Kloian v. Domino's Pizza

• Decision Date: 28 December 2006
• Docket Number: Docket No. 263882.
• Citation: 733 N.W.2d 766,273 Mich. App. 449
• Parties: J. Edward KLOIAN, d/b/a Arbor Management Company, Plaintiff-Appellant, v. DOMINO'S PIZZA, L.L.C., f/k/a Domino's Pizza, Inc., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

733 N.W.2d 766

273 Mich. App. 449

J. Edward KLOIAN, d/b/a Arbor Management Company, Plaintiff-Appellant, v. DOMINO'S PIZZA, L.L.C., f/k/a Domino's Pizza, Inc., Defendant-Appellee.

Docket No. 263882.

Court of Appeals of Michigan.

Submitted December 5, 2006, at Lansing.

Decided December 28, 2006, at 9:20 a.m.

Released for Publication March 14, 2007.

Michael A. Mixer, Ann Arbor, for the plaintiff.

Conlin, McKenney & Philbrick, P.C. (by Neil J. Juliar), Ann Arbor, for the defendant.

Before: MARKEY, P.J., and SAAD and WILDER, JJ.

PER CURIAM.

Plaintiff appeals as of right the trial court's order enforcing a settlement agreement between the parties and dismissing plaintiff's claims against defendant with prejudice. We conclude that the record establishes there was an enforceable settlement agreement between the parties. Consistently with our conclusion, we affirm.

I.

On August 18, 1994, plaintiff J. Edward Kloian, doing business as Arbor Management Company, entered into a lease agreement with defendant Domino's Pizza, L.L.C. On May 14, 2003, plaintiff, the lessor, initiated this action against defendant, the lessee, alleging that defendant had breached the lease by failing to pay certain amounts owing for rent, holdover rent, taxes, insurance, maintenance and repair costs, late fees, and other damages related to the removal of equipment.

In March 2005, shortly before the trial date scheduled in this matter, the parties engaged in settlement discussions through their attorneys. Through a series of email messages exchanged between plaintiff's attorney and defendant's attorney, the attorneys agreed that defendant would pay plaintiff $48,000 to settle the lawsuit in exchange for a release of all possible claims. On March 18, 2005, plaintiff's attorney sent an e-mail to defendant's attorney, stating: "I confirmed with Mr. Kloian that he will accept the payment of $48,000 in [ex]change for a dismissal with prejudice of all claims and a release as [sic, of] all possible claims." In response, also on March 18, 2005, defendant's attorney wrote: "Domino's accepts your settlement offer. . . ."

Documents reflecting the agreement were prepared by defendant's attorney and sent to plaintiff's attorney for his review. After review of these documents, on March 21, 2005, plaintiff's attorney sent an e-mail to defendant's attorney stating: "I reviewed your documents and find them to be in order. However, Mr. Kloian would like the protection of a mutual release." On March 28, 2005, defendant's attorney sent a response stating: "I have the check and Domino's agreement to a mutual release. I need to revise the prior release and get it to you."

On May 18, 2005, defendant moved to enforce the settlement agreement. Defendant asserted that on March 18, 2005, the parties established the terms of the settlement agreement. Plaintiff also moved the trial court to approve the settlement and dismiss the case. Plaintiff's motion stated, in part:

1. On or about March 18, 2005, Plaintiff and Defendant through their counsel reached a settlement in this matter.

2. A proposed Order of Settlement was prepared by counsel for Plaintiff and approved by counsel for Defendant.

3. Despite advice of counsel, Plaintiff has refused to sign the approved Settlement Agreement.

The trial court found that the parties had entered into a binding settlement agreement on March 18, 2005. The trial court issued an order enforcing the settlement agreement and dismissing plaintiff's claims with prejudice.

II

A

Plaintiff first contends on appeal that the trial court erred in enforcing the settlement agreement because the parties had not reached an agreement on essential terms. We disagree.

The existence and interpretation of a contract are questions of law reviewed de novo. Bandit Industries, Inc. v. Hobbs Int'l, Inc. (After Remand), 463 Mich. 504, 511, 620 N.W.2d 531 (2001). "An agreement to settle a pending lawsuit is a contract and is to be governed by the legal principles applicable to the construction and interpretation of contracts." Walbridge Aldinger Co. v. Walcon Corp., 207 Mich.App. 566, 571, 525 N.W.2d 489 (1994). "Before a contract can be completed, there must be an offer and acceptance. Unless an acceptance is unambiguous and in strict conformance with the offer, no contract is formed." Pakideh v. Franklin Commercial Mortgage Group, Inc., 213 Mich.App. 636, 640, 540 N.W.2d 777 (1995). Further, a contract requires mutual assent or a meeting of the minds on all the essential terms. Burkhardt v. Bailey, 260 Mich. App. 636, 655, 680 N.W.2d 453 (2004).

On March 18, 2005, plaintiff's attorney sent an e-mail to defendant's attorney stating that plaintiff would "accept the payment of $48,000 in change [sic] for a dismissal with prejudice of all claims and a release as [sic] all possible claims." An attorney has the apparent authority to settle a lawsuit on behalf of his or her client. Nelson v. Consumers Power Co., 198 Mich. App. 82, 89-90, 497 N.W.2d 205 (1993). The e-mail from plaintiff's attorney constituted a settlement offer. "An offer is defined as `the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.'" Eerdmans v. Maki, 226 Mich.App. 360, 364, 573 N.W.2d 329 (1997) (citation omitted). In response, defendant's attorney sent the following e-mail to plaintiff's attorney:

Domino's accepts your settlement offer contained in the message below. I spoke with the court, advised it of the settlement and confirmed that we need not appear in court in connection with the settlement. I have ordered a settlement draft from Domino's in the amount of $48,000, made payable jointly to Mr. Kloian and your firm. I will forward a stipulation and order for dismissal with prejudice and a release for approval by you and Mr. Kloian respectively. You should have them in the next few days. Please call with any questions. I'm pleased we were able to resolve this matter without trial. —Neil

The e-mail from defendant's attorney constituted an acceptance of plaintiff's settlement offer. "[A]n acceptance sufficient to create a contract arises where the individual to whom an offer is extended manifests an intent to be bound by the offer, and all legal consequences flowing from the offer, through voluntarily undertaking some unequivocal act sufficient for that purpose." Blackburne & Brown Mortgage Co. v. Ziomek, 264 Mich.App. 615, 626-627, 692 N.W.2d 388 (2004) (citations omitted). In the e-mail, defendant expressed the intent to be bound by plaintiff's offer and all the legal consequences flowing from the offer. Moreover, defendant voluntarily offered to draft a settlement agreement to reflect the terms of plaintiff's offer. There clearly was a meeting of the minds on the essential terms of the agreement. The essential terms were the payment of $48,000 by defendant in exchange for a dismissal with prejudice and a release. "`A meeting of the minds is judged by an objective standard, looking to the express words of the parties and their visible acts, not their subjective states of mind.'" Kamalnath v. Mercy Mem. Hosp. Corp., 194 Mich.App. 543, 548, 487 N.W.2d 499 (1992) (citations omitted). The language in plaintiff's settlement offer indicated that plaintiff would accept $48,000 from defendant to settle the lawsuit, and, in exchange, he would promise to release all possible claims against defendant. On the basis of this interpretation of plaintiff's offer, we conclude that defendant's acceptance was unambiguous and in strict conformance with plaintiff's offer. Therefore, defendant's acceptance was sufficient to create a contract between the parties on March 18, 2005. Pakideh, supra at 640, 540 N.W.2d 777. There was a meeting of the minds on the essential terms.

The parties subsequently agreed to modify the contract to include a mutual release. A contract, including a written contract, may be modified orally or in writing. Chatham Super Markets, Inc. v. Ajax Asphalt Paving, Inc., 370 Mich. 334, 339, 121 N.W.2d 836 (1963). The modification must be by mutual consent. Adell Broadcasting Corp. v. Apex Media Sales, Inc., 269 Mich.App. 6, 11, 708 N.W.2d 778 (2005). "The mutuality requirement is satisfied where a modification is established through clear and convincing evidence of a written agreement, oral agreement, or affirmative conduct establishing mutual agreement to waive the terms of the original contract." Quality Products & Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 373, 666 N.W.2d 251 (2003). The parties consented to modify the original contract. Plaintiff requested a mutual release in a March 21, 2005, e-mail, and, in a March 28, 2005, e-mail, defendant consented to that request.¹

B

Plaintiff next contends that the trial court erred in enforcing the settlement agreement because evidence of the agreement was not in writing, signed by plaintiff or his attorney as required by MCR 2.507(H).² We disagree.

The construction and application of a court rule are questions of law that this Court reviews de novo on appeal. Wickings v. Arctic Enterprises, Inc., 244 Mich.App. 125, 133, 624 N.W.2d 197 (2000). A contract for the settlement of pending litigation that fulfills the requirements of contract principles will not be enforced unless the agreement also satisfies the requirements of MCR 2.507(H). Michigan Mut. Ins. Co. v. Indiana Ins. Co., 247 Mich.App. 480, 484-485, 637 N.W.2d 232 (2001). When this case was decided, MCR 2.507(H) provided:

An agreement or consent between the parties or their attorneys respecting the proceedings in an action, subsequently denied by either party, is not binding unless it was made in open court, or unless evidence of the agreement is in writing, subscribed by the party against whom the agreement is offered or by that party's attorney. [Emphasis added.]

By its terms, MCR 2.507(H) is in the nature of a statute of...