Patterson v. Knight , 391 P.3d 1075 ( 2017 )

2017 UT App 22THE UTAH COURT OF APPEALS
CHARLEY PATTERSON,
Appellee,
v.
JED KNIGHT AND ALISHA KNIGHT,
Appellants.
Memorandum Decision
No. 20150885-CA
Filed February 2, 2017
Third District Court, West Jordan Department
The Honorable James D. Gardner
No. 140906572
Erik A. Olson and Bruce R. Baird, Attorneys
for Appellants
J. Ryan Mitchell, Attorney for Appellee
JUDGE J. FREDERIC VOROS JR. authored this Memorandum
Decision, in which JUDGES STEPHEN L. ROTH and KATE A. TOOMEY
concurred.
VOROS, Judge:
¶1 Jed Knight and Alisha Knight appeal a district court order
granting Charley Patterson’s motion to enforce a post-mediation
settlement agreement. We affirm.
¶2 The underlying dispute between Patterson and the
Knights stems from a joint-venture and profit-sharing agreement
between the parties. Patterson sued the Knights for violation of
the agreement to collect various sales commissions. The parties
jointly moved to stay the action while they participated in
mediation. After mediation the parties signed a handwritten
settlement agreement (the Agreement). The Agreement
contained nine provisions. Seven of the provisions pertained to
Patterson v. Knight
aspects of a new profit-sharing agreement and new management
agreements. The eighth states, “Subject to drafting mutually
acceptable settlement agreement w/ above provisions and
mutual non-disparagement, and new GYN & Spearhead
agreements.” 1 The ninth states, “Upon execution of final
settlement documents and new GYN and new Spearhead agmt.
Parties will file a stipulated motion and order to dismiss
litigation w/ prejudice.”
¶3 Shortly after the parties signed the Agreement, Patterson
sent the Knights a draft of a more formal settlement agreement
(the Formal Agreement). Roughly one month later, the Knights
informed Patterson in writing that they “cannot agree to the
terms as drafted and [we] will be terminating the proposed
agreement that was subject to an agreeable final agreement.”
Patterson then filed a motion to lift the stipulated stay, seeking
court enforcement of the Agreement. The district court granted
Patterson’s motion, concluding that “the Agreement is
enforceable and operates to settle the pending litigation.” The
district court dismissed the case with prejudice and the Knights
timely appealed.
¶4 The Knights contend that the district court erred when it
concluded that the Agreement was a final, enforceable
settlement agreement that contained the essential and material
terms of agreement between the parties to end the litigation.
Specifically, the Knights argue that “the express language of the
Mediation Agreement makes any final settlement ‘subject to’ the
future drafting of a mutually acceptable final settlement
agreement” containing specific terms.
1. Patterson & the Knights are also involved in two separate
business entities together: Got Your Number, Inc. (GYN) and
Spearhead, a general Utah partnership.
20150885-CA 2 2017 UT App 22Patterson v. Knight
¶5 “The decision of a trial court to summarily enforce a
settlement agreement will not be reversed on appeal unless it is
shown that there was an abuse of discretion.” LD III, LLC v.
BBRD, LC, 2009 UT App 301, ¶ 13, 221 P.3d 867 (citation and
internal quotation marks omitted). “Whether the parties had a
meeting of the minds sufficient to create a binding contract
is . . . an issue of fact,” which we review “for clear error,
reversing only where the finding is against the clear weight of
the evidence, or if we otherwise reach a firm conviction that a
mistake has been made.” Id. (omission in original) (citations and
internal quotation marks omitted). We “affirm the granting of a
motion to compel settlement if the record establishes a binding
agreement and the excuse of nonperformance is comparatively
unsubstantial.” Id. (citation and internal quotation marks
omitted).
¶6 “Settlement agreements are governed by the rules applied
to general contract actions.” Sackler v. Savin, 897 P.2d 1217, 1220
(Utah 1995). A binding contract exists “where it can be shown
that the parties had a meeting of the minds as to the ‘integral
features of [the] agreement’ and that the terms are sufficiently
definite as to be capable of being enforced.” LD III, 2009 UT App
301, ¶ 14 (alteration in original) (quoting Prince, Yeates
& Geldzahler v. Young, 2004 UT 26, ¶ 13, 94 P.3d 179). However, a
contract “may be enforced even though some contract terms may
be missing or left open to be agreed upon, but if the essential
terms are so uncertain that there is no basis for deciding whether
the agreement has been kept or broken, there is no contract.”
Nielsen v. Gold’s Gym, 2003 UT 37, ¶ 12, 78 P.3d 600 (citation and
internal quotation marks omitted).
¶7 First we must determine whether “it can be shown that
the parties had a meeting of the minds as to the ‘integral features
of [the] agreement’” and whether “the terms are sufficiently
definite as to be capable of being enforced.” See LD III, 2009 UT
App 301, ¶ 14 (alteration in original) (quoting Prince, Yeates
20150885-CA 3 2017 UT App 22Patterson v. Knight
& Geldzahler, 2004 UT 26, ¶ 13). The Knights argue that the
Spearhead and GYN agreements are “essential, missing terms of
a final settlement.” However, the Agreement provides that the
Spearhead and GYN commissions will be split “50/50.” The
Agreement also provides for the Knights’ and Patterson’s
business responsibilities and how specific business expenses
should be handled going forward, and it provides that the
Knights would pay attorney fees and that Patterson would
prepare an accounting.
¶8 The district court concluded that the Agreement “does set
forth the essential terms of the parties’ agreement and current
intent to settle the lawsuit.” The district court also concluded
that when “the parties left mediation . . . they had agreed to the
material terms of a settlement agreement and the terms are
sufficiently definite to be enforced.” We agree with the district
court on both points. The Agreement clearly sets forth the
parties’ obligations for their business relations, including how
commissions will be split in the future and each party’s business
responsibilities. The “terms are sufficiently definite as to be
capable of being enforced.” See id.
¶9 The Knights maintain that because the Agreement
required a non-disparagement clause but did not address the
specifics of such a clause, the parties entered into a mere
agreement to agree. By this standard, it would be difficult to
imagine any handwritten mediation agreement that would be
enforceable. Non-disparagement clauses are common
contractual provisions; omitting the precise language of such a
clause is not akin to omitting integral features of an agreement
such as price or quantity from a contract for the sale of goods.
¶10 The Knights also argue that the Agreement was not a final
settlement agreement, because it was subject to the negotiation
and execution of further agreements, which never happened.
The Agreement concluded that it was “[s]ubject to drafting
20150885-CA 4 2017 UT App 22Patterson v. Knight
mutually acceptable settlement agreement w/ above provisions
and mutual non-disparagement, and new GYN & Spearhead
agreements.” “Words such as ‘on condition that,’ ‘if,’ and
‘provided,’ are words of condition, and in the absence of
indication to the contrary, the employment of such words in a
contract creates conditions precedent.” McArthur v. State Farm
Mutual Auto. Ins. Co., 2012 UT 22, ¶ 32, 274 P.3d 981 (citation and
additional internal quotation marks omitted); see also Shaw v.
Kennedy, Ltd., 879 S.W.2d 240, 246 (Tex. Ct. App. 1994) (“Use of
terms like ‘provided that,’ ‘if,’ or ‘subject to,’ usually indicate
that a promise is not to be performed except upon a condition or
happening of a stated event.”).
¶11 We agree that the language “subject to” created a
condition precedent to the finality of the Agreement; however,
Patterson satisfied the condition precedent when he sent the
Formal Agreement to the Knights. The Formal Agreement
contained the GYN and Spearhead agreements and a mutual
non-disparagement provision. As the district court found, the
proposed Formal Agreement contained terms additional to those
set out in the Agreement. But at that point, instead of seeking to
tailor the Formal Agreement to better reflect the mediated terms,
the Knights simply repudiated the Agreement altogether. The
Knights cannot rely on their own failure to follow through with
reasonable efforts to craft the contemplated written agreement to
defeat the Agreement’s precondition.
¶12 It is common for parties to later memorialize in a more
formal document agreements created in mediation. This
arrangement does not preclude the enforcement or finality of the
agreement created in mediation so long as the terms are
“sufficiently definite as to be capable of being enforced.” See LD
III, LLC v. BBRD, LC, 2009 UT App 301, ¶ 14, 221 P.3d 867. In
Zions First National Bank v. Barbara Jensen Interiors, Inc., this court
affirmed the district court’s grant of the appellee’s motion to
compel settlement. 781 P.2d 478, 479 (Utah Ct. App. 1989). In an
20150885-CA 5 2017 UT App 22Patterson v. Knight
affidavit opposing the motion, the appellants claimed that they
did not assent to an oral settlement during negotiation. Id. at
479–80. The affidavit stated: “At the time of [the settlement
negotiations], we believed that no firm settlement was reached;
rather we understood that terms of the settlement were to be
prepared by counsel for [Zions] and put in writing to be signed
by us, if we were in agreement to the terms as set forth in
writing.” Id. at 480 (second alteration in original) (internal
quotation marks omitted). Once the appellee’s counsel sent over
a written settlement agreement, the appellants “decided not to
enter into any settlement agreement and for that
reason . . . refused to sign any settlement agreement.” Id.(internal quotation marks omitted). However, because the
appellants “actually agreed to the settlement” before the
appellee’s sent formal settlement documents, we held that the
trial court did not abuse its discretion in compelling the
settlement. Id; see also Lawrence Constr. Co. v. Holmquist, 642 P.2d
382, 383–84 (Utah 1982) (holding that an oral settlement
agreement was valid and the fact that “the parties contemplated
subsequent execution of a written instrument as evidence of
their agreement” did not prevent the oral agreement from
binding the parties).
¶13 Here, Patterson and the Knights similarly contemplated
the later execution of formal settlement agreement documents.
The parties indicated this intention with the language “[s]ubject
to drafting mutually acceptable settlement agreement w/ above
provisions.” (Emphasis added.) The parties agreed on the
essential terms of the settlement agreement, evidenced by their
use of the term “above provisions.”
¶14 Similar to the appellants in Zions First National Bank, the
Knights “decided not to enter into any settlement agreement and
for that reason . . . refused to sign any settlement agreement.” See
781 P.2d at 480 (internal quotation marks omitted). However,
because the Knights agreed to the provisions contained in the
20150885-CA 6 2017 UT App 22Patterson v. Knight
Agreement, which were “sufficiently definite as to be capable of
being enforced,” see LD III, 2009 UT App 301, ¶ 14, “we cannot
say the [district] court abused its discretion in compelling the
settlement,” see Zions First National Bank, 781 P.2d at 480.
¶15 Accordingly, the judgment of the district court is
affirmed.
20150885-CA 7 2017 UT App 22