Donahue v. Nagel

• Decision Date: 27 April 2022
• Docket Number: A172763
• Citation: 319 Or.App. 275,510 P.3d 927
• Parties: Kenneth DONAHUE, Jr., an individual, and Sally Donahue, an individual, Plaintiffs-Appellants, v. Ronald D. NAGEL, AS TRUSTEE OF the RONALD D. NAGEL REVOCABLE LIVING TRUST; Juli A. Nagel, as Trustee of the Juli A. Nagel Revocable Living Trust; Ronald D. Nagel, an individual; and Juli A. Nagel, an individual, Defendants-Respondents.
• Court: Oregon Court of Appeals

319 Or.App. 275

510 P.3d 927

Kenneth DONAHUE, Jr., an individual, and Sally Donahue, an individual, Plaintiffs-Appellants,

v.Ronald D. NAGEL, AS TRUSTEE OF the RONALD D. NAGEL REVOCABLE LIVING TRUST; Juli A. Nagel, as Trustee of the Juli A. Nagel Revocable Living Trust; Ronald D. Nagel, an individual; and Juli A. Nagel, an individual, Defendants-Respondents.

A172763

Court of Appeals of Oregon.

Argued and submitted September 17, 2021.

April 27, 2022

Zachary J. Dablow, Salem, argued the cause and filed the briefs for appellants.

Dallas V. Garner, Albany, argued the cause for respondents. Also on the brief was Weatherford Thompson, P.C.

Before Tookey, Presiding Judge, and Egan, Judge, and Hadlock, Judge pro tempore.^*

EGAN, J.

Plaintiffs appeal from a general judgment for defendants on plaintiffs’ claims of trespass, nuisance and ejectment, among other claims, and defendants’ counterclaim for breach of a settlement agreement. They challenge, among other issues, the trial court's determination that a provision of the settlement agreement requiring plaintiffs to execute an easement was not void under the statute of frauds. They also appeal from a supplemental judgment awarding defendants attorney fees on defendants’ breach of contract counterclaim. We conclude that the provision of the settlement agreement relating to the creation of an easement was within the statute of frauds and that, because it was not subscribed to by plaintiffs, as the party to be obligated, it was void. We therefore vacate the general and supplemental judgments and remand to the trial court for consideration whether the easement provision is severable from the remainder of the agreement and, if so, the effect of severance on plaintiffs’ claims and defendants’ counterclaim.

The parties are neighbors and agreed to enter into mediation to resolve disputes over the use of their properties, including the location of the property line. The parties participated in a mediation, reaching a settlement and mutual release agreement. The general outlines of the agreement were memorialized by the mediator in an email to the parties. The agreement included a provision that any dispute as to the terms of the agreement would be resolved by the mediator. The parties agreed that plaintiffs’ counsel would draft the settlement agreement and that defendants’ counsel would draft the easement.

Within a day of the mediation, plaintiffs’ counsel prepared a draft of the settlement agreement and emailed it to defendants’ counsel. The draft settlement agreement included the following paragraph:

"[Plaintiffs] shall grant an easement over that certain portion of their property where there is a hedge and retainer wall, in substantially the same form as the Easement Agreement attached hereto as Exhibit A. [Defendants] will be responsible for all costs associated with preparation and recording of the Easement Agreement."

Defendants’ counsel responded to the email by proposing the addition of one sentence.¹ Plaintiffs objected to the addition. But rather than bringing their concerns to the mediator as the parties had agreed, plaintiffs took the opportunity to repudiate the agreement and filed their complaint in this action.

On defendants’ motion, the trial court bifurcated the trial and addressed first defendants’ counterclaim asserting that the settlement agreement had resolved the issues raised in the complaint and that plaintiffs were in breach of the settlement agreement. Plaintiffs contended that the settlement agreement was unenforceable, because there had been no meeting of the minds, and that the easement provision was void under the statute of frauds, because it had not been subscribed to by plaintiffs, as the party to be charged with the easement. See ORS 41.580² (stating that an agreement for the sale of an interest in real property "is void unless it, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party to be charged"); ORS 93.020(1) (providing that "[n]o estate or interest in real property * * * can be created, transferred or declared otherwise than by operation of law or by a conveyance or other instrument in writing, subscribed by the party creating, transferring or declaring it").

Defendants raised several arguments against the application of the statute of frauds. The trial court's judgment included findings that: the parties had reached an agreement in mediation that included a promise by plaintiffs to grant to defendants an easement to be drafted by defendants’ counsel; the document drafted by plaintiffs’ counsel and exchanged by email accurately reflected the parties’ agreement and resolved all disputes raised by the parties’ pleadings; defendants’ proposed changes to the draft document were not material; and the parties had agreed to be bound by a provision requiring the mediator to resolve any disputes. The court determined that the easement provision of the settlement agreement was not within the statute of frauds, because it did not purport to convey an interest in land.³ Thus, the court concluded, the settlement agreement was enforceable in its entirety. That led the court to reject and dismiss plaintiffs’ claims and to grant judgment to defendants on their counterclaim for breach of the settlement agreement. Plaintiffs appeal from the judgment dismissing their claims and granting specific performance on defendants’ counterclaim for breach of contract, and from the supplemental judgment awarding defendants attorney fees on their counterclaim, assigning error to the trial court's conclusion that the parties had an agreement and to the court's rejection of their contention that the portion of the agreement relating to an easement is void under the statute of frauds.

Plaintiffs admit on appeal that they reached a settlement agreement in mediation that included their promise to convey an easement to defendants and that they also agreed that the mediator would resolve all disputes as to the details of their agreement, including the easement. As noted, the mediator memorialized the settlement agreement in an email to the parties, and the trial court found that plaintiffs’ counsel's draft embodied the essential terms of the parties’ agreement. But plaintiffs contend in their first assignment on appeal that the parties’ attempt to memorialize the settlement in writing failed because of defendants’ proposal to add a sentence to the "good neighbor" provision of the agreement, which they contend was an essential term of the agreement that was unacceptable to them. Plaintiffs also contend that that attempt constituted a counteroffer that defeated a meeting of the minds and prevented the existence of an agreement. The trial court found, and we agree, that the proposed addition was not a material term that defeated the contract that the parties had formed through mediation,...