Kloian v. Domino's Pizza, LLC
733 N.W.2d 766, 273 Mich. App. 449 (2007)
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Rule of Law:
A valid settlement agreement formed through an email exchange is enforceable under Michigan Court Rule 2.507(H) if the emails constitute a subscribed writing. A subsequent, technically unenforceable modification to that agreement does not invalidate the original, validly formed agreement.
Facts:
- On August 18, 1994, J. Edward Kloian, as lessor, and Domino’s Pizza, LLC, as lessee, entered into a lease agreement.
- A dispute arose over payments Kloian alleged Domino's owed for rent, taxes, and other costs under the lease.
- On March 18, 2005, through an exchange of emails, the parties' attorneys agreed to a settlement where Domino's would pay Kloian $48,000 in exchange for a dismissal of all claims with prejudice.
- Both attorneys typed their names at the end of their respective March 18th offer and acceptance emails.
- On March 21, 2005, Kloian's attorney sent an email requesting that the settlement be modified to include a mutual release; the attorney's name appeared in the header of this email but not at the end.
- On March 28, 2005, Domino's attorney replied via email and agreed to the mutual release.
- Subsequently, Kloian refused to sign the written settlement documents prepared by the attorneys.
Procedural Posture:
- J. Edward Kloian sued Domino's Pizza, LLC in a Michigan trial court for breach of a lease agreement.
- Domino's Pizza, LLC filed a motion in the trial court to enforce the settlement agreement.
- Kloian's own attorney also filed a motion to approve the settlement, indicating that his client had refused to sign the formal documents.
- The trial court found a binding settlement agreement had been formed, granted the motion to enforce it, and dismissed Kloian's claims with prejudice.
- Kloian, as plaintiff-appellant, appealed the trial court's order to the Michigan Court of Appeals.
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Issue:
Does a subsequent, technically invalid attempt to modify a settlement agreement render the original, validly formed agreement unenforceable under Michigan Court Rule 2.507(H)?
Opinions:
Majority - Per Curiam
No. A subsequent, technically invalid attempt to modify a settlement agreement does not render the original, validly formed agreement unenforceable. The court reasoned that a binding contract was formed on March 18, 2005, through the email exchange between the attorneys. This exchange contained a clear offer ($48,000 for dismissal and release) and an unambiguous acceptance, establishing a meeting of the minds on all essential terms. This initial agreement satisfied Michigan Court Rule 2.507(H), which requires a 'writing, subscribed' by the party's attorney, because both attorneys had typed their names at the end of their respective emails, which the court interpreted as satisfying the subscription requirement. The subsequent request for a mutual release on March 21 was an attempted modification, but it failed to satisfy MCR 2.507(H) because the requesting email was not 'subscribed'—the attorney's name was in the header, not appended at the bottom. Because the modification was unenforceable, the original, validly formed settlement agreement from March 18 remained in full force and effect.
Analysis:
This case establishes that email communications can form a binding settlement agreement under Michigan law, provided they meet the standards of contract formation and the specific court rule requiring a 'subscribed' writing. The court's strict interpretation of 'subscribed' as meaning signed at the bottom creates a clear, albeit formalistic, standard for electronic communications in litigation settlements. The most significant precedential impact is the holding that a failed modification does not void the underlying contract; this provides stability in settlement negotiations by preventing a party from strategically using a technically flawed modification proposal to escape an otherwise valid agreement.
