When parties walk away from negotiations believing different things, courts face a difficult question: what should they do when one party insists a binding settlement was reached, while the other claims no agreement ever existed—or that a different deal controls?
Any time settlement discussions advance far enough that one party could reasonably believe the case is settled according to certain terms, both parties must prepare for a court to scour and analyze all their discussions of every kind—emails, texts, printed letters, and even oral representations—to ascertain whether an enforceable settlement occurred.
The Pennsylvania Superior Court recently confronted this problem in Liberty Property Limited Partnership v. Kendall Heaton Associates, Inc., 2026 PA Super 37 (Pa. Super. Ct. Feb. 27, 2026)., ultimately affirming the enforcement of one disputed settlement over another.
Background Facts
Liberty Property Limited Partnership (“Liberty”) was the fee developer in the construction of the Comcast Technology Center (“the Center”), located in Philadelphia, Pennsylvania.
A “fee developer” is a third-party real estate professional or firm that manages the entire development process—from site selection and permitting to construction and leasing—for a predetermined fee rather than owning the project.
Here, Liberty contracted with architects (Kendall Heaton), engineers, and contractors to provide construction services related to the Center. During the Center’s construction, Liberty discovered certain design defects, which resulted in additional construction costs.
Liberty filed a lawsuit against Kendall Heaton and several other entities for breach of contract and professional negligence due to design defects. The parties proceeded to mediation, which included Liberty’s in-house counsel, Attorney Christianne Chen—who had authority to bind the company—and Liberty’s outside counsel, Attorney Noah Charlson.
Agreement at the Mediation
The parties–including Liberty and Kendall Heaton–reached an oral agreement at mediation to settle for a certain sum. Later that day, Kendall Heaton’s counsel sent an email confirming the agreement to exchange mutual releases for “all known and unknown claims that were asserted or could have been asserted in this matter concerning the project“.
Attorney Charlson (for Liberty) confirmed this represented Liberty’s “understanding” and later stated Liberty was “in a position to accept the collective settlement offer.” However, Liberty later insisted that the formal written agreement expressly exclude “latent defects” from the release. Kendall Heaton moved to enforce the original oral agreement. However, Liberty cross-moved for a version that included the latent defect exclusion.
The trial court made the following decisions regarding the competing motions to enforce a settlement agreement:
- Enforcement of Oral Agreement: The trial court granted Kendall Heaton’s motion to enforce the oral settlement agreement reached during the January 27, 2022, mediation.
- Denial of Liberty’s Cross-Motion: The court denied Liberty’s cross-motion, which sought to enforce a version of the settlement agreement that expressly excluded “latent defects.”
- Validity of Oral Contract: The trial court concluded that a complete and binding oral agreement was formed at the conclusion of the mediation session. It found that the parties’ subsequent inability to agree on a written document did not affect the validity of that original oral agreement.
Appeal to the Superior Court
On appeal, the Superior Court noted the law in this area:
- Enforceability of Settlements: “Settlement agreements are enforced according to principles of contract law,” requiring “an offer (the settlement figure), acceptance, and consideration (in exchange for the plaintiff terminating his [or her] lawsuit, the defendant will pay the plaintiff the agreed upon sum).” (Mastroni-Mucker v. Allstate Insur. Co., 976 A.2d 510, 518 (Pa. Super. 2009)).
- Oral Agreements: “Pursuant to well-settled Pennsylvania law, oral agreements to settle are enforceable without a writing.” (Mastroni-Mucker, 976 A.2d at 518).
- Essential Terms: “A contract is formed if the parties agree on essential terms and intend them to be binding even though they intend to adopt a formal document with additional terms at a later date.” (Mastroni-Mucker, 976 A.2d at 522, citing Mazzella v. Koken, 739 A.2d 531, 536 (Pa. 1999)).
- Attorney Authority: While it is “well-settled that an attorney must have express authority in order to bind a client to a settlement agreement,” an attorney has “implied or apparent authority to conduct acts that are incidental to the transaction… or are reasonably necessary to accomplish the client’s goal”. (Reutzel v. Douglas, 870 A.2d 787, 789-790 (Pa. 2005); Starling v. West Erie Ave. Bldg. & Loan Ass’n, 3 A.2d 387, 388 (Pa. 1939)).
- Standard of Review: “Because contract interpretation is a question of law, this Court is not bound by the trial court’s interpretation. Our standard of review over questions of law is de novo…”. (Ragnar Benson, Inc. v. Hempfield Twp. Mun. Auth., 916 A.2d 1183, 1188 (Pa. Super. 2007)).
Facts Relied Upon and Decision
The Court identified several specific facts to support its decision to affirm the trial court’s order:
- Meeting of the Minds: The parties reached an agreement on all essential terms on January 27, 2022, including a monetary payment in exchange for a release of all known and unknown claims.
- Authority to Bind: Attorney Chen, who had the authority to bind Liberty, was present at the mediation when the terms were reached. Outside counsel’s subsequent confirmations were “incidental actions” to carry out that intent.
- Nature of the Dispute: The exclusionary provision for “latent defects” was never discussed during the mediation and was therefore not part of the original binding oral agreement.
- Unilateral Action: Liberty’s later insistence on excluding latent defects was a “unilateral attempt to include additional terms” that did not invalidate the existing oral contract.
The Superior Court also found that Liberty had waived the right to an evidentiary hearing before the trial court. Otherwise, there would have been a “trial”—involving witness testimony over whether a settlement had occurred—without ever getting to the merits of the case.
Conclusion
Liberty Property Limited Partnership v. Kendall Heaton Associates, Inc. underscores a recurring lesson in settlement practice: ambiguity invites litigation. When parties fail to clearly document and confirm the precise terms of a settlement, they risk protracted disputes over whether an agreement was ever reached—and what it required.
For practitioners, the takeaway is straightforward but critical: be meticulous when entering into settlement negotiations. Confirm all essential terms, reduce agreements to writing whenever possible, and ensure both sides unequivocally assent. And if you’re concerned the opposing party will try to lock you into some agreement on which your client is not fully on board in writing, be sure to constantly remind the opposing party:
“No settlement will exist until my client reviews and endorses a written agreement.”
Otherwise, what was intended to end litigation may instead become the start of a new one.
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