COA declines to enforce settlement agreement due to disputed terms

Summary

• Missouri Court of Appeals reversed enforcement of a disputed settlement agreement.
• Court found genuine issues of material fact regarding essential settlement terms.
• Dispute centered on confidentiality, non-disparagement and scope of claim releases.
• Case remanded for an evidentiary hearing on whether a binding agreement existed.

As genuine issues of disputed material facts regarding the terms of the parties’ purported settlement agreement exist, the circuit court erred in granting a motion to enforce the agreement, the Missouri Court of Appeals Eastern District ruled on April 28.

Mouna Apperson owns two apartment units in a building operated by Annex Lofts Condominium Association. Annex and Apperson disagreed over who was responsible for maintaining a fence between the unit Apperson lived in and a unit occupied by someone else.

Stephen G. Davis, Kerri A. Mitchell and Carmody MacDonald P.C., hired by Annex, found Apperson to be responsible and emailed that $5,335.50 was owed for attorneys’ fees and costs.

Apperson contested the amount owed and offered to settle, but the firm did not reply.

Nearly a year later, Apperson filed suit against the firm for violation of the Fair Debt Collection Practices Act (FDCPA) and for negligence in their representation of Annex. Apperson emailed a copy of the complaint to the firm and reiterated that an opportunity to settle still existed.

When the firm requested clarification, Apperson responded: “I want you to also pay the $1,000 statutory fine. Do both of those and we’re good to go.”

The parties spoke on the phone about the terms and the firm then emailed Apperson a summary of the conversation.

But when the firm emailed a settlement document, Apperson responded that the offer was substantially different “and, frankly, I don’t believe it was in good faith. It is declined.”

The firm then filed a motion to enforce the settlement document. Over Apperson’s objection, the circuit court granted the motion, finding the settlement agreement to be executed despite Apperson’s refusal to sign it and dismissing with prejudice all of Apperson’s claims against the firm.

Apperson appealed.

Judge Rebeca Navarro-McKelvey reversed, joined by Judge James M. Dowd.

Contract law governs whether the parties have entered into an enforceable settlement agreement, the court explained, focusing on mutuality of assent.

A definite offer must contain the essential terms, and courts look to the objective manifestations of the parties — such as their words and actions — to determine acceptance.

“Here, there are disputed material issues of fact regarding which terms are essential,” the court wrote. “Even on the terms both parties agree are essential, they disagree as to the precise meaning of those terms. For instance, in Apperson’s well-pleaded response, Apperson claims that the March 1 offer which followed the parties’ February 29 phone call involved only the release of the FDCPA claim and that the confidentiality and non-disparagement terms were bilateral. For their part, [the defendants] claim the release was broader than just Apperson’s FDCPA claim and that the other two terms were unilateral.”

In addition, the defendants were inconsistent on what terms they claimed were essential, the court said. In their brief, they stated non-disparagement and confidentiality were essential terms; but at oral argument, they said those terms were non-essential and that the only essential terms were the $1,000 payment, the release of claims and the release of their demand for attorneys’ fees.

The court reversed and remanded for an evidentiary hearing.

Judge Gary M. Gaertner Jr. filed a dissenting opinion. Emphasizing that public policy and the law encourage settlement agreements, he wrote that the “undisputed facts show that Apperson and [the defendants] formed an agreement as to the two essential terms of the settlement agreement,” the $1,000 payment and the release of all claims.

“Courts should not permit parties to undo settlement agreements where there is a meeting of the minds as to the essential terms by claiming that the standard contractual terms are in fact essential terms when the circumstances show that the usual contractual terms are not essential terms,” he wrote. “Allowing a party to avoid a valid settlement agreement by unilaterally claiming that a disputed term is essential endangers the entire settlement process.”

Stephen T. Hamby of Carmody MacDonald in St. Louis represented the defendants.

“We remain confident in our position that the claim was settled, and we look forward to having the evidentiary hearing the court ordered at the circuit level,” he said.

Apperson was represented pro se.

The case is Apperson v. Davis, No. ED113643.