The Maine SJC decided to tidy up Maine law on settlements recently in In Estate of Snow, 2014 ME 105.
The facts of the case were a dispute about a will. When one party appeared for her deposition, the parties' lawyers went on the record before the reporter stating "We have settled the case. We are going to try to put down the outlines of the settlement and then [we] are going to work on finalizing it." They then discussed the details on the record. Everybody goes home and, surprise!, they can't agree on the text of the settlement documents or language in a letter that constituted one term of the settlement. One party filed a motion to enforce the settlement agreement and to amend her complaint to add a claim for breach of the agreement. The other side opposed the motion to enforce, but agreed to the amendment. The parties submitted the transcript before the court reporter and the various communications exchanged by the parties thereafter.
The Probate Court granted enforcement. The other side moved for findings of fact and conclusions of law to probe the exact contours of this settlement. The court denied the motion, saying its original order and portions of the record incorporated in it were adequate.
The SJC said, first, settlement agreements are analyzed like contracts, so whether there's a binding settlement is a question of fact, so the clearly erroneous standard is applied to the trial court's analysis.
Citing Muther v. Broad Cove Shore Ass'n, 2009 ME 37, the Court noted the distinction between a preliminary agreement to agree and a binding settlement agreement, noting that the difference was a question of intent. Here, the record before the Probate Court was "ample" showing an intent to enter into an enforceable settlement agreement to be subsequently memorialized in writing – they said "we have settled" and in that discussion on the record said the parties had "agreed" to various terms. Since the deposition wasn't held, the SJC (Silver, J.) said that reflected an understanding that the case had been resolved.
The reference to an "outline," and the need to negotiate details, the Court said wasn't fatal: "The mere existence of some evidence that would support a finding contrary to the court's decision, however, does not render the decision clearly erroneous." (P 14.)
In response to the argument that the Probate Court had arrived at its findings without a hearing or converting the motion to enforce into one for summary judgment, the SJC said "[w]e have implicitly endorsed motions to enforce as appropriate vehicles by which parties may bring an alleged settlement agreement before a trial court." (P 18, citing White v. Fleet Bank of Me., 2005 ME 72, as well as a First Circuit decision) Whether to hold a hearing, the SJC said, "is ordinarily left to the discretion of the trial court," citing M.R. Civ. P. 7(b)(7) ("Except as otherwise provided by law or these rules, after the opposition [to a motion] is filed the court may in its discretion rule on the motion without hearing.").
The SJC noted that it had held that an evidentiary hearing was required before the trial court could rule on a motion to enforce in Marie v. Renner, 2008 ME 73, because there the parties hadn't waived the hearing and the parties' filings were ambiguous and "without more [did] not disclose the existence of a binding agreement as a matter of law." In contrast, the SJC said, "where parties read a settlement agreement that contains all the necessary elements of an agreement in to the court record, no further fact-finding is required." (P 19.)
While this was not a case in which the parties recited their agreement into the trial court record, the SJC said that the parties did not dispute the accuracy of the transcript they submitted, and the trial court found that the transcript unequivocally reflected a binding settlement. That's "essentially" the same as reciting the settlement before the judge, the SJC said, so "in the absence of ambiguity of the settlement language" no evidentiary hearing was required.
Finally, the SJC said that even if the Probate Court had erred in not holding a hearing, it would not vacate the judgment unless the procedure used was "inconsistent with substantial justice," citing M.R. Civ. P. 61. That means the appellant would need to show both error and prejudice, and here, the appellant had not precisely articulated how she was prejudiced.
What's the takeaway? If you are having settlement terms transcribed, and you don't want it to be considered binding, say so.