The Desire to Resolve Disputes in PA
The average person has very little appetite for litigating any dispute over money. Perhaps the Plaintiff is asserting a breach of contract claim, for non-payment debt, building construction dispute, or non-compete violation. Or maybe the plaintiff is seeking compensation for a physical injury on the road, involving full or limited tort. Fortunately, most civil litigation disputes in Pennsylvania resolve by way of settlement.
But when is the deal truly a “done deal”?
Understanding the Settlement Process
Settlement discussion involves addressing as many issues as possible upfront, because a settlement precludes re-litigation of the same issues. The key question is often: “How much money is the case settling for?” And, will it be a lump sum payment or payments or time (or both)?
But there may be other key questions. For example, will the parties agree to confidentiality of the settlement amount? Will there be a non-disclosure agreement or NDA? Will the parties promise not to disparage each other? Do the parties release all potential disputes between the parties — or will they “agree to disagree” on certain other dealings between the parties?
It sounds complicated, but the hours spent at this stage — discussing settlement — often pale in comparison to the time and money that will be spent preparing for and attending court. And, once the parties agree to the key terms of settlement, this can resolve even the most complex disputes involving witnesses that include friends and family who must come to court. However, enforcing a settlement can be much more simple. A claim for violation of a settlement amounts to a straight-forward breach of contract claim. There, the only witnesses are typically the parties and the counsel.
Knowing When — the Exact Moment — A Case is Truly “Settled”
You might think, the case is not settled until both parties sign off on a settlement agreement, right? However, that’s not always true. “The federal courts applying Pennsylvania law have consistently held that an oral agreement to settle litigation is in itself a binding and enforceable agreement even where performance is postponed to a later date,” Mastroni-Mucker v. Allstate Ins. Co., 976 A.2d 510, 2009 P.A. Super 101 (Pa. Super. Ct. 2009), citing to Main Line Theatres, Inc. v. Paramount Film Distributing Corp., 298 F.2d 801 (3d Cir.1962).
A settlement exists at the moment: “…the parties come to a meeting of the minds on all essential terms, even if they expect the agreement to be reduced to writing but that formality does not take place,” see Commerce Bank/Pennsylvania v. First Union Nat. Bank, 911 A.2d 133, 147 (Pa.Super.2006).
If one party claims a settlement occurred, she may file a motion to enforce settlement, to have a judge review the parties’ dealings, including those carried on between the attorneys without the client present.
Trying to Deny a Settlement Took Place
It’s common for a party to experience “buyer’s remorse” after agreeing to settle a case. Or, a party may have mistakenly believed that his attorney — whom he had authorized to negotiate a settlement — would “just talk” settlement with the opposing counsel, but nothing would be final or binding, until everyone involved signs off.
This is a dangerous assumption.
Recent Case Enforcing a Settlement
In King v. Driscoll, 2023 P.A. Super 259 (Pa. Super. Ct. 2023), the parties had not signed anything in writing, but their attorneys had negotiated terms. The attorneys reduced the understanding to a written agreement, but Driscoll had never signed it. According to Driscoll, the settlement agreement was not binding because it had been sent by his attorney to King without Driscoll’s prior authorization. The trial court conducted a hearing and found that Driscoll’s attorney had kept him apprised of the dealings such that he was aware of — and had consented to — the agreement, even though he had not signed it. The superior court affirmed the trial court’s finding of a settlement.
The Courts Favor Settlement
In truth, the courts err on the side of finding that a settlement occurred. The reasoning can be found in Mastroni-Mucker v. Allstate Ins. Co., 976 A.2d 510, 2009 P.A. Super 101 (Pa. Super. Ct. 2009). There, the superior court held: “[t]here is a strong judicial policy in favor of voluntarily settling lawsuits because it reduces the burden on the courts and expedites the transfer of money into the hands of a complainant. . . If courts were called on to re-evaluate settlement agreements, the judicial policies favoring settlements would be deemed useless.”
One Important Exception
A court will find that no settlement occurred, if the parties expressly agreed that nothing would be final, until all parties physically signed a written agreement. In that instance, the court will effectuate the parties’ understanding. Here again, to ascertain the parties’ understanding, the Court will often conduct a hearing, but affidavits and copies of emails between the parties may be enough.
This is why, skilled attorneys negotiating back-and-forth during settlement discussions will write with each communication to opposing counsel: “This proposal is subject to my client’s written approval” or “I will recommend to my client that she accept the following terms…” This way, it’s made clear that the client’s subjective approval is necessary.
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