Opinion
No. 06-1101.
Filed September 4, 2007.
Dare County No. 05 CVS 141
Appeal by Defendant from judgment entered 14 November 2005 by Judge Gary E. Trawick in Dare County Superior Court. Heard in the Court of Appeals 10 April 2007.
The Twiford Law Firm, P.C., by John S. Morrison, and Baker, Jones, Daly Carter, P.A., by Ronald G. Baker and Darlene G. Chambers, for Plaintiffs. Wyrick Robbins Yates Ponton LLP, by K. Edward Greene and Adrienne E. Allison, for Defendant.
On 24 April 2001, Muslima Subkhangulova ("Muslima") and Gary Joseph Dowdy, Sr. ("Defendant") were married. Muslima had two children before marrying Defendant, but no children were born of her marriage to Defendant. On or about 20 July 2004, the couple separated. On 15 September 2004, Muslima filed a complaint in Dare County District Court seeking postseparation support, alimony, divorce from bed and board, equitable distribution of the marital property, and interim distribution of the marital assets. In the complaint, Muslima alleged, inter alia, that the couple was married outside the United States "in the town of Yoshkar-Ola the Republic of Mari El" and that at the time of the wedding, "Defendant promised that upon bringing [Muslima] to the United States of America that he would fully and faithfully provide support for her and her two minor daughters, for at least ten years."
By a second complaint dated 18 February 2005 and filed in Dare County Superior Court, Muslima and her daughters, Albina Subkhangulova ("Albina") and Diana Subkhangulova ("Diana") (collectively "Plaintiffs"), brought causes of action against Defendant for assault, intentional infliction of emotional distress, seduction and alienation of affections, and breach of contract. Plaintiffs' complaint alleged, inter alia, that "[f]rom the summer 2002 to spring 2003, the Defendant approached [Albina] out of the presence of her mother and sister, and on numerous occasions made lewd and vulgar comments about . . . Albina's body . . . and . . . did in fact place his hands on Albina's [body] . . . in a rude and vulgar manner." The complaint alleged further that "[o]n numerous occasions, beginning in the Summer of 2002 and continuing up until July 20, 2004, the Defendant maintained a pattern of and practice of illicit sexual relations with the minor child Diana[.]" Additionally, the complaint stated that
[t]he Defendant on at least two occasions in 2004 struck [Muslima] in a violent, rude, and offensive manner: Once by grabbing [her] person by the throat and throwing her to the floor, straddling her body, and pinning her down as she cried for help from Diana[.]Secondly, by threatening to do her great bodily harm unless she engaged in sexual intercourse with the Defendant.
Finally, the complaint alleged that
[d]espite the obligations imposed on the Defendant by his agreement . . . and the laws of the United States of America, [through his sponsorship of Plaintiffs during their immigration into the United States,] the Defendant has willfully failed and refused to provide support to all Plaintiffs as [required] by law . . ., despite his ability to do so.
Plaintiffs sought compensatory and punitive damages and attorneys' fees.
On 8 April 2005, Plaintiffs and Defendant purportedly entered into a settlement agreement ("the agreement"). By the terms of the agreement, Defendant agreed to pay $1,500,000.00 to Diana, $1,250,000.00 to Muslima, and $250,000.00 to Albina by noon on 31 May 2005. In exchange, Plaintiffs agreed that upon receipt of the payments from Defendant, they would file a voluntary dismissal with prejudice of the claims pending in Dare County Superior Court. Additionally, the parties acknowledged that the agreement was a
final and binding release and discharge from any and all claims, demands, actions, or suits at law or in equity, contract or tort, or of any kind or nature, in any manner arising out of the alleged personal injuries or alleged breach of contract suffered by the Plaintiffs as specified in the pleadings.
Furthermore, the agreement provided that
the pending litigation in both the District and Superior Courts of Dare County shall be stayed by Plaintiffs and all time periods are tolled, until June 1, 2005; if as of that date payment has not been made in full as provided in this agreement, then Plaintiffs are free to pursue all legal remedies in litigation to the same extent as if this agreement had not been executed and no tolling agreement existed. Provided, however, it is specifically understood that Plaintiffs shall be entitled to pursue enforcement of this agreement in law and at equity in addition to such remedies as are otherwise available to Plaintiffs under the pending litigation.
With regard to potential criminal proceedings for "various felonious charges" pending against Defendant in Dare County Superior Court, the parties agreed that
[a]s a result of this settlement, the Plaintiffs . . . will interpose no objection to the Defendant negotiating any lesser plea, on a single count or otherwise, and receiving a suspended sentence for the service of any active imprisonment, either in whole or in part, provided any judgment imposed will require counseling and treatment of the Defendant as a sex offender, and further provided, that any suspended sentence completely prohibits the Defendant from any contact whatsoever, direct or indirect, physically or through communication of any kind, personally or by a third party with the Plaintiffs, or any one of the Plaintiffs, except through their counsel. . . . [Additionally,] nothing in this agreement is to be construed in any way as making the settlement contingent upon the outcome of the criminal litigation. There are no representations that the Plaintiffs have complete control over the criminal litigation, that they will not cooperate fully with the District Attorney or other authorities, that they will not testify truthfully if called upon to do so, nor that they will not make themselves fully available to the District Attorney in this cause.
Finally, through the agreement, the parties consented that
[i]n the event that the terms of this agreement have not been complied with, a copy of this agreement shall be filed with the court in each pending civil litigation action. The parties further agree that this agreement shall form the basis of an appropriate judgment to be entered by the court in this action without further contest by either party. And it is stipulated that this document is in compliance with the North Carolina Rules of Civil Procedure as to a confession of judgment.
Upon a motion for approval, on 14 April 2005, the Honorable J. Richard Parker approved the settlement agreement as it pertained to Diana, after finding that the agreement was in the minor's "best interest[.]" Additionally, Judge Parker ordered "that the Motion for Approval of this Settlement, the Order, and all exhibits in support of the same, including the Settlement Agreement, now approved, be sealed until further Orders of this Court[.]"
Defendant failed to make any payments required by the agreement and, on 21 July 2005, Plaintiffs moved the trial court to unseal the court file and enter judgment against Defendant "for the sums set forth in the . . . Settlement Agreement[.]" On 14 November 2005, the Honorable Gary E. Trawick held a hearing on this motion, and that same day, Plaintiffs filed the agreement in Dare County Superior Court. After the hearing, Judge Trawick entered judgment against Defendant for the sums due Plaintiffs under the terms of the agreement. In the judgment, Judge Trawick found, inter alia, that
1. Plaintiffs and Defendant entered into a Settlement Agreement in this matter. . . .
. . . .
3. The Defendant has failed to comply with the terms of the Settlement Agreement and has failed to pay the sums called for therein.
4. In the Settlement Agreement the parties agreed that Plaintiffs shall be entitled to pursue enforcement of the Settlement Agreement.
5. The Settlement Agreement further provides that it may be treated as a Confession of Judgment and that the Court might enter Judgment thereon.
Judge Trawick then concluded that "[t]he Settlement Agreement, by its terms, is enforceable by this Court" and that "Plaintiffs are entitled to judgment in the amounts called for by the Settlement Agreement." Upon these findings and conclusions, the court ordered Defendant to pay the sums due Plaintiffs pursuant to the agreement. Defendant appeals from Judge Trawick's judgment. For the reasons set forth herein, we affirm.
After entry of judgment, pursuant to Rule 60(b) of the North Carolina Rules of Civil Procedure, Defendant moved the trial court for relief from judgment. Following a hearing, by order entered 6 February 2006, the Honorable Cy A. Grant denied Defendant's motion. Defendant appealed from Judge Grant's order denying his Rule 60(b) motion. In a companion case to the case decided in this opinion, we affirmed Judge Grant's order. Subkhangulova v. Dowdy, ___ N.C. App. ___, ___ S.E.2d ___ (Sept. 4, 2007) (COA06-1112) (unpublished).
Defendant argues the trial court erred in entering judgment based on the agreement because the agreement is not enforceable under general contract principles. Specifically, Defendant contends the agreement is not enforceable because it was not properly executed by its express terms as contemplated by the parties. Defendant also argues there is no evidence that all parties executed the same instrument, and thus, the agreement is not enforceable. We disagree.
In his reply brief, Defendant alleges that the sole basis for the trial court's decision to enforce the agreement was that the agreement provides it can be treated as a confession of judgment. Based on this allegation, Defendant asserts that because the trial court did not rely on any other legal principles to enforce the agreement and because Plaintiffs have not cross-assigned as error the trial court's failure to address other applicable principles of contract law, we should consider only the application of confessions of judgment under N.C. Gen. Stat. § 1A-1, Rule 68.1. However, as discussed above, our interpretation of the trial court's judgment establishes that Judge Trawick ruled the agreement was enforceable under its specific terms and general principles of contract law. He only noted that the terms of the agreement provide it may be treated as a "Confession of Judgment[.]" Therefore, we first address the application of general contract principles to the enforceability of the agreement.
"Settlements negotiated by parties are encouraged by the courts." PCI Energy Servs., Inc. v. Wachs Technical Servs., Inc., 122 N.C. App. 436, 440, 470 S.E.2d 565, 567 (1996) (citing Nationwide Mut. Ins. Co. v. Aetna Cas. Surety Co., 1 N.C. App. 9, 159 S.E.2d 268 (1968)). "A compromise and settlement agreement terminating or purporting to terminate a controversy is a contract, to be interpreted and tested by established rules relating to contracts." Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827, 829, 534 S.E.2d 653, 654 (2000) (citing Fid. Cas. Co. of N.Y. v. Nello L. Teer Co., 250 N.C. 547, 109 S.E.2d 171 (1959)). "It is a well-settled principle of contract law that a valid contract exists only where there has been a meeting of the minds as to all essential terms of the agreement." Northington v. Michelotti, 121 N.C. App. 180, 184, 464 S.E.2d 711, 714 (1995) (citing O'Grady v. First Union Nat'l Bank of N.C., 296 N.C. 212, 250 S.E.2d 587 (1978)). "If the plain language of a contract is clear, the intention of the parties is inferred from the words of the contract." Walton v. City of Raleigh, 342 N.C. 879, 881, 467 S.E.2d 410, 411 (1996) (citation omitted).
Although "[t]he object of a signature to a contract is to show assent, . . . the signing of a written contract is not necessarily essential to its validity. Assent may be shown in other ways, such as acts or conduct or silence." Burden Pallet Co. v. Ryder Truck Rental, Inc., 49 N.C. App. 286, 289, 271 S.E.2d 96, 97 (1980) (citations omitted), disc. review denied, 301 N.C. 722, 276 S.E.2d 282 (1981). Moreover, even when the terms of the contract itself require showing assent by completing certain procedures, "the circumstances may, however, either amount to a waiver of this requirement or work an equitable estoppel against" the party seeking to avoid enforcement of the contract. Id. at 289, 271 S.E.2d at 98.
The agreement at issue here provides that it "shall be executed in counterpart via facsimile to thereafter be supplemented, in counterpart, by original written signatures of the parties to be bound." The copy of the agreement included in the Record on Appeal contains the signatures of Muslima and Albina, although the notary paragraphs immediately following their signatures were not completed. The signature of the guardian ad litem for Diana is not contained on the copy of the agreement in the Record. Plaintiffs' lawyer signed the agreement, but Defendant's lawyer did not. Defendant's signature, however, appears on a facsimile document, this signature was notarized on 8 April 2005, and Defendant concedes in his brief to this Court that he "executed the Agreement via facsimile." Although the Record does not contain a copy of Defendant's "official written signature" and thus, the agreement was not executed as contemplated by its express terms, from the transcript and record evidence before us, it is clear that before filing his appeal, Defendant never contested the validity of his assent to the parties' agreement. For example, the trial court's order approving the settlement as it pertained to Diana contains no indication that Defendant disputed anything other than the substantive allegations of Plaintiffs' complaint. Furthermore, when the trial court entered judgment in favor of Plaintiffs based on the agreement, nothing in the record or transcript indicates that Defendant objected or argued to the trial court that the agreement was not valid because the parties had failed to execute the document in accordance with its terms.
However, we note that by order entered 14 April 2005, Judge Parker approved the agreement as it pertained to the minor Diana. Defendant has not appealed from this order.
After the trial court entered judgment in favor of Plaintiffs, Defendant engaged different counsel to prosecute his Rule 60(b) motion before the trial court. After the trial court denied Defendant's Rule 60(b) motion, Defendant again engaged different counsel to represent him before this Court.
Additionally, because of the parties' agreement, Plaintiffs delayed pursuit of their tort action against Defendant in Dare County. Based on the prior acts of Defendant and his trial counsel throughout the proceedings in the trial court, we hold that Defendant may not now contest the validity of the settlement agreement. See id. at 289-90, 271 S.E.2d at 98 (holding that where the "defendant failed to notify [the] plaintiff that the agreement was rejected and . . . [the] [p]laintiff relied on defendant's promises" contained in the agreement, the "acts and conduct by the defendant [were] substantial evidence that [the] defendant waived its contract right" to have the contract signed pursuant to its express terms and "should be equitably estopped from asserting that right"). To hold otherwise would "allow [Defendant] to accept the benefits of the contract and to avoid its obligations thereunder[,]" which "would be unconscionable[.]" Id. at 290, 271 S.E.2d at 98.
Here, as noted above, Defendant never contested the validity of the parties' agreement before the trial court, and the record does not show that Plaintiffs were aware of any objection that Defendant may have had to the agreement. Furthermore, Defendant was able to reap the benefits of the agreement when Plaintiffs, relying on Defendant's promise to pay them a fixed amount of money, delayed pursuing their tort causes of action against him. Defendant's actions and Plaintiffs' reliance on them support our holding that Defendant is equitably estopped from asserting any right to have the contract executed by its express terms. Accordingly, we overrule this argument.
Since we hold that the agreement was valid based on applicable principles of contract law, we need not address Defendant's argument that the settlement agreement "is not a valid confession of judgment under N.C. Gen. Stat. § 1A-1, Rule 68.1." Rather, because we conclude that the settlement agreement is enforceable, we next address the propriety of the trial court's order requiring Defendant to comply with the terms of the agreement and pay $1,250,000.00 to Muslima, $1,500,000.00 to Diana, and $250,000.00 to Albina, "plus interest at the legal rate" from 31 May 2005 until paid. We hold that the trial court did not err in enforcing the parties' agreement.
Although our courts have not laid down a precise method for the enforcement of such agreements, the general rule in other jurisdictions is that a party may enforce a settlement agreement by filing a voluntary dismissal of its original claim and then instituting another action on the contract, or it may simply seek to enforce the settlement agreement "by petition or motion in the original action."
State ex rel. Howes v. Ormond Oil Gas Co., 128 N.C. App. 130, 136, 493 S.E.2d 793, 796-97 (1997) (quoting Beirne v. Fitch Sanitarium, Inc., 167 F. Supp. 652, 654 (S.D.N.Y. 1958)).
Instead of instituting an action to enforce a compromise agreement, a [party] who has already commenced an action on an antecedent claim may seek to enforce a [compromise] which was entered into subsequently to the commencement of the action, and he may have the compromise enforced simply by moving for judgment in accordance with the terms of the compromise. Even where a [party] is seeking to obtain some form of equitable relief, rather than a payment of money, he may obtain a judgment in accordance with the terms of a compromise agreement and may thereby obtain whatever performance the [other party] agreed to in the compromise agreement.
Id. at 136-137, 493 S.E.2d at 797 (quotation marks and citation omitted). Here, Plaintiffs first filed their suit against Defendant alleging causes of action for assault, intentional infliction of emotional distress, seduction and alienation of affections, and breach of contract. Thereafter, on 8 April 2005, the parties reached their settlement agreement by which Defendant agreed to pay each Plaintiff a fixed amount of money in exchange for their agreement to forego their civil actions against him. Defendant then failed to pay Plaintiffs the sums they were entitled to receive under the terms of the agreement. Once Defendant failed to make the required contractual payments, Plaintiffs had two options by which they could seek enforcement of the agreement. Plaintiffs could (1) take a voluntary dismissal in their original action against Defendant and then institute a new cause of action to enforce the settlement agreement, or (2) seek to enforce the settlement agreement by petition or motion in the original action. Id. Plaintiffs chose to enforce the agreement by filing a motion in the cause, and under Howes, supra, the trial court had the authority to enforce the agreement. Accordingly, Defendant's argument that the trial court erred in enforcing the agreement is without merit.
For all the reasons stated, the judgment of the trial court is affirmed.
AFFIRMED.
Judges McGEE and HUNTER concur.
Report per Rule 30(e).