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Contract — Mediated Settlement Agreement – Binding & Enforceable – Corporate – Signatories’ Capacities

DeCristoforo v. Givens (Lawyers Weekly No. 15-15-0538, 25 pp.) (James Gale, C.J.) 2015 NCBC 53

Holding: Although the parties expected to execute a “further statement of their agreement and complete mutual release,” the mediated settlement agreement they signed is nonetheless binding and enforceable.

The court grants plaintiffs’ motion to enforce the agreement.

Individual defendants Seamons and Kaye signed the mediated settlement agreement (the mediation report) without indicating whether they were signing in their individual or corporate capacities.

Defendant Pittco Capital Partners III, L.P. (Pittco) owns 25.89 percent of defendant Lindy’s Homemade, LLC. Pittco has previously held defendant Seamons out as an agent who was permitted to bind Pittco, and it had him sign on its behalf in prior transactions with Lindy’s. The court concludes that Seamons had authority to bind Pittco. Because the mediation report makes clear that it was “a full and final agreement of all issues,” the court concludes that Seamons bound himself and Pittco with his signature.

Furthermore, defendants Seamons and Kaye were the members of Lindy’s Special Matters Committee, which was given “plenary and exclusive authority” to agree to a settlement of plaintiffs’ claims and to execute documents necessary to do so. Where an individual has authority and an intent to bind the corporation as to a matter in which he also has an individual interest, and where he participates in a negotiation both individually and as a corporate representative, his unqualified signature on a document prepared as a result of that negotiation binds both the individual and the corporation he represents. Seamons’ and Kaye’s signatures on the mediation report bound Lindy’s. The signatures also bound Seamons and Kaye individually.

Kaye signed the mediation report and then left, knowing the reduction of the terms to paper on “Exhibit A” was in progress. His counsel was still present. There is no indication that he instructed that his signature, reflecting a “full and final agreement of all issues” was to be withheld until he further assented to Exhibit A. Under these circumstances, Kaye and Lindy’s should be bound to the settlement.

All necessary parties, both the individual defendants and corporate defendants, joined the settlement agreement as indicated by authorized signatures affixed on their behalf signifying that a full and final agreement on all issues had been reached.

When it came time to draft a formal settlement agreement, defendants sought to include matters to which there is no express reference in the mediation report, Exhibit A, or among the claims in the pending litigation, such as plaintiffs’ obligation to return corporation materials upon termination and the proposed release of federal claims that had not been brought in the litigation. The mediation report’s language, with Exhibit A appended, expressed a clear intent that all issues in the litigation had been fully and fairly resolved. The language was effective to release pending claims even if the parties did not later execute a more comprehensive statement of the release. Upon satisfaction of the settlement terms, plaintiffs will be obligated to (or the court may) dismiss plaintiffs’ claims in the litigation with prejudice, which will have the same binding effect as a release.

The mediation report is enforceable. The parties may, but are not required to, execute a more comprehensive statement of the release terms to effectuate the release.

Exhibit A says, “Defendants agree to purchase Mrs. DeCristoforos’ membership interest in Lindy’s with [four] payment[s].” The court finds that defendants collectively are financially responsible for the completion of the purchase of the shares. At defendants’ election, Lindy’s alone may complete the purchase.

Where the settlement documents require defendants to submit “a confession of judgment” along with the first payment, only one of the defendants (of defendants’ choosing) is required to execute a confession of judgment in favor of plaintiff Veronica DeCristoforos.

Finally, Exhibit A says, “Defendant Pittco Capital Partners III, L.P. will either remove Plaintiffs’ guarantees or indemnify Plaintiffs for any liability under the guaranties on all loans and real estate lease. If this condition is not fulfilled, Plaintiffs may elect to waive this condition.”

This language, although not a model of clarity, grants plaintiffs the option to relieve Pittco of its obligations to remove guarantees but does not allow plaintiffs to withdraw from the settlement entirely. Pittco has the option of either removing plaintiffs from guarantees or indemnifying them from guarantees, but it does not have option to scuttle the entire settlement by doing neither. Plaintiffs’ ability to waive their right to enforce Pittco’s obligations does not render the agreement unenforceable.

Motion granted.

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