Contract – Settlement agreement – Assent

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Where a plaintiff has moved to vacate a judgment enforcing a settlement agreement, the motion must be denied because the plaintiff has not shown that the defendants changed a material term.

Enforceable agreement

“This case arises out of a dispute over an agreement between the plaintiff, DealerStock, LLC, and the defendants, Marcello Zouain and Natick Auto Center, Inc., for the consignment and sale of cars. After the parties reported that they had reached a settlement, a nisi period entered after which a judgment entered dismissing all claims. …

“The Settlement Agreement provided that the parties agreed to settle the litigation for $25,000 and enter a stipulated judgment in that amount. The Agreement further provided that ifMr. Zouain delivered a check for $10,000 by October 31, 2015 to DealerStock’s counsel, then the stipulated judgment would be deemed satisfied in full. Section 6 of the Settlement Agreement was titled ‘Future Lawsuits.’ Section 6(c) provided: ‘Natick Auto and Zouain will cooperate with DealerStock’s discovery efforts in determining where the disputed monies were lost. This includes, but is not limited to sharing corporate and personal financial records, and providing an Affidavit detailing what he did with the missing money and vehicles. Any documents provided by Natick Auto and Zouain shall be maintained as confidential.’

“The Settlement Agreement also included provisions to dismiss the pending litigation, mutual release of all claims, and a covenant by Mr. Zouain not to sue DealerStock. Other parts of the Settlement Agreement included various common boilerplate provisions, such as confidentiality, an integration clause, and a choice of law clause.

“On December 9, 2014, Attorney Zakarian sent an email to Attorney Carter that read: ‘When we spoke yesterday, you said that your client had signed the agreements but made a few changes that you said I “would not care about.” I asked you to please send me copies of whatever he signed or tell me what these supposed changes are. Please do that TODAY so that we can get this finalized, report the settlement to the Court, and not have to proceed with tomorrow’s final pretrial conference.’ (Emphasis in original). Later that same day, Attorney Carter emailed Attorney Zakarian with a revised draft of the Settlement Agreement containing his changes, signed by Mr. Zouain. The defendants’ draft added a sentence to the end of Section 6(c) that read: ‘However, since Natick Auto and Zouain have no such records, DealerStock shall prepare any such Affidavit.’

“On December 10, 2014, the parties notified the court that they had settled the matter, and the court (Giles, J.) entered an order for entry of dismissal nisi as to all parties and claims in thirty days. …

“DealerStock argues that the Settlement Agreement is unenforceable because the defendants changed a material term, and DealerStock never assented to the change. …

“Here, the terms of the Settlement Agreement were clearly definite and had been reduced to writing in formal terms, complete with boilerplate and other standard language in DealerStock’s proposed draft. DealerStock contends that no agreement was reached between the parties because the defendants changed a material term in the Settlement Agreement before signing it. However, the parties reported to the court that they had reached a settlement, which strongly suggests that the parties did agree to all material terms. … Presumably, Attorney Zakarian reviewed the proposed changes before notifying the court of the settlement and did not find them sufficiently objectionable at that time.

“The only disputed term here is the added sentence to Section 6(c), which places the burden on DealerStock to prepare an affidavit, The single sentence does not appear to be a material term of the Settlement Agreement. In their opposition to DealerStock’s motion to vacate and request to confirm the Settlement Agreement, Mr. Zouain claims that ‘the changes made to the Settlement Agreement were only minor and not significant. …’ As the defendants do not seem to think that the change constituted a material term, the court sees no reason to enforce it over DealerStock’s objections. Furthermore, if the defendants truly do not possess any records or information related to the missing funds, then the preparation of an affidavit is only a minor burden. Therefore, the court will strike the added sentence in Section 6(c) from the Settlement Agreement. …

“DealerStock argues that it never made any statement affirming its acceptance of terms of the Settlement Agreement, and thus, Basis [Tech. Corp. v. Amazon.com, Inc., 71 Mass. App. Ct. 29 (2008)]is distinguishable. … DealerStock is correct that it sent no reply similar to that of defense counsel in Basis. However, that is merely because in the present case, DealerStock was the party offering terms for approval, as was plaintiff’s counsel in Basis. DealerStock sent the defendants an email asking ‘Please let me know if this is acceptable.’ DealerStock could hardly send an email affirming its own offer of settlement terms. The fact that the parties contemplated a later formal execution of the Settlement Agreement does not preclude a finding that the parties intended to be bound. …

“DealerStock also argues that the facts of Basis are distinguishable because that case settled after the trial had begun, which meant that the waste of judicial resources from reopening the case would have been significant, while this case had not yet proceeded to trial, lessening the waste of judicial resources. While certainly settlement after the commencement of trial greatly increases the potential waste, such considerations are not limited only to situations where the trial has begun. … Here, the parties were well into the litigation process and were readying for their final pretrial conference.

“The court finds that the Settlement Agreement is enforceable because the material terms were sufficiently complete and definite, and the parties intended to be bound by those terms. …”

DealerStock, LLC v. Zouain, et al. (Lawyers Weekly No. 12-051-15) (4 pages) (Curran, J.) (Suffolk Superior Court) (Civil Action No. 13-CV-3854-B) (April 24, 2015).