Deal or No Deal? Enforcing Preliminary Settlement Agreements
Brief author introduction: My name is Sage Shaheen and I am a summer associate finishing the last week of my summer here at Pierce Atwood. You can find my previous writing and research for this blog here and here.
The Law Court recently issued an opinion on the enforceability of preliminary settlement agreements in the case of Maine Human Rights Commission et al. v. Robert Larkin, 2026 ME 67. Because it is not uncommon for parties who initially agree to the broad strokes of a settlement agreement to either (1) seek to undo the agreement before it is inked, or (2) add additional substantive terms to the agreement after the fact, we thought it was worth examining the takeaways from this recent decision.
In Larkin, the Maine Human Rights Commission filed suit against a landlord alleging housing discrimination claims against a tenant. The tenant later requested a judicial settlement conference with the landlord. Following the conference, the trial court issued a settlement conference record form, which stated only that “[t]he parties have agreed upon a full and final settlement of the matter. The attorneys will prepare the necessary paperwork and filed a notice of dismissal with prejudice in this matter in due course.” However, the parties never agreed to the terms of a final written settlement agreement, despite exchanging several redlined drafts. Instead, after negotiations over the terms of the agreement broke down, the landlord informed the trial court that he no longer wished to proceed with the agreement and instead wanted to proceed to trial. The Commission subsequently moved to enforce the agreement.
The trial court heard oral argument on the motion to enforce, but did not hold an evidentiary hearing. The court concluded, based on the settlement conference record, that the parties had in fact reached a settlement agreement, and looked to the redlined drafts exchanged by the parties to determine the five key terms of the agreement to which the parties had agreed. The court ordered the parties to execute an agreement consistent with those terms.
The landlord appealed the trial court’s determination that the parties had mutually assented to be bound by a settlement agreement and that that agreement had consisted of the five key terms. In its subsequent review, the Law Court held that the factual record was insufficient to support the existence of a binding settlement agreement including the five key terms. The record contained no recording, transcript, or contemporaneous written notes reflecting the terms of the parties’ purported agreement. Instead, it included only the settlement conference record form, the attorneys’ vaguely-worded affidavits regarding what had occurred at the settlement conference, and the parties’ oral arguments. The Law Court accordingly concluded that “the [trial] court could not properly determine that there was a meeting of the minds as to the existence of the settlement agreement and to its express terms.” Notably, the settlement conference form was insufficient on its own to support the existence of a binding settlement agreement, because, as with all contracts, “definite terms are necessary to establish the existence of a binding agreement.” Thus, the Law Court remanded the case to the trial court for an evidentiary hearing to determine the existence and terms of any settlement agreement between the parties.
The practical takeaway here is that counsel should make every effort to document agreements reached in a judicial settlement conference, mediation, or other alternative dispute resolution process. In an ideal world, counsel would bring a draft settlement agreement outlining their party’s key interests to the negotiations, leaving blank the key terms to be settled. In this way, the settlement conference could potentially lead to a final agreement that can be signed that very day, or shortly thereafter. Alternatively, documentation may take one of several forms, including: (1) a formal term sheet; (2) a report issued by the mediator or judicial referee laying out the specific terms to which the parties agreed; (3) a written transcript or audio/video recording of the parties acknowledging agreement to the key terms of a settlement; or (4) or (at the very least) a contemporaneous email exchange between counsel acknowledging the same. If no such memorialization of the settlement terms exists, a party should request an evidentiary hearing from the court in any subsequent effort to enforce the settlement, and should not rely solely on self-serving attorney affidavits to prove the existence of an agreement.
