This is not a family-law opinion, but it deals with an issue that applies to all trial lawyers, so I think it is “blog-worthy.”
Facts: Hayes bought a piece of real estate and wanted to build a driveway and parking area from the road to his planned homesite. He hired Extreme Excavation to construct the driveway. He paid $11,500 and owed a balance of $5000.
Hayes was dissatisfied with the quality of the work. Extreme Excavation said Hayes would need to pay the remaining balance before any remedial work would begin. Extreme Excavation also claimed it did much more work than it was paid for. Hayes refused.
Hayes hired someone else to do more work to finish the driveway to his satisfaction. He then sued Extreme Excavation.
Extreme Excavation filed a counter-complaint.
Settlement negotiations occurred between the lawyers. Hayes offered to pay Extreme Excavation $15,000 to settle all claims.
Extreme Excavation countered with a demand for $25,000 and asked for Hayes to pay court costs.
Hayes’ lawyer wrote: “My client has instructed me to accept your counteroffer as stated in your letter dated October 19, 2022, and agrees to pay your client the sum of $25,000. I will not be back in my office until October 31, 2022, and we can finalize the settlement when I return. Thanks.”
On November 4, 2022, Hayes’s attorney sent another letter to Extreme Excavation’s attorney stating that Hayes had withdrawn his acceptance of the counteroffer.
Extreme Excavation moved to enforce the settlement agreement. The trial court denied the motion, stating: “The Court respectfully denies the motion [] on the basis that there was no ‘agreement’ for the Court to enforce until the ‘Settlement Agreement’ in [Hayes’s] offer had been entered into by the parties. This was not done.”
A bench trial followed that resulted in a verdict in favor of Hayes for $17,400.
Extreme Excavation appealed.
On Appeal: The Court of Appeals reversed the trial court.
In Tennessee, a compromise and settlement agreement is a contract between parties to litigation. Issues of enforceability of a settlement agreement are governed by contract law.
While a contract may be expressed or implied, or written or oral, it must result from a meeting of the minds of the parties in mutual assent to the terms, must be based on sufficient consideration, free from fraud or undue influence, not against public policy, and sufficiently definite to be enforced.
Tennessee courts retain the inherent power to enforce agreements entered into in settlement of litigation pending before them, and this power exists even if the parties’ agreement has not been reduced to writing.
It is well-settled that contracts must have terms of sufficient definiteness to let courts give them exact meanings.
In a 2-1 decision, the Majority found the settlement agreement should have been enforced:
Here, however, neither Mr. Hayes nor the dissent adequately explains what terms remained to be decided. The parties agreed that Mr. Hayes would pay $25,000 to Extreme Excavation; all parties would dismiss their claims and execute releases; Mr. Hayes would pay court costs; and the parties would pay their own discretionary costs and attorney fees. Despite Mr. Hayes’s attorney’s statement about future finalization of the settlement, the essential terms were already finalized. The only step remaining was for the parties to put their agreement in writing and sign the agreement…. Given that this was a straightforward breach of contract claim and counterclaim for monetary damages, there is simply nothing left for the parties to agree upon.
The Court reversed the trial court’s judgment and ordered the settlement agreement to be enforced.
Dissenting Opinion: Judge Bennett dissented, explaining:
Agreements to agree are unenforceable in Tennessee because their terms lack the definiteness required for performance. Contracts must have terms of sufficient definiteness to allow courts to give them exact meanings.
* * * * *
What was left to negotiate? The only agreed-upon term was the amount that Hayes would pay to Extreme Excavation. There is no agreement on the language of the mutual general releases or the agreed order of dismissal proposed in the October 14 communication from Hayes’s attorney and accepted in the October 19 reply. These are critical components of the settlement left to be finalized later. Furthermore, Mr. Hayes’s attorney did not respond to the proposal that Mr. Hayes should pay the court costs. This, too, is left for future negotiation.
It is evident to me that what we have here is an agreement to agree or “concepts of a plan” of settlement, if you will. As such, there is no binding agreement. Therefore, I dissent.
K.O.’s Comment: Shout out to Judge Bennett for his “concepts of a plan” reference. While that’s not quite enough for “World’s Most Awesome Judge” recognition, it’s damn close.
Source: Hayes v. Extreme Excavation, LLC (Tennessee Court of Appeals, Eastern Section, October 2, 2024). If you find this helpful, please share it using the buttons below.