Court Opinion

ID: 2789324
Source: CourtListenerOpinion
Date Created: 2015-03-26 07:04:41.630726+00
Date Added: 2024-06-11T08:33:07.145874
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

CENTRAL WAREHOUSE OPERATIONS, INC.,                                  UNPUBLISHED
                                                                     March 24, 2015
               Plaintiff-Appellee,

v                                                                    No. 319183
                                                                     Saginaw Circuit Court
PATRICK RIFFEL, HPC TRANSPORTATION                                   LC No. 13-019766-CK
BROKERAGE, LLC d/b/a HIGHWAY PRO
CONNECTION, and HAUSBECK PICKLE
COMPANY, INC.,

               Defendants-Appellants.

Before: WILDER, P.J., and SERVITTO and STEPHENS, JJ.

PER CURIAM.

        Defendants appeal as of right the trial court’s order granting plaintiff’s motion to enforce
a settlement agreement between the parties. We reverse.

       In 2012, plaintiff filed suit against defendant Riffel, a former employee, alleging that he
breached his contract with plaintiff, violated terms of a non-compete agreement and
confidentiality clause and breached fiduciary duties when he left plaintiff’s employ and began
working with defendants HPC Transportation Brokerage, LLC and Hausbeck Pickle Company,
Inc. Plaintiff further alleged that all defendants tortiously interfered with a contract and/or
advantageous business relationship or expectancy and engaged in a civil conspiracy.

         On January 23, 2013, defendants HPC’s and Hausbeck’s president, Timothy Hausbeck,
and plaintiff’s president, John Strobel, negotiated an oral settlement agreement with the aid of a
facilitator. The parties’ respective attorneys were not present at that meeting, and the agreement
was not reduced to writing.

         Defendants signed a settlement agreement dated January 28, 2013, and sent it to plaintiff
for its president’s signature. Instead of signing the document, plaintiff faxed a different version
of a settlement agreement to defendants’ counsel on February 25, 2013. While some portions of
the two documents are similar (both stated that Riffel could work for HPC in the freight
brokerage business but not solicit plaintiff’s clients for warehouse business), differences existed
(the latter stated that “Riffel shall not engage in work associated with warehousing or related
value added service activities”). The version sent by plaintiff also stated that HPC would pay
plaintiff 2.25% of gross revenue paid by Michigan Sugar to HPC to February 1, 2016, whereas
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defendant’s draft stated the payment would be 2% of gross profits and would only last until
January 1, 2016.

         As every draft of the settlement agreement prohibited defendant Riffel from soliciting
plaintiff’s warehouse clients, every draft also contained a requirement for plaintiff to provide
defendants with a list of plaintiff’s current clients. On February 28, 2013, defendants HPC’s and
Hausebeck’s counsel sent an e-mail to plaintiff’s counsel asking her to double check the client
list he had received because in his view many of the entities on the list were not current clients.

        A hearing was held on March 5, 2013. It does not appear defendants HPC’s and
Hausebeck’s counsel were present at the hearing. At the hearing plaintiff’s counsel stated that a
settlement had been reached but specifically stated that “[w]e’re still working on some of the
final aspects of the settlement agreement itself, that being the customer list.” The trial court
asked for a response by defendant Riffel’s counsel, and he stated “[t]hat’s my understanding,
Judge.” The trial court stated that it would give the parties two weeks to get him a final order
dismissing the case, or it would be dismissed without prejudice pursuant to what was placed on
the record. The trial court asked if the parties agreed, and both plaintiff’s counsel and defendant
Riffel’s counsel answered in the affirmative. When a settlement agreement signed by all the
parties was not given to the trial court by the two week deadline, the trial court dismissed the
case without prejudice.

        On May 13, 2013, plaintiff filed its complaint in this present action (which essentially
repeated the allegations in the first action) as well as a motion to enforce the version of the
settlement agreement that it had signed on February 25, 2013, but that did not contain any of
defendants’ signatures. A hearing on plaintiff’s motion was held on June 10, 2013; defendants
HPC’s and Hausebeck’s counsel did not attend. Plaintiff’s counsel indicated that she believed a
settlement had been reached and that the defendants’ only objection was regarding the client list,
which she stated was not a specific objection and not a reason to refuse signing the agreement.
Plaintiff’s counsel stated that the first version of the settlement agreement that defendants both
signed referenced the same client list the defendants were disputing. Defendant Riffel’s counsel
stated that they did not have a settlement agreement because the version they signed, the first
version, was altered by plaintiff’s counsel. Defendant Riffel’s counsel stated that he believed
that they did have a settlement agreement with the first version, but that defendants did not agree
to the latter version. After defendant Riffel’s counsel stated that the latter agreement was
different, the trial court asked plaintiff’s counsel how it was different. Plaintiff’s counsel
responded as follows:

                 Your Honor, it clarified a number of things. Actually the one that was
         signed by Mr. Fordney[1] on behalf of all the parties was one that was not
         accurate. It didn’t accurately reflect—we went through four more versions. In
         fact, some of my exhibits show that after the date that Mr. Fordney alleged that
         they signed the agreement, he was requesting additional language to be put in that

1
    Defendants HPC’s and Hausebeck’s counsel.

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         settlement agreement. The material terms are not different, some of the language
         is.

Plaintiff’s counsel then stated that defendants’ only objection related to the client list.

        The trial court, without letting defense counsel respond to plaintiff’s characterization of
the differences, granted plaintiff’s motion.

        Another hearing was held on August 5, 2013. Counsels for all defendants were present.
Defendants HPC’s and Hausebeck’s counsel stated that the client list that it received from
plaintiff was not a current client list. Counsel stated that he wanted a finalized client list that was
signed by plaintiff’s president and that “if he does that, and presents to this Court these clients as
being a current list of the present clients that he has at the—as of 2/23/2013, then we’ve got a
deal.” When the court asked defendant Riffel’s counsel if he had anything to add, counsel stated,
“Mr. Riffel doesn’t have anything.” The trial court then signed the order enforcing the
settlement agreement.

        Subsequently, defendants filed a motion for reconsideration that for the first time pointed
out the substantive differences in the version of the settlement agreement that they signed and the
version that plaintiff had signed such as a changing the term “gross profit” to “gross revenue”
with respect to the disputed Michigan Sugar account. The trial court denied the motion because
it determined that defendants had not raised any new issues or any arguments that could not have
been presented to the court at the hearing on plaintiff’s original motion.

                                   II. STANDARD OF REVIEW

        The decision to enforce a settlement agreement is reviewed for an abuse of discretion.
See Groulx v Carlson, 176 Mich App 484, 493; 440 NW2d 644 (1989). An abuse of discretion
occurs when the trial court chooses an outcome falling outside the range of principled outcomes.
City of Novi v Robert Adell Children’s Funded Trust, 473 Mich 242, 254; 701 NW2d 144
(2005).

                                          III. ANALYSIS

        Settlement agreements are contracts and governed by the legal principles applicable to
the construction and interpretation of contracts. Reicher v SET Enterprises, Inc, 283 Mich App
657, 663; 770 NW2d 902 (2009). “However, this Court will not enforce a settlement agreement
that fulfills the requirements of contract principles if that agreement does not also satisfy the
requirements of” MCR 2.507(G). Michigan Mut Ins Co v Indiana Ins Co, 247 Mich App 480,
484-485; 637 NW2d 232 (2001). MCR 2.507(G)2 provides as follows:

2
    Prior to January 1, 2015, this court rule was MCR 2.507(F).

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              An agreement or consent between the parties or their attorneys respecting
       the proceedings in an action is not binding unless it was made in open court, or
       unless evidence of the agreement is in writing, subscribed by the party against
       whom the agreement is offered or by that party’s attorney.

       In the present case the only writing defendants have signed is the first version of the
settlement agreement; there is no writing signed by any defendant evidencing agreement to the
settlement agreement plaintiff seeks to have enforced. Therefore, the only way that plaintiff’s
motion could have been properly granted is if the purported agreement “was made in open
court.” Id.

       Although “[a] party cannot, after agreeing in open court, refuse to sign a proposed
judgment which accurately incorporates the agreement unless there was mistake, fraud, or
unconscionable advantage which would justify setting aside the settlement agreement,” Mich
Bell Tel Co v Sfat, 177 Mich App 506, 515; 442 NW2d 720 (1989), “a party’s repudiation of a
settlement agreement before it is placed on the record in open court . . . is a ‘denial’ of the
agreement for purposes of the court rule,” Brunet v Decorative Engineering, 215 Mich App 430,
433; 546 NW2d 641 (1996).

        In the present case, while the parties did acknowledge some form of agreement was
made, upon examination of the entire record, it appears that that agreement was nothing more
than an agreement to agree and not an enforceable settlement agreement. There is no evidence to
suggest what was actually agreed to during the mediation conference other than what is in the
record. The record shows that defendants signed and sent a draft of an agreement to the plaintiff,
which sent back a different version. Further, the record indicates that plaintiff only initially sent
it to defendants HPC and Hausebeck and not to defendant Riffel. Defendants HPC’s and
Hausebeck’s counsel did not sign this draft, but faxed the coversheet back requesting changes.
Plaintiff made the recommended changes and then signed and e-mailed the draft to all
defendants. The drafts are different.

        Plaintiff heavily relies on the actions taken by defendants HPC’s and Hausebeck’s
counsel with respect to the draft it signed. However, the record shows that on February 28,
2013, defendants HPC’s and Hausebeck’s counsel objected to the client list that was attached to
that draft because he believed it included past as well as current clients. Every draft of the
settlement agreement prohibits defendant Riffel from discussing warehouse work with plaintiff’s
clients, and the clients are defined by the list. The restrictions placed on defendant Riffel could
change drastically based on how many clients are on that list. Therefore, the extent of the clients
list is material to the obligations that defendant Riffel would have under any settlement
agreement.

        Even if it is assumed that the client list is not a material term, it appears that defendant
Riffel’s counsel had more objections to plaintiff’s draft at the June 10, 2013, hearing. He stated
on the record that “[t]he second settlement agreement changes materially a number of terms that
were in the first agreement.” The trial court merely asked plaintiff’s attorney to state what the
differences were without giving defendant Riffel’s attorney an opportunity to explain what he
believed the differences were.

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        Despite the fact that at various points the parties all expressed that a settlement agreement
had been reached, the record does not show that the parties ever came to anything more than an
agreement to agree. While it is possible for parties to make a contract binding them to “prepare
and execute a subsequent agreement” if all essential terms are expressed, where the future
agreement is to contain a material term not already agreed upon “the so-called ‘contract to make
a contract’ is not a contract at all.” Prof Facilities Corp v Marks, 373 Mich 673, 679; 131 NW2d
60 (1964). Because the parties never reached an agreement on all material terms, the trial court
abused its discretion in granting plaintiff’s motion.3

        Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.

                                                              /s/ Kurtis T. Wilder
                                                              /s/ Deborah A. Servitto
                                                              /s/ Cynthia Diane Stephens

3
  Because we conclude that the trial court abused its discretion in granting plaintiff’s motion, we
need not consider whether the trial court erred in denying defendants’ motion for
reconsideration.

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