Katherine McClerkin v. Rogue Construction, LLC , 2022 Ark. App. 515 ( 2022 )

Cite as 2022 Ark. App. 515ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-22-10
Opinion Delivered December 14, 2022
KATHERINE MCCLERKIN APPEAL FROM THE PULASKI
APPELLANT COUNTY CIRCUIT COURT,
SIXTH DIVISION
V. [NO. 60CV-18-8522]
HONORABLE TIMOTHY DAVIS FOX,
ROGUE CONSTRUCTION, LLC JUDGE
APPELLEE
REVERSED AND REMANDED
KENNETH S. HIXSON, Judge
Appellant Katherine McClerkin appeals from an order of the Pulaski County Circuit
Court that granted appellee Rogue Construction, LLC’s motion to enforce a settlement
agreement between the parties. On appeal, McClerkin argues that the circuit court’s finding
that the parties entered into an enforceable settlement agreement was clearly erroneous. We
agree, and we reverse and remand.
I. Facts and Procedural History
In August 2017, McClerkin entered into a contract with Rogue Construction for
remodeling work on her house. Problems arose, resulting in this litigation. Rogue
Construction filed a complaint against McClerkin alleging that McClerkin breached the
contract by failing to pay the amount owed under the contract. Rogue Construction
requested $25,525.92 in damages. McClerkin answered and asserted a counterclaim for
breach of contract alleging that she suffered damages in excess of $100,000 when she was
required to repair Rogue Construction’s allegedly defective work.1
The parties attempted to negotiate a settlement of their claims in two separate phases. 2
The first phase began in the summer of 2020, and in June 2020 the parties met for mediation
but were unable to reach an agreement. The parties continued to negotiate, and on July 1,
2020, Rogue Construction’s counsel sent an email to the circuit court stating that the parties
had agreed to a settlement and were working on finalizing the language of the settlement
agreement. However, on September 2, 2020, McClerkin’s counsel sent an email to the
circuit court advising the court that unfortunately the parties could not agree on the release
language to be included in the settlement agreement. McClerkin’s counsel explained that
proposed language provided by Rogue Construction was unilateral in that it released only
Rogue Construction from liability but not McClerkin.
The parties continued to negotiate the terms of the settlement agreement to no avail.
Finally, on October 20, 2020, Rogue Construction sent a letter to the circuit court advising
1
McClerkin later filed an amendment to counterclaim and second amendment to
counterclaim wherein she raised additional claims for negligence and breach of implied
warranty and requested additional damages, including consequential damages.
2
In the first phase of settlement negotiations, Rogue Construction was represented
by Jason Davis, and in the second phase, it was represented by G. Spence Fricke, who is
Rogue Construction’s counsel in this appeal. McClerkin was represented by Jack Wagoner
in both phases of the settlement negotiations, and in the latter stages of the second phase,
McClerkin was also represented by John Ogles, who is McClerkin’s counsel in this appeal.
2
the court that the parties were ultimately unable to reach a settlement agreement and
requested the case be placed back on the active trial docket. Rogue Construction explained
to the court that, although the parties had agreed to a monetary amount for the settlement,
the parties had not reached an agreement as to which party would pay an outstanding bill of
$3434.50 owed to subcontractor Ace Glass for installation of a shower door in McClerkin’s
master bathroom.
Notwithstanding that the parties had not reached an agreement as to all the material
terms of a settlement agreement during the first phase of the negotiations, on October 27,
2020, McClerkin filed a motion to enforce a settlement agreement. Rogue Construction
opposed the motion. The circuit court initially granted McClerkin’s motion to enforce a
settlement agreement on February 5, 2021; however, on February 8, the circuit court set
aside the February 5 order and placed the case back on the docket for litigation of any and
all issues.
The second phase of settlement negotiations followed. This phase was documented
by a series of email exchanges between the parties’ attorneys. On April 29, 2021,
McClerkin’s counsel sent an email to Rogue Construction’s counsel stating:
I think that this case is settled. We will need a release from you as well though. My
client has instructed me to tell you that she will withdraw her complaint with the
Contractor’s Board as you have requested. I just want to talk with you and make sure
we’re on the same page about everything. . . . I hope to get with you and knock this
one out as soon as we can visit.
Later that day, Rogue Construction’s counsel evidently had a telephone conversation with
McClerkin’s counsel, and Rogue Construction’s counsel then sent a follow-up email stating:
3
Jack—I’m confirming we have a settlement for $65,000. I will prepare a mutual release
which will include a mutual confidentiality provision, a non-disparagement provision,
and an agreement by your client to withdraw her complaint at the Contractor’s
Licensing Bd, and not re-file it. Please confirm on your end.
McClerkin’s counsel replied:
Confirmed. I’ll need to see the release language before we sign. But send it to me
and I expect we’ll just be signing it and sending it back. I know you as an ethical, very
talented lawyer. I trust you’ll include release language that takes care of both sides.
Rogue Construction’s counsel replied, “Understood, and I will try my very best to do that.”
Rogue Construction’s counsel prepared a “Confidential Settlement Agreement and
Mutual Release” consisting of eight paragraphs. The proposed agreement provided that for
consideration of $65,000, McClerkin would release Rogue Construction from any and all
claims arising out of the design or construction work performed by Rogue Construction.
The proposed agreement also provided that the lawsuit would be dismissed with prejudice
in its entirety, and that McClerkin would withdraw her pending complaint against Rogue
Construction before the Arkansas Contractor’s Licensing Board. There were additional
provisions covering confidentiality, nondisparagement, mutual release, and no admission of
liability. On May 6, 2021, Rogue Construction’s counsel sent an email to McClerkin’s
counsel with an attachment containing the Confidential Settlement Agreement and Mutual
Release along with the message, “Jack—attached is the release. I have gone over it with my
client and he will agree to it if your client will agree to sign it.” Thirteen minutes after
receiving that email, McClerkin’s counsel responded, “I have a couple of questions. Can
you please call me as soon as you get a chance.”
4
A few days passed, and the next correspondence between the parties contained in the
record occurred on May 11, 2021, when Rogue Construction’s counsel sent an email stating:
Jack—following is language that my client and I can agree to add to paragraph 7 of the
release:
“For the same consideration, McClerkin further agrees that she will be
responsible for paying any outstanding bills or other indebtedness for work or
services provided by any subcontractor who worked on, or provided materials
to, the Construction. To the best of Rogue Construction (formerly Rogue
Architecture LLC)’s current knowledge, there are no outstanding balances due
to any subcontractors, with the exception of Ace Glass Company, and
McClerkin agrees that she will be responsible for, and will pay all sums owed
to, Ace Glass Company.”
In that email, Rogue Construction’s counsel apparently introduced yet a new provision and
stated further, “My client is also interested in adding some statement of assurance to the
effect that McClerkin will see that there is a final inspection as soon as reasonably possible
so that we can close out the construction and he can close his currently open construction
permit.” Rogue Construction’s counsel concluded the email with, “Just let me know if you
want to discuss.”
The parties exchanged emails again on June 1, 2021. McClerkin’s counsel sent an
email to Rogue Construction’s counsel stating:
I don’t think I have received a new version of the release we discussed a week or two
ago. If you have sent one, please resend as it must have gotten lost in my spam folder
or something.
This case is giving me anxiety. I need to get this release deal either resolved or we
have to pick the case back up and start moving forward with it. I don’t want to have
to do that when the case was settled. We are giving you a full release. My client has
agreed to a release and the $65,000, pay the contractor bill to Ace Glass, and assume
5
responsibility for any outstanding bills to subcontractors. Rogue affirms that it is not
aware of any unpaid subcontractor bills except for Ace Glass.
Can we get on the phone or in person and knock this out? This case stands out
among my cases because of the position it is in right now. I feel like I need to get the
release situation resolved asap.
Rogue Construction’s counsel responded:
Jack I am out of the office right now on vacation. I return to the office next Monday.
I do believe I sent you the final version of the release agreement, but by copy of this
email I’m asking De’Shae to do that just in case I did not. My client has been very
busy over the last week or so and wants to review the release one last time. He is
going to be doing that soon and I anticipate we will have a deal in the very near future.
Rogue Construction’s counsel subsequently prepared a revised version of the
Confidential Settlement Agreement and Mutual Release, which contained identical
language as the former version and added a paragraph providing that McClerkin would be
responsible for paying any outstanding subcontractor bills. In an email sent on June 8, 2021,
Rogue Construction’s counsel provided McClerkin’s counsel with a copy of the revised
version of the proposed agreement along with this message:
Jack—I have now reviewed the attached final release with my client. My client is
willing to sign this release if your client is willing. If you will have your client sign
and return the signature page to me, I will have my client sign as well, and I will order
the check from Hanover. Please also send me the payee information in terms of how
the check should be made out as well as a W-9. Just let me know if you want to
discuss.
Notably, Rogue Construction never received a response to the above correspondence.
On June 17, 2021, Rogue Construction sent a follow-up email to McClerkin’s
counsel, who was then still Jack Wagoner, stating, “Jack—just following up.” Wagoner did
not respond to that email. However, on June 21, 2021, McClerkin acquired additional
6
counsel, John Ogles. Now on board, co-counsel3 Ogles reached out to Rogue Construction’s
counsel with an email stating, “I just [got] hired to represent Ms. McClerkin. I look forward
to working with you and getting this case resolved. I will be in touch.”
On June 30, 2021, Rogue Construction’s counsel sent Ogles an email stating, “John—
just checking back. Are you available this week for a telephone call? I’d like to get this done
if we possibly can as soon as we can.” Later that day, Ogles responded, “Sorry, I forgot to
call you. Let’s touch base this afternoon. Do you think we have to mediate again?” Rogue
Construction’s counsel replied:
Sure. What’s a good time for you? I’ll give you a call. I’m not going to eliminate all
possibilities of mediation, but Jack [Wagoner] and I had reached an agreement on the
amount of money to be paid, $65,000, and we were working on the terms of the
release, and I thought we had basically gotten agreements on that although no one
had signed anything. Do you need to see the latest release that I sent Jack?
Ogles then responded, “No. I have seen it. I will not stand in the way of a settlement but I
think she has changed her mind.”
Apparently dissatisfied, or perhaps confused, with the response from the new co-
counsel, John Ogles, Rogue Construction’s counsel turned around and emailed McClerkin’s
existing co-counsel, Jack Wagoner, stating:
Jack—I have talked to John Ogles and he said he would not stand in the way of a
settlement agreement. I thought we had one or at least were very near one. I am
resending you again the final release with language that you requested. My client is
anxious to settle this and get it done. Please let me hear from you.
3
While we have referred to Jack Wagoner and John Ogles as “co-counsel,” we do not
intend to imply any legal relationship between the attorneys except they were both apparently
now representing McClerkin going forward.
7
In response to that email, Wagoner sent Rogue Construction’s counsel an email clearly
stating that “[w]e don’t have an agreement.” Among other things, Wagoner stated in the
email that there was no agreement because “you keep sending me releases that are not
completely mutual.” Wagoner stated that there was no settlement and indicated that
McClerkin was moving forward with trying the case. This email from Wagoner wherein he
confirmed there was no settlement agreement is the last correspondence between the parties
contained in the record.
On August 4, 2021, Rogue Construction filed a motion to enforce settlement. In its
motion, Rogue Construction alleged that after several years of litigation, the parties agreed
to settle their claims for payment of a specific monetary amount and execution of a
settlement agreement providing certain terms. Rogue Construction alleged that the parties
exchanged various drafts of the agreement and reached an accord on all material terms.
Rogue Construction asked the circuit court to order McClerkin to stand by the agreement
she negotiated and enter an order enforcing the parties’ settlement agreement. Rogue
Construction also asked that, in enforcing the settlement, the circuit court dismiss Rogue
Construction’s claim and McClerkin’s counterclaim with prejudice.4
On August 23, 2021, McClerkin filed a response to Rogue Construction’s motion to
enforce settlement, asking that it be denied. McClerkin argued that there was no enforceable
4
Rogue Construction also filed a separate motion to dismiss McClerkin’s second
amended counterclaim. Rogue Construction never specifically asked to dismiss McClerkin’s
first amended counterclaim.
8
settlement agreement because there was no meeting of the minds or mutual agreement on
all material terms.
On November 4, 2021, the circuit court entered an order granting Rogue
Construction’s motion to enforce settlement agreement. The circuit court ordered the
parties to execute releases and pay money within thirty days, and the circuit court dismissed
the complaint and counterclaim with prejudice. The circuit court denied as moot Rogue
Construction’s motion to dismiss McClerkin’s second amended counterclaim. 5
II. Discussion
In this appeal, McClerkin argues that the circuit court’s November 2021 order should
be reversed because the circuit court clearly erred in finding that the parties entered into an
enforceable settlement agreement. McClerkin argues that the parties did not reach a full
and complete settlement because the parties never reached a mutual agreement as to the
language of the releases to be executed by both parties, which was a material part of the
agreement.6 McClerkin argues that there was no binding agreement reached but rather an
5
We observe that there can be no issue as to the finality or appealability of the circuit
court’s order because in McClerkin’s notice of appeal she stated that she abandoned any
pending but unresolved claims as required by Rule 3(d)(vi) of the Arkansas Rules of
Appellate Procedure–Civil.
6
In her brief, McClerkin also cites Terra Land Services, Inc. v. McIntyre, 2019 Ark. App.
118, 572 S.W.3d 424, where we stated that an attorney may not compromise his client’s
cause of action without permission. However, McClerkin does not appear to argue on appeal
that her attorney did not have permission or lacked authority to negotiate or enter into an
agreement on her behalf, and at any rate, such argument would not be preserved because it
was not raised below. See Chastain v. Chastain, 2012 Ark. App. 73, 388 S.W.3d 495 (stating
9
agreement to engage in continuing negotiations. We agree with McClerkin’s argument, and
we reverse and remand.
The law favors amicable settlement of controversies, and courts have a duty to
encourage rather than discourage compromise as a method of resolving conflicting claims.
Williams v. Davis, 9 Ark. App. 323, 659 S.W.2d 514 (1983). Nevertheless, a settlement is
contractual in nature, and in order to be legally valid, it must possess the essential elements
of a contract. Id. The essential elements of a contract include (1) competent parties, (2)
subject matter, (3) legal consideration, (4) mutual agreement, and (5) mutual obligations.
Billingsley v. Benton NWA Props., LLC, 2015 Ark. 291. We keep in mind two legal principles
in determining whether a valid contract was entered into: (1) a court cannot make a contract
for the parties but can only construe and enforce the contract that they have made; and if
there is no meeting of the minds, there is no contract; and (2) it is well settled that in order
to make a contract there must be a meeting of the minds as to all terms, using objective
indicators. Alltel Corp. v. Sumner, 360 Ark. 573, 203 S.W.3d 77 (2005). Whether or not
there is a meeting of the minds is an issue of fact, and we do not reverse a circuit court’s fact-
finding unless it is clearly erroneous. DaimlerChrysler Corp. v. Smelser, 375 Ark. 216, 289
S.W.3d 266 (2008). A finding is clearly erroneous when, although there is evidence to
support it, the reviewing court on the entire evidence is left with a definite and firm
conviction that a mistake has been committed. Id.the well-settled rule that in order to preserve an argument for appeal, the issue must first be
raised at the circuit-court level).
10
During both the first and second phases of the parties’ settlement negotiations, the
terms of the release language as to both parties was consistently discussed and, ultimately,
never mutually agreed upon. In the latter stages of the first phase of negotiations, McClerkin
sent an email to the circuit court noting the parties’ disagreement as to the content of the
release language, and after the first phase of negotiations, the circuit court initially ruled that
an enforceable settlement had been reached but then, correctly, set aside that order and the
parties’ negotiations continued.
In the second phase of the parties’ settlement negotiations, McClerkin’s counsel
advised in an email to Rogue Construction’s counsel that he thought the case was settled
but that “[w]e will need a release from you as well though.” Rogue Construction’s counsel
responded by stating he would prepare a mutual release, and McClerkin’s counsel replied,
“I’ll need to see the release language before we sign.” (Emphasis added.) Several days later, Rogue
Construction’s counsel sent an email stating that it had drafted a release and would send it
for McClerkin’s counsel’s review. On the following day, Rogue Construction’s counsel
emailed the first version of the Confidential Settlement Agreement and Mutual Release that
he had drafted, and advised, “I have gone over it with my client and he will agree to sign it
if your client will agree to sign it.” (Emphasis added.) McClerkin’s counsel never assented to
the initial settlement agreement drafted by Rogue Construction’s counsel; after receiving the
proposed agreement, McClerkin’s counsel sent an email stating, “I have a couple of
questions. Can you please call me as soon as you get a chance?”
11
Settlement negotiations continued, and two weeks later McClerkin’s counsel sent an
email stating that “I need to get this release deal either resolved or we have to pick the case
back up and start moving forward with it. . . . I feel like I need to get the release situation
resolved asap.” A week later, Rogue Construction’s counsel responded with an email, on
June 8, 2021, wherein he attached his revised draft of the Confidential Settlement
Agreement and Mutual Release and stated, “My client is willing to sign this release if your
client is willing . . . . Just let me know if you want to discuss.” McClerkin’s counsel did not
respond to that email or communicate any agreement as to the settlement language therein.
In Rogue Construction’s appellate brief, it posits that the parties’ agreement as to the
material terms of the settlement were expressed in the final version of the agreement
circulated between counsel on June 8, 2021. This final draft contained release terms
applicable to McClerkin as well as a mutual release clause applicable to both parties, as
follows:
Release
1) That Katherine McClerkin (McClerkin), for and in consideration of the
payment to her of the sum of $65,000, the receipt and sufficiency of which are
hereby acknowledged, does hereby compromise, settle with, release, acquit and
forever discharge Rogue Construction, LLC; Rogue Architecture, LLC;
Jeremiah Russell; The Hanover Insurance Company; as well as their
predecessors, affiliated companies, successors, agents, servants, officers,
directors, employees, partners, insurers, and assigns, and any other person,
firm, corporation or association in privity with them (Rogue Parties), or any of
them, of and from any and all actions, claims, demands, and causes of action
whatsoever, known and unknown, which McClerkin may now have or may
have in the future arising out of any and all design or construction work done
by Rogue Construction LLC or Rogue Architecture, LLC on McClerkin’s
residence located at 11040 Rivercrest Drive, Walton Heights neighborhood,
12
Little Rock, AR., (the Construction), said claims being more specifically
described in those pleadings and other materials filed and of record in the case
of Rogue Construction, LLC v. McClerkin v. Rogue Construction, LLC,
Pulaski County Circuit Case Number 60CV-18-8522 (the Lawsuit).
2) It is the express intention of McClerkin to reserve any rights, claims, or causes
of action which she may have against any person other than the Rogue Parties,
but to release the Rogue Parties fully and completely. Therefore, in
consideration of the above payment, McClerkin agrees to a reduction of the
damages recoverable against all other tortfeasors to the extent of the prorata
share of the liability of the Rogue Parties, and further agrees to indemnify,
protect and hold harmless the Rogue Parties from all judgments, claims, losses
or expenses arising out of or by reason of any action, claim or demand by any
person on account of the damages sustained by McClerkin as a result of the
Construction, or any liability or alleged liability of the Rogue Parties. It is
specifically intended that the Rogue Parties are and shall be released,
indemnified and held harmless with respect to any liability or alleged liability
under act 315 of the Acts of Arkansas of 1941, as amended, being the Uniform
Contribution Among Tortfeasors Act. This Release does not release
McClerkin from any claims by the Rogue Parties for contribution or
indemnity.
3) For the same consideration, McClerkin covenants and agrees that this Release
shall cover, and it does cover and release, any and all claims and demands of
any kind whatsoever arising from the Construction, including any and all
consequences thereof that may hereafter develop, as well as those already
known, developed or that are now apparent that the McClerkin could have
asserted against the Rogue Parties.
....
7) Mutual Release McClerkin and the Rogue Parties hereby agree that any and all
claims for contribution, fault, defense, damages, requests to be reimbursed for
attorney’s fees and defense costs, hold harmless, and indemnity by McClerkin or the
Rogue Parties against the other are forever released to the extent the defense,
damages, request to be reimbursed for attorney’s fees, defense costs, hold harmless
obligation, and indemnity or contribution obligation arise out of, or are in any way
related to the Construction or the Lawsuit.
13
We conclude that Rogue Construction’s argument that this version of the agreement was
enforceable as to all the material terms is misplaced because, as stated, the record reflects no
communication from McClerkin’s counsel approving this or any other version that Rogue
Construction’s counsel had drafted.
Finally, we find it significant that a few weeks after the June 8, 2021, proposed
settlement had been communicated without response, McClerkin’s newly acquired counsel,
John Ogles, sent an email to Rogue Construction’s counsel asking, “Do you think we have
to mediate again?” Rogue Construction’s counsel responded, “Sure. What’s a good time
for you? I’ll give you a call.” Rogue Construction’s counsel then stated that he and
McClerkin’s previous counsel, Jack Wagoner, “had reached an agreement on the amount of
money to be paid, $65,000, and we were working on the terms of the release, and I thought we
had basically gotten agreements on that, although no one had signed anything.” (Emphasis
added.) Later that day when Rogue Construction’s counsel emailed Wagoner, he stated that
“[m]y client is anxious to settle this and get this done,” and Wagoner responded by
confirming that “[w]e don’t have any agreement” based in part on the absence of a mutual
agreement as to the terms of the releases.
It is well settled that in order to make a contract there must be mutual agreement and
a meeting of the finds as to all terms. See Alltel Corp., supra. We hold on this record that the
circuit court clearly erred in finding that the parties reached any mutual agreement as to the
release language of a settlement and, therefore, that the circuit court’s order enforcing the
settlement agreement must be reversed and the case remanded for further proceedings.
14
Reversed and remanded.
HARRISON, C.J., and BROWN, J., agree.
Ogles Law Firm, P.A., by: John Ogles, for appellant.
Barber Law Firm, PLLC, by: G. Spence Fricke and Jerry D. Garner, for appellee.
15