Enforcing a settlement
Maybe some lawyers just don't have enough to do. That thought occurred to me while reading the 8th District's decision a few weeks ago in Morris-Walden v. Moore.
The facts are simple: the plaintiffs filed a complaint alleging breach of fiduciary duty, tortious interference with contract, and other neat stuff like that. The case was settled right before trial, on December 5, 2005, with defendant agreeing to pay plaintiff $10,000 in ten days. When defendants hadn't paid by January 6, 2006, the plaintiffs filed a motion to reinstate under Rule 60(B) and a motion for sanctions. Defendants paid the money the next day.
Mission accomplished, right? Wrong. That's when the legal maneuvering went into high gear:
On January 11, 2006, appellees filed their response to appellants' motion to reinstate and for sanctions. Seven days later, appellants sought leave to file a reply to appellees' response. A number of motions soon followed, including: plaintiffs' reply to defendants' motion for leave to file reply instanter, defendants' rejoinder to plaintiffs' reply, plaintiffs' motion to strike defendants' rejoinder, defendants' motion for nunc pro tunc leave to file rejoinder and brief in opposition to plaintiffs' motion to strike.
And a partridge in a pear tree. The trial court, apparently deciding, quite correctly, that it had a virtually infinite variety of better ways of occupying its time, denied all the motions. At which point the plaintiffs, having devoted a substantial amount of attorney time to recouping the month's interest on the $10,000, took it to the court of appeals.
The appellate court made short shrift of the plaintiff's argument that the defendant's failure to pay within the ten days constituted a "fraud on the court" under Rule 60(B)(3), and held that the appropriate remedy would have been to file an action for breach of contract:
Allegations that a party did not honor a settlement agreement may be the subject of an independent action for breach of the settlement contract but not for relief from the settlement itself.
The court probably went a little too far here. As this case from the 1st District recognized last year, there's a good body of case law that a party has two remedies for a breached settlement:
A party may seek to enforce a settlement agreement through the filing of an independent action sounding in breach of contract, or it may be sought in the same action through a supplemental pleading filed pursuant to Civ.R. 15(E), setting out the alleged agreement and breach.
Indeed, as Judge Karpinski points out in her dissent in this 2002 case, there's case law in the 8th District holding that the commonplace "settled and dismissed" entry is actually a "conditional dismissal," where the case isn't really dismissed until the settlement is completed, and until that time, the trial court has inherent power to enforce the settlement.
So if you settle a case and the other side stiffs you, you've got a remedy. But if they send you a check the next day, take the money and be done with it. It beats spending a lot more time on the case just so you can ultimately stand before a panel of appellate judges and try to explain to them why you're wasting their time.
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