Duff v. McKay

• Decision Date: 14 June 2016
• Docket Number: No. 15–P–634.,15–P–634.
• Citation: 52 N.E.3d 203,89 Mass.App.Ct. 538
• Court: Appeals Court of Massachusetts
• Parties: Daniel DUFF & another v. John McKAY & others.

89 Mass.App.Ct. 538

52 N.E.3d 203

Daniel DUFF & another¹

v.John McKAY & others.²

No. 15–P–634.

Appeals Court of Massachusetts, Plymouth.

Argued Jan. 19, 2016.

Decided June 14, 2016.

Stephen W. Rider, Hingham, for the plaintiffs.

Colin Black for the defendants.

Present: GRAINGER, RUBIN, & MILKEY, JJ.

MILKEY

, J.

In 2010, plaintiffs Daniel and Lisa Duff hired the defendants to perform a renovation project at their home in Hingham. A dispute ensued regarding the defendants' workmanship and their alleged failure to obtain a building permit in a timely manner. In May of 2012, the Duffs sought redress by initiating arbitration through the State program created in accordance with G.L. c. 142A.³ The following year, on the eve of the assigned arbitrator's scheduled view of the property, the parties reached an apparent settlement of their dispute. Nonetheless, a formal settlement document was never executed because of a disagreement regarding payment terms. When the parties reached an impasse in resolving that issue, the Duffs withdrew their request for arbitration and filed a multicount action in the Superior Court asserting their underlying claims. The defendants moved to dismiss the action and to enforce the settlement. A Superior Court judge allowed that motion and entered judgment requiring the defendants to pay the agreed-to amount within ten days. On the Duffs' appeal, we affirm.

Background. The parties' key communications were memorialized in electronic mail messages (e-mails), copies of which were submitted to the motion judge.⁴ As a result, the essential facts pertaining to the parties' negotiations are uncontested.

At the heart of this case is a March 21, 2013, e-mail exchange between counsel that followed extended and vigorous settlement discussions. Counsel for the Duffs wrote to “confirm what I believe our respective clients have agreed to.” He then listed six terms. Key among those terms were the requirements that the defendants pay the Duffs $27,500, and that the parties “exchange mutual general releases, subject only to the obligations in the settlement agreement.”⁵ The list of terms did not specify when payment of the $27,500 was due.

The Duffs' counsel concluded his e-mail by asking his counterpart to “confirm that I got this right by return e-mail.” Six minutes later, the defendants' counsel responded, “Confirmed.” Six minutes after that, the Duffs' counsel sent an e-mail to the assigned arbitrator canceling the scheduled site visit because “I am pleased to report that the parties have reached a settlement agreement.” The following morning, the coordinator for the arbitration program sent an e-mail to express her happiness “that the parties have settled,” and she requested clarification whether she should “consider this your formal notice of settlement or will you mail written notice of the settlement.” Counsel for the Duffs responded by stating:

“I believe the parties are planning on preparing and signing a formal settlement agreement and then will file a stipulation of dismissal, with prejudice, of the claims in the arbitration. This may take a week or so.”

Over the next two and one-half weeks, the parties sought to complete a formal settlement document. During that time, counsel for the Duffs expressed concern over delay, stating that he did not “want to give the clients too much time to rethink this.” As the Duffs acknowledge, some of the delay was caused by a medical issue related to the defendants' counsel's family.

In the end, the parties agreed on every provision of the final settlement document save one: when precisely payment of the $27,500 was required. The Duffs insisted that payment be made when the agreement was executed, while the defendants insisted that they be given some time to complete payment. Each side asserted that its position was consistent with customary practice. In addition, each attorney asserted that his counterpart should have raised the payment issue before an apparent settlement had been reached if the issue had been important to his client. As of April 8, 2013, the state of play was as follows: the defendants were willing to pay a majority of the money ($17,500) the following day,⁶ with the remaining payment to be made three weeks later (April 30, 2013), while the Duffs continued to insist that the full amount be paid “immediately.”⁷

With the final issue at a seeming impasse, the Duffs on April 8, 2013, terminated the still-pending arbitration proceeding by withdrawing their request for arbitration.⁸ The following day, they filed the current action in Superior Court. Notably, their complaint did not allege that the parties had reached a settlement agreement, with payment due immediately. Instead, without mentioning the putative settlement agreement or the abandoned arbitration proceedings, the complaint simply set forth the Duffs' underlying claims with regard to the defendants' work on the renovation project (alleging violations of G.L. c. 93A, breaches of contract, negligence, and misrepresentation).

In response, the defendants filed what was styled as a motion to enforce the settlement agreement and to dismiss the complaint. The motion was supported by an affidavit from counsel setting forth the history of the negotiations as memorialized in the trail of e-mails. In opposing the motion, the Duffs submitted an affidavit from their own counsel that covered the same uncontested e-mail history. However, counsel also set forth his view, based on his experience, that “attorneys presume that payment of settlement proceeds will be made at the time the settlement agreements are finalized and releases exchanged” unless the paying party requests additional time before the settlement is reached. Daniel Duff himself also executed an affidavit in which he stated that in authorizing settlement, he had “understood” that payment would be due when formal settlement papers were signed and that he otherwise would not have agreed to settle the case for $27,500.

A Superior Court judge eventually allowed the defendants' motion and entered judgment requiring the defendants to pay the settlement amount within ten days.⁹ Dissatisfied with that result, the Duffs appealed.

Discussion. 1. Procedural posture and standard of review. We begin by reviewing the procedural posture in which this case has come before us. “A settlement agreement is a contract and its enforceability is determined by applying general contract law.” Sparrow v. Demonico, 461 Mass. 322, 327, 960 N.E.2d 296 (2012)

. In entering judgment enforcing the parties' apparent settlement agreement, the judge in effect resolved a contract claim put forward by the defendants even though that claim was presented by motion, not as a counterclaim. The case law suggests that such informality is acceptable where settlements have been reached while litigation is pending. See Fecteau Benefits Group, Inc. v. Knox, 72 Mass.App.Ct. 204, 211–212, 890 N.E.2d 138 (2008)

(affirming allowance of “motion to enforce settlement agreement”). See also Fidelity & Guar. Ins. Co. v. Star Equip. Corp., 541 F.3d 1, 5 (1st Cir.2008) (“[B]efore the original suit is dismissed, the party seeking to enforce the [settlement] agreement may file a motion with the trial court”). Whether this practice is appropriate where, as here, the settlement was negotiated prior to the commencement of litigation is arguably a different matter.

We need not resolve that question, as the Duffs do not press this issue on appeal.¹⁰

That said, the parties do debate the applicable standard of review. As the defendants point out, there is case law to suggest that in enforcing settlement agreements, judges enjoy substantial leeway to resolve open issues and to dispose of the matter summarily. See Fidelity & Guar. Ins. Co., supra. See also Mathewson Corp. v. Allied Marine Indus., Inc., 827 F.2d 850, 852 (1st Cir.1987)

(noting “inherent power” of courts to oversee and enforce settlement agreements). The Duffs counter that even to the extent that might be true with regard to settlements of pending litigation, ordinary procedural rules apply to the enforcement of any out-of-court agreements reached prior to the commencement of litigation. See In re Mal de Mer Fisheries, Inc., 884 F.Supp. 635, 637 (D.Mass.1995) (“The court's inherent power of enforcement, however, is limited to cases pending before it”). Because the judge here enforced a prelitigation settlement agreement without an evidentiary hearing, the Duffs argue that the judge in effect treated the defendants' motion as one for summary judgment and that his ruling must be reviewed as such.¹¹

Under the circumstances of this case, we agree with the Duffs that the defendants' motion should be treated as akin to one for summary judgment. Thus, we review the allowance of the defendants' motion de novo, to determine “whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.” Bank of N.Y. v. Bailey, 460 Mass. 327, 331, 951 N.E.2d 331 (2011)

, quoting from Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991).¹²

2. Merits. The Duffs rest their appeal on two alternative theories that lie in tension with each other. One is that because the parties never agreed on a specific date when payment was due, any agreement they had reached was too indefinite to constitute an enforceable contract. Without an enforceable contract in place, they argue, they were free to sue on their underlying claims. The Duffs' other theory is that the two sides reached a fully enforceable agreement on March 21, 2013, with payment due immediately upon execution of a formal document memorializing that agreement. According to the Duffs, the defendants breached the agreement by refusing to make timely payment, and this breach justified the Duffs in repudiating the agreement. We address these arguments in order.

a. Whether...