Opinion
Case No. 2:04-CV-816-DB, 2:04-CV-1002 (consolidated).
June 17, 2005
ORDER
Before the Court is Defendant Lite Touch, Inc.'s ("Lite Touch") Motion to Enforce a Settlement Agreement. After reviewing the parties' written arguments on the present motion and the relevant law, the Court GRANTS Lite Touch's motion based on the following reasoning.
BACKGROUND
On September 2, 2004, Vantage Controls, Inc., ("Vantage") filed a complaint against Lite Touch. Lite Touch filed a separate complaint against Vantage and Ronald E. Wilson ("Wilson") on October 27, 2004. The cases were consolidated on November 15, 2005, because both cases revolve around Vantage's use of the trade name "BriteTouch" in connection with the manufacture and sale of its electronic control devices.
In an effort to resolve their disputes before litigation, officers of Vantage and Lite Touch, without the assistance of counsel, engaged in direct settlement negotiations through written letters and e-mail correspondence between January 11, 2005, and February 2, 2005. On January 11, 2005, Richard Brady ("Brady"), Executive Vice President of Vantage, sent a letter to Don Buehner ("Buehner"), Chief Executive Officer of Lite Touch, indicating that Vantage would cease using the "BriteTouch" designation on its products if Lite Touch would agree to six settlement terms. At the conclusion of the letter, Brady recognized that "the details of any settlement [would] still need to be worked out," and placed an expiration date on Vantage's offer.
In response, Buehner e-mailed Brady a letter on January 19, 2005, with the stated belief that Vantage's offer "could form the basis to resolve [their] differences . . ." Buehner went on to address each of the six proposed settlement terms and Lite Touch's agreement, rejection, or proposed alteration of each. Buehner concluded his e-mail by placing an expiration date on Lite Touch's counter offer.
After receiving Buehner's e-mail, Brady sent the following response on January 28, 2005, indicating the changes to the settlement terms to which Vantage would agree:
Dear Don:
The following are our responses to your January 19, 2005 counter offer:
1. Vantage will agree to stop using the name BriteTouch within two months from the date the parties sign a settlement agreement. Further, once that agreement is signed, we will not create any new materials using the name BriteTouch. As you know, it is impractical to stop use "immediately" and it is a waste of time to debate different stop dates for using the term in various materials. We propose we simply set a date we know we can meet.
2. Vantage will extend the agreement to include names that include the character strings "itetouch," "ighttouch" and phonetic variations. This is in keeping with the spirit of our earlier proposal.
3. You asked that Vantage discontinue naming products with "touch" as part of the name. This request is far broader that the concern you and your attorneys have ever communicated. Vantage feels this is unfair and burdensome. The term "touch" is used by numerous parties in the industry and merely describes products which consumers touch. However, we will consider agreeing to your request on the condition that you obtain a similar agreement from any one of the following companies who also compete in this industry and also have products with "touch" in the name: Lutron, Leviton, Honeywell, or Crestron. Anything less is overreaching, discriminatory and punitive by Lite Touch. Vantage raised the point of it's other "touch" names merely to ensure that we did not settle the dispute over BriteTouch to only have Lite Touch immediately raise the same concern regarding the others.
4. You have asked that Vantage pay up to $10,000 in Lite Touch attorney fees. Vantage will not agree to this request. Vantage's earlier offer to make a payment to you was clearly conveyed as a gesture of reconciliation and Vantage is not willing to make any payment to Lite Touch under the present settlement terms.
5. You indicate that Lite Touch does not wish to purchase Vantage's rights to the name BriteTouch. That is fine with us. We will simply retain those rights.
6. You request that the confidentiality clause [— an agreement that Lite Touch not publicly comment on the terms of settlement —] apply to both parties. We will agree with this request.
As he had done previously, Brady placed an expiration on Vantage's counter offer.
Finally, on February 2, 2005, Buehner sent the following email in response to Vantage's counter offer:
Dear Richard;
In reviewing your latest settlement offer of January 28, 2005, I acknowledge the efforts Vantage has made to work toward a resolution.
While I remain unhappy that LiteTouch has had to unnecessarily expend money and effort to get us to this point that should have and could have been agreed to in August of last year, and that Vantage remains unwilling to compensate us, I believe, nevertheless, that our main objectives have been addressed. Therefore, subject to our attorney's review and approval of final documentation, I will agree in principal to all 6 points of your January 28 letter, which were derived from our negotiations.
I would ask that you draw up the terms in contract form for our review. So that this matter can be brought to a timely and agreeable conclusion, please have the contract ready for our review before Thursday, February 10th, 2005.
Due to the travel schedule and prior commitments of appropriate Vantage officials, they were unable to completely review and approve a draft settlement agreement created by Vantage's attorney. Unsatisfied with the delay in completing the formal settlement agreement, counsel for Lite Touch drafted a settlement agreement on March 14, 2005, that included the six main points of Brady's January 28 e-mail and submitted it to Vantage's counsel for review. Vantage claims that Lite Touch's proposed settlement agreement differs in significant respects to the version drafted by its own counsel and has therefore refused to sign Lite Touch's proposed document. Rather, Vantage sent its version of the settlement agreement to Lite Touch and is awaiting comments.
Lite Touch filed the present motion asking the Court to judicially enforce its March 14 proposed settlement agreement, which memorialized their previous agreement, arguing that the two parties have agreed to all necessary terms. Vantage argues that the two are merely continuing in negotiations in hopes of arriving at a mutually acceptable settlement.
ANALYSIS
I. Enforcement of a Settlement AgreementBecause "[a]n agreement of compromise and settlement constitutes and executory accord, . . . [and therefore] a valid enforceable contract, basic contract principles affect the determination of when a settlement agreement should be . . . enforced." John Deere Co. v. A H Equipment, Inc., 876 P.2d 880, 883 (Utah Ct.App. 1994) (citations and quotations omitted). As with most matters associated with contracts in federal courts, "[i]ssues involving the formation, construction and enforceability of a settlement agreement are resolved by applying state contract law." United States v. McCall, 235 F.3d 1211, 1215 (10th Cir. 2000).
In Utah, although "[s]ettlement agreements are favored by law," they may only be enforced judicially "if there is a binding settlement agreement and the excuse for nonperformance is comparatively insubstantial." Sackler v. Savin, 897 P.2d 1217, 1220 (Utah 1995). "Under the principles of basic contract law, a contract is not formed unless there is a meeting of the minds" between the parties as to the essential terms of the contract. Id. citing Pingree v. Continental Group of Utah, Inc., 558 P.2d 311, 312 (Utah 1976). "[C]ontractual mutual assent requires assent by all parties to the same thing in the same sense so that their minds meet as to all the terms." John Deere Co., 876 P.2d at 883 (citations and quotations omitted). In arguing that Vantage and Lite Touch were merely in continuing negotiations, Vantage is in essence arguing that the parties had yet to reach a meeting of the minds as to the essential terms of the settlement agreement, and would not reach that stage until a formal agreement was executed.
Whether the correspondence between Brady and Buehner culminated in an enforceable settlement agreement or merely constituted preliminary negotiations must be determined by the content of their communications and the surrounding circumstances; a written document is not indispensable to the creation of a binding agreement. As quoted with approval by the Supreme Court of Utah, the Restatement of Contracts directs that "[m]anifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations." Sackler, 897 P.2d at 1221 (quoting Restatement (Second) of Contracts § 27 (1981)). Among many circumstances that may argue for or against the existence of a contract, the Restatement lists the following:
the extent to which express agreement has been reached on all the terms to be included, whether the contract is of a type usually put in writing, whether it needs a formal writing for its full expression, whether it has few or many details, whether the amount involved is large or small, whether it is a common or unusual contract, whether a standard form of contract is widely used in similar transactions, and whether either party takes any action in preparation for performance during the negotiations.
Restatement (Second) of Contracts § 27 cmt. c (1981).
The letters between Brady and Buehner certainly evince the understanding by both parties that each letter was an offer or counter offer for settlement to the other party: each letter concludes with a date the offer would expire. It is equally obvious that, in response to Vantage's final counter offer, Buehner "agree[d] in principle to all 6 points of [the] January 28 letter," which points Buehner considered to be "derived from [Lite Touch and Vantage's] negotiations." While it is true that Buehner qualified his acceptance as "in principle" and subject to our attorney's review and approval of final documentation, his acceptance was clear and he admitted that Lite Touch's "main objectives had been addressed." According to Buehner, the only thing left to do was for Vantage to "draw up the terms in contract form for [Lite Touch's] review."
The question before the Court really becomes whether the qualifications of Buehner's acceptance and his request to create a formal written agreement expressed a desire to continue in negotiations or whether the acceptance was sufficient in itself to create a contract. The fact that Lite Touch is seeking enforcement of the terms Buehner agreed to confirms that negotiations, in his mind, were complete.
Lite Touch and Vantage point to two Utah cases, Sackler and John Deere, where the parties were involved in settlement negotiations through written correspondence. The Utah Court of Appeals in John Deere found that the parties had reached a meeting of the minds and therefore enforced the settlement agreement; the Utah Supreme Court in Sackler found that there was no meeting of the minds and declined to enforce any final agreement between the parties. In each of those cases, one of the parties disputed the meaning or application of at least one of the settlement terms. We have no such dispute here. The only argument Vantage asserts against the judicial enforcement of the terms of the settlement agreement — terms originally proposed by Vantage — is that a formal and final agreement should be created before any settlement is consummated. As noted above, a written document is not necessary to create an enforceable contract if the circumstances indicate that the parties agreed to all essential terms. That appears to be the case here. Lite Touch accepted Vantage's proposal. Vantage cannot now seek to change, add or remove terms from the settlement it proposed because it does not in hindsight like the agreement it reached.
CONCLUSION
In this case, there was a meeting of the minds between Vantage and Lite Touch as to the essential terms of the settlement agreement. The draft proposal prepared by Lite Touch reflects the parties agreement and the Court sees no reason why this agreement should not be enforced. Lite Touch's motion is therefore GRANTED.
The parties agreed to settle this case on February 2, 2005. One of the terms of that agreement was that Vantage would stop using the name "BriteTouch" within two months from the date the parties signed a formal settlement agreement, which Lite Touch requested be on or around February 10, 2005. Vantage has been allowed to use the name "BriteTouch" for more than three months after the original settlement was made. Therefore, the parties shall have twenty (20) days from the date of this order to formally execute a written settlement that conforms with the terms set forth in the January 28 letter.
IT IS SO ORDERED.