Powell v. City of Newton
2010 N.C. LEXIS 1078, 364 N.C. 562, 703 S.E.2d 723 (2010)
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Rule of Law:
The doctrine of judicial estoppel can override the statute of frauds to enforce an oral settlement agreement involving the conveyance of real property when a party has unequivocally affirmed the agreement on the record in open court, thereby causing the court and opposing parties to rely on that affirmation.
Facts:
- The City of Newton hired contractors to construct a park on land adjacent to Powell's property.
- Powell alleged that the city's agents trespassed on his property and wrongfully cut and removed trees.
- During the trial, the parties reached an oral settlement agreement in open court.
- Under the agreement, Powell would quitclaim his interest in the disputed land in exchange for a total of $40,000 from the City of Newton and its contractors, Shaver and Dickson.
- When questioned directly by the presiding judge in court, Powell, after initial hesitation, stated, "Yes, that’s my agreement."
- The City of Newton's attorney noted that the city council still needed to approve the settlement.
- Subsequently, the City of Newton and its contractors delivered the full $40,000 settlement payment to Powell's attorney's trust account.
- Powell later refused to sign the written settlement agreement and quitclaim deed memorializing the in-court agreement.
Procedural Posture:
- Powell filed a complaint against the City of Newton in the Superior Court, Catawba County.
- The City filed a third-party complaint against Shaver and Dickson.
- The case proceeded to a jury trial, which was terminated after the parties announced a settlement in open court.
- The City of Newton filed a motion in the trial court to enforce the settlement agreement after Powell refused to sign the written documents.
- The trial court granted the motion, concluding that a valid and binding settlement existed, and ordered specific performance.
- Powell, the appellant, appealed to the North Carolina Court of Appeals.
- A divided panel of the Court of Appeals affirmed the trial court's order.
- Powell appealed to the Supreme Court of North Carolina based on the dissent in the Court of Appeals.
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Issue:
Does the doctrine of judicial estoppel prevent a party from invoking the statute of frauds to invalidate an oral settlement agreement for the conveyance of land, when that party had previously affirmed the agreement in open court before a judge?
Opinions:
Majority - Edmunds, Justice.
Yes, the doctrine of judicial estoppel prevents a party from using the statute of frauds to invalidate an oral settlement agreement affirmed in open court. Although the oral agreement to convey land does not satisfy the signature requirement of the statute of frauds, the equitable doctrine of judicial estoppel is properly invoked to protect the integrity of the judicial process. Plaintiff's refusal to be bound by the settlement is clearly inconsistent with his earlier in-court affirmation, on which the trial court relied when it terminated the trial. Allowing plaintiff to reverse his position would threaten judicial integrity and give him an unfair advantage, thereby satisfying the three factors for applying judicial estoppel established in Whitacre P'ship v. Biosignia, Inc. An oath is not required for judicial estoppel to apply to on-the-record statements made in court.
Dissenting - Hudson, Justice
No, judicial estoppel should not be applied to create a new exception to the statute of frauds in this case. The defendants did not raise the issue of judicial estoppel at the trial court, and it is therefore not properly preserved for appellate review. North Carolina jurisprudence has historically been reluctant to create exceptions to the statute of frauds, which serves the critical purpose of protecting land transfers. Furthermore, key factual matters remain in dispute, including whether plaintiff, who is hard of hearing, truly understood the agreement and whether the city council's approval was properly obtained and communicated. The case should be remanded to the trial court for a new hearing to resolve these factual issues before any new legal doctrine is applied.
Concurring - Martin, Justice
Yes, the doctrine of judicial estoppel applies here, but the manner in which the agreement was reached is concerning. While legally correct, the situation serves as a cautionary tale for trial courts. Land is a uniquely valuable asset, and its alienation should not occur in a summary five-minute exchange where a party expresses reluctance. When a party transferring real property states something like, "I don't have any choice," the trial court should pause the proceedings to ensure the party fully understands and voluntarily consents to the transaction. The court is in the best position to protect a reluctant party and ensure the transfer of land occurs with appropriate deliberation.
Analysis:
This decision establishes judicial estoppel as a significant, albeit equitable and discretionary, exception to the statute of frauds in North Carolina for in-court settlement agreements. It prioritizes the integrity of the judicial process over the strict formal requirements for contracts conveying land. The ruling serves as a strong deterrent against parties strategically agreeing to a settlement to end a trial, only to later use a technical defense like the statute of frauds to repudiate the agreement. Future litigants are now on notice that their on-the-record statements in open court can be binding and enforceable, even for transactions that would otherwise require a signed writing.
