Clark v. Elza

• Decision Date: 23 October 1979
• Docket Number: No. 91,91
• Citation: 286 Md. 208,406 A.2d 922
• Parties: Swannie B. CLARK et al. v. Floyd L. ELZA et ux.
• Court: Maryland Court of Appeals

Page 208

286 Md. 208

406 A.2d 922

Swannie B. CLARK et al. v. Floyd L. ELZA et ux.

No. 91.

Court of Appeals of Maryland.

Oct. 23, 1979.

Richard A. Reid, Towson (Royston, Mueller, McLean & Reid, Towson, on the brief), for appellants.

Paul Weinstein, Baltimore, for appellees.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE, ORTH, COLE and DAVIDSON, JJ.

ELDRIDGE, Judge.

This case presents the question of whether an executory oral agreement to settle a pending law suit may be raised as a defense to prevent a plaintiff from pursuing his original cause of action. It also presents the threshold issue of whether a trial court's refusal to enforce such a settlement agreement, where enforcement was sought in the underlying legal action, may be immediately appealed. We answer these questions in the affirmative.

As a result of injuries sustained in an automobile accident, the plaintiffs, Floyd L. Elza and his wife Myrtle E. Elza, filed suit in the Circuit Court for Baltimore County. They alleged that the defendants, Swannie B. Clark and Linda Sue Woodward, were legally responsible for their injuries. After the case was scheduled for trial, settlement negotiations ensued between the parties. A figure of $9,500.00 was verbally agreed upon; the trial judge was notified; and the case was removed from the trial calendar. The defendants forwarded a release and an order of satisfaction to the plaintiffs' attorney, and later sent a settlement draft to the plaintiffs' attorney. Thereafter, these papers were returned unexecuted with the statement that the $9,500.00 settlement was no longer adequate. The reason given for this change of mind was that on the day after the oral agreement, Mr. Elza had visited a new physician who informed him that his injuries were more extensive than he originally believed.

The plaintiffs then advised the court that they were no longer willing to go through with the settlement. In response, the defendants filed in the tort action a "Motion to Enforce Settlement." ¹ At a hearing on the motion the plaintiffs argued that the settlement agreement was not binding on them because it was merely an executory accord, and could only be enforced upon satisfaction. The court observed that if the agreement were a substituted contract, as opposed to an executory accord, then it would be binding. Finding that the intention of the parties was to create an executory accord the trial judge denied the motion of the defendants to enforce the settlement. The effect of this ruling was that trial upon the original tort action could proceed, notwithstanding the supposed settlement.

The defendants then took an appeal to the Court of Special Appeals, and the plaintiffs moved to dismiss the appeal. The Court of Special Appeals, in an unreported opinion, dismissed the appeal as premature because the trial court had not yet rendered a final judgment in the tort case. The court reasoned:

"Here, the order . . . denying appellants' motion to enforce settlement did not deny appellees the means of further prosecuting their claims nor did it deny appellants the right to defend against those claims. In short, it did not settle and conclude the rights of the parties involved in the action and, thus, constituted an interlocutory order which is not appealable at this time."

The defendants petitioned this Court for a writ of certiorari, challenging the ruling that the case was not appealable and arguing that the purported settlement was effective. We granted the petition with respect to both issues.

(1)

In this Court, both sides now agree that the decision of the circuit court was immediately appealable. Nevertheless, the consent of the litigants cannot vest jurisdiction in an appellate court. Recently in Biro v. Schombert, 285 Md. 290, 293, 402 A.2d 71, 73 (1979), we observed:

"The apparent acquiescence of the parties to the exercise of appellate jurisdiction . . . does not enable us to overlook the matter. As we stated in Eastgate Associates v. Apper, 276 Md. 698, 700-701, 350 A.2d 661 (1976): 'The jurisdiction of this Court, and the Court of Special Appeals, is determined by constitutional provisions, statutory provisions and rules; jurisdiction cannot be conferred by consent of the parties.' Consequently, 'this Court will dismiss an appeal Sua sponte when it notices that appellate jurisdiction is lacking.' Smith v. Taylor, 285 Md. 143, 400 A.2d 1130 (1979). See Rule 835 a 1. Similarly, where the Court of Special Appeals has entertained an appeal without having jurisdiction to do so, and the case is timely brought to our attention (such as by a petition for a writ of certiorari dealing with the merits of the appeal), we will issue a writ of certiorari and Sua sponte consider the jurisdiction of the intermediate appellate court. Eastgate Associates v. Apper, supra. See also Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 740, 96 S.Ct. 1202, 1204, 47 L.Ed.2d 435 (1976) ('Though neither party has questioned the jurisdiction of the Court of Appeals to entertain the appeal, we are obligated to do so on our own motion if a question thereto exists.')."

Consequently, we must make an independent determination as to the appealability of the trial court's decision.

With certain exceptions not here pertinent, a party may appeal only from a Final judgment entered by a circuit court. Peat & Co. v. Los Angeles Rams, 284 Md. 86, 90-91, 394 A.2d 801 (1978), and cases there discussed; Maryland Code (1974), § 12-301 of the Courts and Judicial Proceedings Article. Certainly the order from which the instant appeal was taken was not final in the usual sense. It did not conclude the matter of the defendants' tort liability or prevent the defendants from defending the tort suit. See Peat & Co. v. Los Angeles Rams, supra, 284 Md. at 91, 394 A.2d 801; United States Fire Ins. v. Schwartz, 280 Md. 518, 521, 374 A.2d 896, 898 (1977). Consequently, for the order to be deemed final and appealable, it must come within the so-called "collateral order" doctrine originally set forth in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 545-547, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), and applied by this Court in Peat & Co. v. Los Angeles Rams, supra, 284 Md. at 91-92, 394 A.2d 801; Stewart v. State, 282 Md. 557, 571, 386 A.2d 1206, 1213 (1978); and Jolley v. State, 282 Md. 353, 357, 384 A.2d 91, 94 (1978).

As recently pointed out by Judge Digges for the Court in the Peat case, 284 Md. at 92, 394 A.2d 801, the collateral order doctrine "is narrow in scope." An order must meet four requirements to be deemed "final" under this doctrine (Ibid., quoting from Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978)):

" '(T)he order must ((1)) conclusively determine the disputed question, ((2)) resolve an important issue (, (3) be) completely separate from the merits of the action, and ((4)) be effectively unreviewable on appeal from a final judgment.' "

In our view, these four criteria were satisfied, and the order was therefore final and appealable. First, the order finally resolved the disputed question of whether the plaintiffs were bound by their oral settlement agreement or were entitled to proceed with the tort action. Second, because a decision holding the settlement agreement to be enforceable would have the direct effect of terminating the litigation, it concerns "an important issue." Third, the questions bearing upon the enforceability of the settlement agreement have absolutely nothing to do with the merits of the tort cause of action. Thus, it is "completely separate" from the principal claim. Lastly, a final judgment on the merits of the underlying tort claim would render the ruling on the settlement agreement effectively unreviewable. One of the principal considerations in entering a pre-trial settlement agreement is the avoidance of the expense and inconvenience of a trial. If the defendants must proceed to a trial on the merits, this contractual benefit will be irretrievably lost. Regardless of the outcome of the trial or the outcome of an appeal after trial, the defendants will have been forced to go to trial and thus will have been deprived of a right under the contract if the contract should have been enforced. Cf. Abney v. United States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977); Neal v. State, 272 Md. 323, 322 A.2d 887 (1974), holding that a denial of a pre-trial motion to dismiss an indictment on double jeopardy grounds was final and therefore immediately appealable. See also Jolley v. State, supra, 282 Md. at 357, 384 A.2d 91.

(2)

As previously mentioned, the trial court refused to enforce the settlement agreement on the ground that it was an "executory accord" and not a "substitute contract." An executory accord is defined in 6 Corbin on Contracts § 1268, p. 71 (1962) as follows:

"The term 'accord executory' is and always has been used to mean an agreement for the future discharge of an existing claim by a substituted performance. In order for an agreement to fall within this definition, it is the promised performance that is to discharge the existing claim, and not the promise to render such performance. Conversely, all agreements for a future discharge by a substituted performance are accords executory. It makes no difference whether or not the existing claim is liquidated or unliquidated, undisputed or disputed, except as these facts bear upon the sufficiency of the consideration for some promise in the new agreement. It makes no difference whether or not a suit has already been brought to enforce the original claim; or whether that claim arises out of an alleged tort or contract or quasi-contract. . . ."

See also J. Calamari and J. Perillo, The Law of Contracts § 21-4 (2d ed. 1977); II Restatement of Contracts § 417 (1932). See generally Gold, Executory Accords, 21 Boston U.L.Rev. 465 (1941); Comment, Executory Accord, Accord and Satisfaction, and Novation The...