Opinion ID: 2979927
Heading Depth: 2
Heading Rank: 2

Heading: Existence of Settlement Agreement

Text: Under Ohio law, “a valid settlement agreement is a contract between parties, requiring a meeting of the minds as well as an offer and acceptance.” Rulli v. Fan Co., 683 N.E.2d 337, 338 (Ohio 1997) (syllabus). Although “[i]t is preferable that a settlement be memorialized in writing, . . . an oral settlement agreement may be enforceable if there is sufficient particularity to form a binding contract.” Kostelnik v. Helper, 770 N.E.2d 58, 61 (Ohio 2002). “To constitute a valid settlement agreement, the terms of the agreement must be reasonably certain and clear.” Rulli, 683 N.E.2d at 339.
The Smiths first argue that no enforceable settlement agreement was reached during the May 1 settlement discussions because the discussions were “merely a set of preliminary negotiations leading up to a written, binding contract.” Appellants’ 1st Br. at 24. In support, the Smiths point out that the district judge’s initial oral summary of the settlement agreement was not exhaustive—counsel for both sides engaged in a give-and-take discussion with the judge on a variety of issues that were not contained in his initial summary. They also note that, at the hearing’s conclusion, defense counsel agreed to prepare a draft agreement for circulation and execution. 9 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. The Smiths’ claim is belied by the record in this case. Soon after going on the record at the May 1 conference, the district judge summarized the “basic settlement terms,” which included specified monetary awards to the Smiths from NMF, Mid America, and MERS, minus a specified portion of a deficiency judgment for Chase. The judge also explained that all pending actions would be dismissed. The parties then discussed several additional issues requiring clarification. After the parties concluded their discussion, all of the parties, including the Smiths and their counsel, expressly assented to the terms as stated on the record. The terms of this agreement as set forth in the record of the district court are “reasonably certain and clear,” Rulli, 683 N.E.2d at 339, and are therefore enforceable under Ohio law.4 After the parties assented to the agreement, all that remained was to sort out the “general recital-type things that are standard to settlement agreements” and to put the agreement in writing. JA662. As this Court explained in a similar case applying Ohio contract law, “[t]he existence of a valid agreement is not diminished by the fact that the parties have yet to memorialize the agreement. When parties have agreed on the essential terms of a settlement, and all that remains is to memorialize the agreement in writing, the parties are bound by the terms of the oral agreement.” Re/Max Int’l, Inc., 271 F.3d at 646. For these reasons, the district court did not err in concluding that the parties reached an oral settlement agreement. 4 The Smiths’ claims to the contrary are further undermined by the fact that, in their motion to modify the agreement filed in the district court, they expressly acknowledged that they had “made a settlement agreement on May 1, 2008,” but simply claimed that they could “no longer agree to the terms of the settlement.” JA420, JA423. 10 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al.
The Smiths also argue that there was no meeting of the minds because they were not aware that the agreement required ABN AMRO and Chase to forgive any deficiency claims they had against the Smiths. We are not persuaded. At the settlement conference the district court summarized the proposed agreement as providing for the compromise of Chase’s deficiency claim on one property and the total forgiveness of any deficiency claims held by ABN AMRO on the other two properties. It also subsequently clarified at the conference that the two properties financed by ABN AMRO “would be conveyed to [ABN AMRO] in [their] entirety” in lieu of foreclosure and ABN AMRO would “releas[e] any and all claims o[f] deficiency or anything else [it] would have against [the Smiths].” JA658–JA659. As noted above, the Smiths and their counsel agreed to the terms of the agreement. Objectively, the parties reached a meeting of the minds.5
Reversal of the district court’s decision is also required, the Smiths argue, because the defendants did not introduce any evidence to establish that the parties reached an agreement. Similarly, they contend that the defendants failed to introduce evidence demonstrating that the courtentered agreement contains the same terms as those actually agreed to by the parties during the May 1 conference. In support of their argument, they rely on Powers v. MagiTech Corp., No. 2001-L- 5 In a related argument, the Smiths argue that Chase’s and ABN AMRO’s waiver of their deficiency claims is insufficient consideration to support the agreement. The Smiths have not cited, and we have not found, any authority suggesting that the promise to forgo pursuit of the deficiency claims was insufficient consideration under Ohio law. See, e.g., Mathis v. St. Alexis Hosp., 650 N.E.2d 141, 144 (Ohio Ct. App. 1994) (explaining that a promise to forbear pursuit of a legal claim is generally sufficient consideration provided the promisor subjectively believes the claim is valid). 11 Nos. 08-3948, 08-4011 Smith, et al. v. ABN AMRO Mortgage Group, Inc., et al. 015, 2002 WL 445045 (Ohio Ct. App. Mar. 22, 2002), where the court reversed a trial court’s grant of a motion to enforce a settlement agreement because there was no evidence in the record establishing that the movant’s drafted agreement reflected the oral agreement reached between the parties. Unlike Powers, the evidence of a binding oral settlement agreement in the present case is contained in the district court record, particularly in the transcript of the May 1 settlement conference. Consequently, the district court did not err by failing to require defendants to introduce additional evidence to establish the existence of an agreement. Moreover, the Smiths do not point to any material differences between the oral agreement reached at the May 1 hearing and the district court’s Order memorializing the agreement. For all of these reasons, the district court did not err in finding that the parties reached an oral settlement agreement.