Opinion
Nos. SUCV2005-01684, 04-04106-E.
October 18, 2007
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO ENFORCE SETTLEMENT AGREEMENT
The plaintiff, New Commonwealth Residential Company, LLC ("New Commonwealth"), brought this claim to recover unpaid rent allegedly owed by the defendant, Richard Hack ("Hack"). A judgment of default was entered in favor of New Commonwealth pursuant to Mass. R. Civ. P. 55(b). In light of the default judgment, the parties began settlement negotiations. This matter is before the court on the defendant's motion to enforce the settlement agreement. For the reasons set forth below, the defendant's motion is ALLOWED .
BACKGROUND
On September 16, 2004, New Commonwealth filed its current claim against Hack to recover damages resulting from the alleged breach of a residential lease. On November 17, 2004, because Hack had not responded to service, default was entered against him pursuant to Mass. R. Civ. P. 55(a). Because Hack remained unresponsive, on December 6, 2004, New Commonwealth obtained a default judgment against him in the amount of $92,374.95 plus costs and interest pursuant to Mass. R. Civ. P. 55(b)(2). Thereafter, on May 2, 2005, execution was entered for New Commonwealth in the amount of $99,438.07 plus $333.75 in costs.
Hack alleges that although he received notice of New Commonwealth's claim he did not believe the matter applied to him. Hack maintains that at all times the premises was occupied by Troy Stratos ("Stratos"). Hack claims that Stratos was responsible for rent payments and that it was Stratos who failed to make payments to New Commonwealth. In addition, Hack argues that his confusion was further justified because Stratos was already involved in litigation against New Commonwealth in Boston Housing Court. Allegedly believing Stratos would answer to New Commonwealth, Hack never responded to the complaint.
Subsequently, the parties began settlement negotiations. The record reflects the following events:
On May 23, 2006, Hack's attorney began settlement negotiations by sending New Commonwealth a letter offering $20,000 plus $2,483.75 for court costs and attorney's fees.
On July 31, 2006, Hack's attorney sent a letter to New Commonwealth that included a draft settlement agreement.
On September 1, 2006, Hack's attorney emailed New Commonwealth with an amended draft agreement. The only change was to make a non-disparagement clause reciprocal.
On October 30, 2006, Hack's attorney emailed New Commonwealth expressing a willingness to settle for an amount greater than $22,500 but less than $32,500.
It appears from the record that the parties spoke sometime before October 30, 2006 and New Commonwealth suggested settling for $32,500.
On October 31, 2006, New Commonwealth sent an email to Hack's attorney stating, "[w]e would like $3,000 up front for our attorney's fees and after all documents are reviewed by our attorney the balance of $24,500.00 to finalize."
On November 21, 2006, Hack's attorney responded by email stating, "Thi[s] is fine with us. We can work out the details of getting documents finalized and signed after Thanksgiving."
On January 8, 2007, Hack's attorney sent an email expressing her client's desire to resolve the matter. The record indicates that the parties had not been in contact for some time.
On January 19, 2007, Hack's attorney sent a letter to New Commonwealth outlining her client's wish to resolve the matter. As documentation of the parties' communications, Hack's attorney included the October 31, 2006 and November 21, 2006 emails.
On February 15, 2007, New Commonwealth asked Hack's attorney to forward a $3,000 check to cover New Commonwealth's attorney's fees. New Commonwealth stated that it then intended to forward the draft documents to its attorney for review.
On February 16, 2007, Hack's attorney responded to New Commonwealth's email stating that she could not advise her client to forward funds until after the documents were signed. However, because she was already in possession of the settlement funds, Hack's attorney assured New Commonwealth that she could transfer the initial $3,000 quickly.
On March 8, 2007, Hack's attorney sent an email to New Commonwealth expressing a desire to settle the dispute along with a draft of the settlement agreement. The language of Hack's attorney's email indicates that the parties had not communicated for some time.
On March 22, 2007, Hack's attorney sent an email to New Commonwealth seeking to resolve the matter and asserting that Hack was prepared to file a motion to remove the default and litigate the claim if New Commonwealth failed to respond.
On March 23, 2007, New Commonwealth responded to Hack's attorney by email, stating that New Commonwealth's attorney would contact Hack's attorney directly.
On April 11, 2007, New Commonwealth's attorney sent a letter to Hack's attorney asking for a "more reasonable offer."
On July 5, 2007, Hack filed the instant motion to enforce the settlement agreement.
DISCUSSION
Evaluating Hack's motion to enforce the settlement agreement, the question before the court is whether the email communications between the parties created an enforceable contract. New Commonwealth argues that because those communications did not address all material matters, no enforceable agreement was reached. Conversely, Hack contends that the total amount of the settlement was the only material term and therefore the settlement agreement should be enforced. It is a well settled principle of law that a contract is enforceable when it contains all material terms and the parties intend to be bound by it. Situation Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000); McCarthy v. Tobin, 429 Mass. 84, 87 (1999). However, it is not enough that the parties agreed to certain important terms if no agreement was reached on other essential elements. The Comm. Bldrs. v. Indian Motorcycle Assoc., 44 Mass. App. Ct. 537, 556 (1998); Geo. W. Wilcox, Inc. v. Shell C. Products, Inc., 283 Mass. 383, 390 (1933)Sibley v. Felton, 156 Mass. 273, 276 (1892). The fact that parties may have contemplated execution of a final written agreement creates a strong inference that the parties did not intend to be bound by earlier negotiations or agreements until the final terms were settled. Rosenfield v. United States Trust Co., 290 Mass. 210, 216 (1935). "If, however, the parties have agreed upon all material terms, it may be inferred that the purpose of a final document which the parties agreed to execute is to serve as a polished memorandum of an already binding contract." Goren v. Royalty Investments, Inc., 25 Mass. App. Ct. 137, 140 (1987) (finding an agreement enforceable because the parties resolved all significant economic issues and voiced no dispute regarding subsidiary terms during the negotiations). Furthermore, even though subsidiary matters may sometimes be the subject of bargaining, norms exist for their customary resolution and a dispute over these terms will not necessarily bar enforcement of an agreement. Id. at 141.
Here, the parties' communications indicate that the primary subject of negotiation was the amount of a possible settlement. Going back and forth, the parties moved closer to a specific amount with each correspondence. Not withstanding, New Commonwealth contends that there are many other material matters that the parties did not address. Nevertheless, as in Goren, these terms are secondary; although they could be the subjects of a dispute, they appear easily resolvable through normal procedures. Id. at 141. In fact, none of the terms New Commonwealth cites were addressed by the parties during negotiations. This indicates that these matters were subsidiary and that the total amount of the settlement was the only material term.
New Commonwealth lists terms including: Timing of payments, removal of default and the outstanding execution; rights of the parties in the case of a breach of the agreement; the nature of the dismissal as being with or without prejudice; confidentiality, the parties to be bound by the agreement; modifications to the agreement; the right to costs incurred; exhibits to the agreement and the rights and obligations of the parties as a result of a settlement
Save one occasion, the parties did not discuss any terms except the amount of the settlement. On that occasion, Hack's attorney mentioned changing the non-disparagement clause of a draft agreement to apply reciprocally.
New Commonwealth argues that even if the total amount of the settlement was the only material term, the parties never reached a final agreement. In support of this argument, New Commonwealth points to Hack's attorney's March 22, 2007 email. In that email, Hack's attorney stated that if she did not hear back from New Commonwealth, she would have no choice but to file a motion to remove the default judgment and litigate the matter. New Commonwealth interprets this correspondence as indicating Hack never believed a final agreement was reached. The court disagrees with New Commonwealth's contention. Hack's attorney's statements may indicate frustration with New Commonwealth's unresponsiveness, but not the absence of an enforceable agreement. Similarly, the fact the parties contemplated executing final documents demonstrates their desire to have a polished memorandum of an already binding agreement. Id.
Hack's intent to enter into the agreement is evidenced by Hack's attorney's emailed statement "[t]hi[s] is fine with us," made on November 21, 2006. New Commonwealth's intent to enter into the agreement is evidenced by its request for Hack to tender $3,000 in conformance with its October 31, 2006 offer.
Finally, New Commonwealth argues that even if the parties formed an agreement, because Hack refused to tender the $3,000 up-front payment before signing the settlement documents, Hack rejected New Commonwealth's offer and neither party is bound to it. However, Hack's attorney's attempt to suggest a functionally identical pay arrangement hardly constitutes a rejection or repudiation. Moreover, in that the court finds the total dollar amount of the settlement was the only material term, the precise timing of the initial payment was unimportant. Therefore, because the parties agreed to the total amount of the settlement, the only material term to the agreement, Hack's motion to enforce the settlement agreement must be ALLOWED .
Generally, removal of a default judgment is left to the sound discretion of the trial judge. Bissanti Design/Build Group v. McClay, 32 Mass. App. Ct. 469, 470 (1992). Determining whether such action is appropriate, the judge should consider the six factors outlined in Berube v. McKesson Wine Spirits Co., 7 Mass. App. Ct. 426, 430-431 (1979). However, courts have expressed a strong aversion for disposing of cases by default. Scannell v. Ed. Ferreirinha Irmao, LDA., 23 Mass. App. Ct. 465 470 (1987). In that the parties carried out settlement discussions with knowledge that a default judgment had entered, the court finds that the default judgment should be vacated solely to allow the settlement agreement to be enforced.
ORDER
For the foregoing reasons, it is hereby ORDERED that the defendant's motion to enforce the settlement agreement is ALLOWED .