Lombardo v. Trans Union, LLC

Background

Lisa Lombardo, proceeding without a lawyer, sued JPMorgan Chase Bank, N.A. (Chase), alleging violations of the Fair Credit Reporting Act and the Connecticut Uniform Commercial Code, as well as a breach of an automobile lease. She claimed Chase prematurely reported the lease as charged off. She had also sued three credit-reporting agencies, but those claims were settled and those defendants were dismissed in early 2022.

After the court granted Chase’s earlier motion for summary judgment in part and denied it in part, Lombardo, her lawyers, and Chase’s lawyer participated in a mediation on January 15, 2024. Chase made a final offer. Lombardo said she was willing to accept the number, but later argued that she had not agreed to a settlement because the proposed division of the settlement between her and her lawyers, and protections concerning taxes, had not been resolved. Her lawyers said she had agreed to the division, and the mediator reported that the case had settled.

The parties notified the court that they had reached a settlement and were finalizing the documents. Lawyers later exchanged drafts concerning credit reporting, confidentiality, and releases. The drafts did not include terms protecting Lombardo from taxes on the settlement or specifying the division of money between Lombardo and her lawyers. Chase ultimately did not agree to proposed tax-related provisions, including a qualified settlement fund and separate tax forms.

Motions and legal standards

Chase moved to enforce the alleged oral settlement. Schlanger Law Group, Lombardo’s former counsel, moved to intervene so it could support Chase’s motion. The court explained that a settlement is a contract and can be enforced even if it was made orally, provided the parties intended to be bound.

The court applied the four factors from Winston v. Mediafare Entertainment Corp. for deciding whether parties intended to be bound by an oral or unsigned settlement: whether they expressly reserved the right not to be bound without a writing; whether there was partial performance; whether all material terms were agreed upon; and whether the agreement was the type usually put in writing.

The court also considered whether Schlanger had authority to settle for Lombardo. An attorney’s apparent authority exists when a third party reasonably believes the attorney has authority to act for the client, and that belief is traceable to the client’s conduct.

Analysis

The court found that Schlanger had apparent authority to settle. Lombardo was present at the mediation when Schlanger accepted Chase’s final offer, and she did not tell the mediator or Chase that her acceptance depended on additional terms. The court also noted that she did not object to the settlement until about two months later. Because apparent authority was sufficient, the court did not hold a hearing about whether Schlanger had actual authority.

The court then applied the four settlement factors. The first factor strongly favored enforcement because neither Lombardo nor Schlanger expressly reserved the right not to be bound unless a written agreement was signed. The court viewed the planned writing as a document memorializing the agreement rather than a condition that had to occur before any agreement existed. The parties’ notice to the court that they had reached a settlement also supported enforcement.

The second factor was neutral. Chase had not paid any settlement money, which weighed slightly against enforcement, but Chase had sent a draft agreement and the parties had stopped litigating. The court concluded that this factor did not favor either side.

The third factor favored enforcement. The court held that the attorney-fee division was not a material term of the agreement between Lombardo and Chase, even though it could be important to Lombardo’s separate relationship with her lawyers. The court also held that tax protections were not material terms of the settlement reached at mediation. It noted that the record did not show that those protections were discussed with Chase during mediation or included in the exchanged drafts.

The fourth factor slightly favored Lombardo because settlements are generally put in writing. But the court found the agreement relatively simple and concluded that this factor did not outweigh the other considerations.

Balancing the factors, the court held that the parties formed a binding settlement at mediation and that the agreement should be enforced. The court emphasized that its decision concerned only the settlement between Lombardo and Chase. It made no decision about the amount of fees Lombardo may owe Schlanger.

Disposition

The court granted Chase’s motion to enforce the settlement agreement. The conclusion states that Schlanger’s motion to intervene was denied, while an earlier portion of the opinion describes that motion as denied as moot. The court instructed Lombardo and Schlanger to discuss their fee dispute and submit a joint status letter by March 27, 2025. It also directed that Chase not make the settlement payment until the court determines whether and how the fee dispute will be resolved. The clerk was instructed to terminate Schlanger’s motion to intervene.