Duff v. McKay
52 N.E.3d 203, 89 Mass. App. Ct. 538 (2016)
Rule of Law:
A settlement agreement is enforceable if the parties agree on all material terms and demonstrate a present intent to be bound, even if a non-material term, such as the precise payment schedule, remains undefined and can be resolved by reference to professional norms or reasonableness.
Facts:
- In 2010, Daniel and Lisa Duff (Duffs) hired the defendants (Corey Revell & another) to perform a renovation project at their home in Hingham.
- A dispute arose regarding the defendants’ workmanship and their alleged failure to obtain a building permit in a timely manner.
- In May 2012, the Duffs initiated arbitration through a State program created in accordance with G. L. c. 142A to resolve their dispute.
- On March 21, 2013, counsel for the Duffs sent an email to defendants’ counsel listing six settlement terms, including the defendants' payment of $27,500 to the Duffs and mutual general releases, and requested confirmation.
- Six minutes later, defendants' counsel responded, “Confirmed,” and six minutes after that, Duffs' counsel informed the assigned arbitrator that the parties had reached a settlement agreement and canceled a scheduled site visit.
- Over the next two and a half weeks, the parties attempted to complete a formal settlement document but disagreed on the precise date when the $27,500 payment was due.
- The Duffs insisted that payment be made when the agreement was executed, while the defendants insisted they be given some time, proposing to pay $17,500 immediately and the remaining $10,000 three weeks later.
- On April 8, 2013, with the payment issue still unresolved, the Duffs terminated the arbitration proceeding by withdrawing their request for arbitration.
Procedural Posture:
- In May 2012, Daniel and Lisa Duff initiated arbitration proceedings against Corey Revell & another through the State program created under G. L. c. 142A.
- On April 9, 2013, after withdrawing their request for arbitration, the Duffs filed a multicount action in Superior Court, asserting their underlying claims for violations of G. L. c. 93A, breaches of contract, negligence, and misrepresentation.
- The defendants filed a motion to dismiss the Duffs' Superior Court action and to enforce the settlement agreement.
- A Superior Court judge allowed the defendants' motion and entered judgment requiring the defendants to pay the agreed-upon amount within ten days.
- The Duffs (appellants) appealed the Superior Court's judgment to the Appeals Court of Massachusetts, with Corey Revell & another as the appellees.
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Issue:
Is a settlement agreement enforceable when the parties have agreed to all material terms and expressed an intent to be bound, even if a non-material term, such as the precise payment schedule, remains undefined and later becomes a point of contention preventing the execution of a formal document?
Opinions:
Majority - Milkey, J.
Yes, a settlement agreement is enforceable even if a non-material term, such as the precise payment schedule, remains undefined, provided the parties intended to be bound and agreed on all material terms. The court reasoned that the March 21, 2013, e-mail exchange contained "terms sufficiently complete and definite," as the absence of a specific payment date did not mean "significant, material terms were still to be negotiated." The determinative question is whether the absent term altered the essential nature of the bargain. The court noted that indeterminacy can be resolved by reference to professional norms or by inferring a "reasonable" date, without changing the essence of the contract, and the Duffs themselves acknowledged that professional norms could determine the payment date. Furthermore, the parties demonstrated a "present intent... to be bound" at the time of the email exchange, evidenced by counsel's unqualified report of a settlement to the arbitrator and the absence of any suggestion that a formal document was a prerequisite for a binding agreement. Even if the defendants' payment demand was a breach, it was not a material breach, as the payment deadline was not an "essential and inducing feature of the contract." Therefore, the Duffs were not entitled to repudiate the agreement but could only seek enforcement and damages for an immaterial breach.
Concurring - Grainger, J.
I agree with the majority's result that the settlement agreement is enforceable. Justice Grainger emphasized that the plaintiffs' insistence on immediate payment and subsequent actions were commercially unreasonable and effectively a breach by the Duffs. In the absence of a specific payment time or a "time is of the essence" clause, the parties were obligated to perform within a "reasonable time." The defendants' proposal to pay the bulk immediately ($17,500) and the balance ($10,000) within three weeks was reasonable under any recognizable standard of commercial dealing. The delay in receiving the remaining $10,000 for three weeks had a negligible financial value (between .03% and .18% of the total settlement), making it an "immaterial departure" from the settlement terms. The plaintiffs' quick demand for additional money or their subsequent filing of a lawsuit, rather than countering with a reasonable alternative payment schedule, suggested a desire to unravel the agreement, thus justifying the defendants' concern to secure a signed agreement.
Analysis:
This case significantly clarifies that courts will generally enforce settlement agreements where there is clear agreement on material terms and intent to be bound, even if minor details remain unaddressed. It underscores that the absence of a non-material term, like a precise payment date, can often be resolved through reference to professional norms or a 'reasonable time,' preventing parties from unilaterally repudiating an agreement. The ruling reinforces the high threshold for establishing a material breach necessary to justify contract repudiation, thereby promoting the finality of settlements and discouraging subsequent litigation over disputes that were substantially resolved.
