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Corporate – Ownership Restructuring – Settlement – Motion to Enforce

The parties founded a business together. Ultimately, the parties’ personal and professional relationship deteriorated to the point where they could no longer work together. After entering a “restructure agreement” to divide the business, plaintiff alleged defendant’s breach. The parties subsequently engaged in advanced settlement negotiations. Because the facts do not support finding that the parties reached a final settlement of all claims because each side added a condition that the other failed to accept, the court cannot enforce the purported settlement between the parties.

We deny defendants’ motion to enforce settlement.

Plaintiff’s complaint alleged that defendant mismanaged the business and breached the restructure agreement and her fiduciary duties. The parties entered settlement negotiations, with plaintiff’s counsel proposing “tentative” terms. Defendants’ counsel accepted the tentative terms and requested the parties finalize a written settlement agreement.

After plaintiff’s counsel submitted an initial written settlement, defendants’ counsel returned an amended version requesting a public statement that defendants were the sole owner of the business. Plaintiff’s counsel objected to the term in a red-lined version; although counsel later stated “I think we have an agreement,” he did not accept the exact terms of the settlement agreement as drafted. The parties also agreed that plaintiff would have to sign a written agreement and that the court would have to approve the settlement.

We hold that defendants have failed to carry their burden to prove there was no genuine issue of material fact as to whether the parties reached a final and binding settlement agreement. We find that the parties never mutually agreed to the same set of final settlement terms. Instead, we find that the parties traded counteroffers over the proposed public announcement of the company’s ownership. We hold that, even when plaintiff’s counsel stated “I think we have an agreement,” he simultaneously counteroffered with a joint public announcement that constituted a rejection of defendants’ offer.

We further find that the parties considered plaintiff’s signature of a written agreement to be an essential term of a final settlement; thus, plaintiff’s failure to sign an agreement is fatal to finding an enforceable contract between the parties.

Accordingly, we rule that the facts fail to establish that the parties reached a final settlement of all claims and issues. Motion to enforce settlement denied.

Priess v. Wine and Design Franchise, LLC (Lawyers Weekly No. 020-065-18, 13 pp.) (Gregory McGuire, J.) 2018 NCBC 86

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