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Kosmann retained Dinius to represent him in a dispute with a third party concerning the sale of real property. Following trial, Kosmann was awarded a judgment of approximately $32, 000. The opposing party appealed. Kosmann had difficulty paying Dinius's attorney fees, so Dinius withdrew from representation and filed a lien for his attorney fees against the judgment. Kosmann then hired Loren Messerly to replace Dinius as his attorney throughout the appeal. The judgment was ultimately affirmed on appeal. Kosmann v. Gilbride, 161 Idaho 363, 386 P.3d 504 (2016). One month later, Kosmann filed a lawsuit against Dinius alleging claims of professional negligence and breach of contract. Dinius was represented by Yvonne Dunbar.

         The trial court ordered mediation and appointed a mediator.[1] The mediation occurred on July 26, 2017. After several hours of contentious negotiations, the parties reached a tentative agreement to settle the dispute by having Dinius make a payment of $40, 000 to Kosmann.[2]However, before the agreement was final, Messerly met in the hallway with Dunbar and requested an additional term: a release of all potential claims by Dinius against Messerly.[3]Dunbar and Dinius refused, stating that they believed it was unethical for Messerly to make such a request. The request caused a considerable delay in the mediation while the attorneys contacted and spoke with counsel from the Idaho State Bar regarding the ethical concern. Eventually, Messerly dropped his request and instructed Kosmann to inform the mediator that he would accept the original proposed settlement of $40, 000 without the release for Messerly.

         Kosmann left the room alone and went into the hall to inform the mediator that he was willing to accept the settlement agreement without the release. However, in addition to conveying his decision, Kosmann asked the mediator if he (Kosmann) could meet one-on-one with Dinius. Messerly claims that he was unaware that Kosmann was going to make this request. Without informing Messerly, the mediator communicated Kosmann's wish to Dinius. Dinius initially refused, but claims that after repeated urging from the mediator, he acquiesced and agreed to meet alone with Kosmann. Neither Dinius nor Dunbar were informed that Messerly was unaware of the meeting. During the meeting, Dinius and Kosmann agreed to settle their dispute for approximately $32, 000 (the amount held by the court in the property sale dispute between Kosmann and the third party), with the stipulation that Dinius would not pursue litigation against Messerly.

         When about twenty minutes had passed without Kosmann's return, Messerly went into the hallway to see what was going on. At that time, the mediator informed him that Kosmann and Dinius were having a private discussion. Messerly expressed concern over the meeting because Dinius was an attorney and should not have been speaking to Kosmann without Messerly being present. However, the mediator reportedly advised him that the parties to a mediation are allowed to meet alone, if they wish. Soon thereafter, Kosmann returned and informed Messerly of the new settlement terms. At that point, Messerly advised Kosmann that he could either adhere to the renegotiated settlement agreement and end the litigation or continue to pursue the $40, 000 settlement. Kosmann chose to end the litigation.

         The parties and their counsel then put the renegotiated settlement agreement on the record. Messerly noted on the record that Kosmann initially agreed to settle the matter for $40, 000, but that after the private meeting with Dinius, which Messerly did not consent to, Kosmann agreed to settle for approximately $8, 000 less in exchange for the release for Messerly. Messerly further stated that he had advised Kosmann not to request the release and that due to ethical considerations he did not want to be included in it. Nevertheless, despite his protestations, Messerly never objected to the revised terms of the settlement. In fact, when it was Dinius's turn to speak, Messerly intervened to ensure that Dinius mentioned "the other part of the deal" on the record-his agreement not to pursue any claims against Messerly. After it was apparent that an accord had been reached, the mediator asked Dinius's attorney, Dunbar, to "take the lead" in drafting the stipulation and a proposed order of dismissal.

         In the weeks following the mediation, Dunbar submitted several drafts of a proposed Mutual Release and Settlement Agreement to Messerly. Messerly disagreed with multiple sections of the agreement and proposed his own language. With the parties at an apparent impasse, Dunbar obtained a transcript of the oral settlement agreement put on the record at the conclusion of mediation to confirm that her draft of the agreement was consistent with the terms of the oral agreement. Messerly rejected Dunbar's suggestion that his client share in the cost of the transcript, authoring several heated emails to Dunbar before ultimately advising her that Kosmann had decided to back out of the settlement agreement. As a result, Dinius filed a motion to enforce the oral settlement on August 2, 2017. The following day, Kosmann filed a cross-motion to enforce the $40, 000 settlement that the parties agreed to before Dinius met with Kosmann. The district court held a hearing on both motions on August 31, 2017.

         Shortly after the hearing-and without leave from the court-Kosmann filed a supplemental brief in support of his motion to enforce the settlement agreement. The following week, Dinius filed a motion to strike Kosmann's supplemental brief on the basis that it was untimely and filed without leave. Two days after Dinius filed his motion to strike, Kosmann filed a corrective Motion for Leave to File Supplemental Material. The district court granted Kosmann's motion and took the supplemental brief under advisement. On November 3, 2017, the district court issued a memorandum decision in which it enforced the oral settlement agreement that was put on the record at mediation.

         Meanwhile, the parties had filed cross-motions for sanctions. Kosmann argued that Dinius violated Idaho Rule of Professional Conduct 4.2 by meeting with him alone and that the district court should use its inherent authority to impose sanctions against Dinius for that ethical violation. He also argued that Dinius violated Idaho Rule of Civil Procedure 11(b) by filing (and not withdrawing) the motion to enforce the oral settlement agreement that he believed resulted from Dinius's alleged breach of Rule 4.2. Dinius also argued for sanctions against Kosmann pursuant to I.R.C.P. 11(c) on the basis that Kosmann's motions to enforce the settlement and for sanctions were frivolous and unwarranted by existing law or fact. He also requested payment for one hour of billable time as a sanction against Kosmann and Messerly on the basis that he was forced to file a motion to strike Kosmann's untimely supplemental brief.

         The district court denied Kosmann's motion for sanctions on the bases that Dinius's motion to enforce the settlement did not violate I.R.C.P. 11 and that even if Dinius violated Rule 4.2, the Idaho Rules of Professional Conduct do not provide a legal basis for a trial court to impose sanctions for alleged ethical violations. It partially denied Dinius's motion for sanctions to the extent that it found that Kosmann's arguments were not frivolous or unwarranted, but granted the motion in regard to payment for the one hour of billable time Dunbar spent on the motion to strike Kosmann's untimely supplemental brief. The district court's stated reason for granting that sanction was that the brief was not warranted under existing law. It then issued a final judgment in the case.

         On December 5, 2017, Kosmann filed a motion to reconsider the court's decisions regarding enforcement of the settlement agreement and the imposition of sanctions. However, he failed to file his memorandum and declaration of counsel in support of the motion within the timeline prescribed by I.R.C.P. 11.2(b). Consequently, Dinius filed a motion to strike Kosmann's untimely filings. On January 24, 2018, the district court issued its Memorandum Decision and Order on Plaintiff's Motion to Reconsider and Defendants' Second Motion to Strike in which it struck Kosmann's untimely filings and denied Kosmann's motion to reconsider in its entirety. Kosmann timely appealed.

         II. STANDARD OF REVIEW

         "This Court has frequently stated that '[a] motion for the enforcement of a settlement agreement is treated as a motion for summary judgment when no evidentiary hearing has been conducted.'" Seward v. Musick Auction, LLC, 164 Idaho 149, ___, 426 P.3d 1249, 1255 (2018) (quoting Budget Truck Sales, LLC v. Tilley, 163 Idaho 841, 845-46, 419 P.3d 1139, 1143-44 (2018)). "Such a motion seeks specific performance of the settlement agreement or a declaration of the rights of the parties. As these claims for relief lie in equity, there is no right to jury trial." Id. at___, 426 P.3d at 1256. Accordingly,

the trial court as the trier of fact is entitled to arrive at the most probable inferences based upon the undisputed evidence properly before it and grant the summary judgment despite the possibility of conflicting inferences. This Court freely reviews the entire record that was before the district court to determine whether either side was entitled to judgment as a matter of law and whether inferences drawn by the district court are reasonably supported by the record.

Borley v. Smith, 149 Idaho 171, 176-77, 233 P.3d 102, 107-08 (2010) (internal quotation omitted). Thus, the Court applies the summary judgment standard "when reviewing the district court's order enforcing the settlement agreement." Seward, 164 Idaho at___, 426 P.3d at 1256.

         "The standard of review for an appellate court reviewing a trial court's imposition of sanctions pursuant to I.R.C.P. 11 is one of abuse of discretion." Campbell v. Kildew, 141 Idaho 640, 649-50, 115 P.3d 731, 740-41 (2005). The abuse of discretion standard also applies when we review a district court's decision to reject an untimely filing. See Marek v. Hecla, Ltd., 161 Idaho 211, 221, 384 P.3d 975, 985 (2016).

When this Court reviews an alleged abuse of discretion by a trial court the sequence of inquiry requires consideration of four essentials. Whether the trial court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal standards applicable to the specific choices available to it; and (4) reached its decision by the exercise of reason.

Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018).

         III. ANALYSIS

         A. The district court did not err in enforcing the $32, 047.19 settlement agreement.

         The district court thoroughly reviewed the facts and the applicable law, and concluded that the settlement agreement was an enforceable contract:

[A]fter discussing the status of the case and the proposed agreement with his attorney, Kosmann exercised his ultimate authority as a client to settle these matters. Idaho R. Prof. Conduct 1.2(a) and comment 1. Kosmann and his attorney knew what had occurred in the meeting between Kosmann and Dinius prior to agreeing to the settlement on the record. They had an opportunity to disaffirm the agreement reached by Kosmann and Dinius and/or to end the mediation without reaching a settlement. Yet Kosmann chose not to walk away, and instead agreed to the settlement he had reached with Dinius. The Court has already found that the settlement agreement as entered on the record is a valid and enforceable contract. The facts and circumstances surrounding the meeting between Kosmann and Dinius and subsequent opportunity for Kosmann to discuss that meeting with his attorney do not render the settlement agreement void for violation of public policy, and the Court finds no basis to upset the settlement agreement under these facts.

         Kosmann argues that the district court erred in applying contract law principles to determine whether the settlement agreement was enforceable, in deciding that he voluntarily agreed to the $32, 047.19 settlement, and in declining to decide whether a violation of Rule 4.2 ...


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