There is a common belief among some lawyers that a settlement is not complete until there is a formal written agreement signed by the parties that has all the “bells and whistles” typical of a settlement agreement. Not always so. In J.B.B. Investment Partners LTD v. Fair (2019) 37 Cal.App.5th 1, Division 2 of the First Appellate District enforced a settlement based upon emails: one from Plaintiffs’ counsel stating a “last and final offer” setting out the terms; and one from Defendants, albeit somewhat ambiguous but which included the magic words “So I agree.” The Court of Appeal found that the plain outward manifestation of these emails (along with several others subsequently sent by Defendants), reflected that an agreement was reached on the terms set out in Plaintiffs’ counsel’s earlier email; and that the lack of a formal settlement agreement which the parties clearly had intended to sign, did not detract from the enforceability of the settlement. The emails satisfied the need for a “writing” to meet the requirements of the Statute of Frauds. For these reasons, the trial court granted summary adjudication on the breach of contract claim brought by Plaintiffs to enforce the settlement, which was upheld on appeal as there was no material dispute of fact over the settlement terms that had been stated in the email exchange; and the failure of Defendants to sign the formal written version of the settlement, did not render the settlement terms reflected in the underlying emails a nullity. The emails contained sufficient manifestations of the parties’ respective consent to settle on those terms.
This dispute arose out of a demand to rescind real estate investments against the promoter and manager, a non-practicing attorney, of two real estate syndications based upon claims of fraud, omissions and misrepresentations. By way of procedural background this was the third appeal between the parties. The first appeal, heard by different panel, reversed the trial court’s order granting Plaintiffs’ motion under Code of Civil Procedure section 664.6 to enforce the proposed written settlement agreement reflecting the settlement they thought had been reached, because that settlement document had not been signed by Defendants, a statutory requirement in order to be judicially enforceable. Plaintiffs had not sought to enforce the emails as an agreement but rather the terms of the formal written settlement agreement. (The second appeal involved attorney fees.) The third and final appeal arose from a motion for summary adjudication on a cause of action for breach of contract brought by Plaintiffs to establish that the existing email communications (not the unsigned settlement agreement that had been rejected in the first appeal) between the parties formed an enforceable contract for damages which were the amounts agreed to be rescinded.
So what is the lesson here? First, it is the notion that Plaintiffs may have benefited by consulting with appellate counsel, who could have flagged the alternative emails-as-settlement argument for development in the initial motion to enforce, or at least as alternative arguments during the first appeal. Second, it is recognizing that when a client has committed to a settlement in his or her own words, no amount of lawyering can unhinge a clear agreement made between the parties and the attempt to do so, could lead to a sanctions award. And that is what happened here when the Court of Appeal found the latest appeal to be frivolous and awarded $44, 654 in fees and costs against both lawyer and client; and made a referral to the California State Bar under Business and Professions Code section 6086.7 subdivision (a)(3). Knowing when to counsel a client to stop litigating or withdraw as counsel of record was the important and expensive lesson for the lawyer. Counsel reading this post would do well to avoid learning the lesson the hard way.
As a litigator, Neil has been lead counsel in a substantial number of court and jury trials, appeals and arbitrations in state and federal courts in the areas of legal malpractice defense, technology, securities, fiduciary fraud, corporate and business disputes, real estate and natural resources involving environmental, water and oil and gas.