David v. Warwell

CATHELL, Judge. Appellants (Davids/lessors) and appellees (Warwells/lessees) entered into a lease agreement in August of 1987. Attached to the lease agreement was an addendum as to a ³⁰⁸ purported option to purchase. In pertinent part, that addendum provided: The Lessees will have the first Option of refusal On Sale of the property.

The Lessees will (at their option) exercise the option to buy the property ($79,900) within the lease period or renewal, extension or any additional lease between the parties.[ 1 ] Disputes occurred which resulted in the lessors, the appellants, filing a suit against a tenant holding over and the appellees, lessees, filing suit for specific performance of the option and for breach of contract. Eventually the suits were consolidated, and ultimately a hearing was held on a Motion to Enforce Settlement filed by appellees. 2 The Warwells argued below that the attorneys for the parties had agreed to settle the litigation and that an executed contract for the sale was to be performed by the Davids to effectuate that settlement. The Davids’ attorney responded that the Davids had decided not to settle on the terms that had been discussed by counsel. After the Motion to Enforce Settlement was filed, but before the hearing, the Warwells’ attorney communicated with the Davids (the Davids were then unrepresented).

That letter appears to have contained a further settlement agreement or efforts to settle the litigation. Thereafter, the first Motion to Enforce Settlement was granted; that settlement order was subsequently rescinded. Ultimately a hearing was held on the subsequent Motion to Enforce Settlement. The Davids contested the settlement, asserting that such an agreement did not exist, contending that the purported agreement was not suffi ³⁰⁹ ciently specific and lacked necessary terms and conditions.

They further argued that even if agreement had been reached, it was dependent upon a further agreement as to a subsequent writing which was never realized. They also contended that the subsequent writing was legally required in order to satisfy the statute of frauds. Most importantly, the appellant pointed out to the trial court that: There is no evidence being taken, no witnesses have testified that my clients entered into a settlement agreement. Mr. Ward (prior counsel for the Davids) wasn’t called.

Mr. David wasn’t called. We have (only) argument to this extent today. [Parenthetical material in original.] Appellants contend that: 1. An oral agreement, for purposes of a motion to enforce a settlement pertaining to the purchase of real property, was subject to disavowal under the statute of frauds because it contemplated the execution of a formal written document. 2. Sufficient evidence was not presented to the trial court to establish the existence of an oral or written settlement agreement pertaining to the purchase of real property.

The General Rule on Enforcement of Settlement Agreements The settlement of litigation has long been a favored method of resolving disputes. The Court of Appeals, as early as the case of Stiles v. Brown, 1 Gill 350 (1843), stated: It has been admitted by the counsel for the appellant, that if we should believe from the mutual allegations of the parties, and from the evidence adduced, that they had stated and settled an account between them, the appellants cannot claim a decree at our hands. This admission is in strict conformity with the rules of equity governing bills to account. ³¹⁰ By the testimony which the record furnishes we feel ourselves led conclusively to the opinion that the parties settled and adjusted their claims by the note of 13th October, 1832. This of course forecloses an enquiry into all antecedent transactions, unless upon the ground of error or fraud, and we perceive no evidence of either in the record.

Id. at 356, 358 . In another early case, McClellan v. Kennedy, 8 Md. 230, 248 (1855), quoting from 1 Story’s Eq. secs. 131, 132, the Court said: If compromises are otherwise unobjectionable they will be binding, and the rights will not prevail against the agreement of the parties, for the right must always be on one side or the other, and there would be an end of compromises if they might be overthrown upon any subsequent ascertainment of right contrary thereto. “The doctrine of compromises rests on this foundation.” More recently, the Court of Appeals addressed the issue of settlement agreements in Clark v. Elza, 286 Md. 208 , 406 A.2d 922 (1979), where Judge Eldridge, for the Court, stated: Moreover, it is logical to hold that executory accords are enforceable. An executory accord is simply a type of bilateral contract. As long as the basic requirements to form a contract are present, there is no reason to treat such a settlement agreement differently than other contracts which are binding.

This is consistent with the public policy dictating that courts should “look with favor upon the compromise or settlement of law suits in the interest of efficient and economical administration of justice and the lessening offriction and acrimony.” Chertkof v. Harry C. Weiskittel Co., 251 Md. 544, 550 , 248 A.2d 373 (1968), cert. denied, 394 U.S. 974 , 89 S.Ct. 1467 , 22 L.Ed.2d 754 (1969). Id. at 219, 406 A.2d 922 (emphasis added). This Court recognized the general policy in Eastern Environmental Endeavor, Inc. v. Industrial Park Authority ³¹¹ of Calvert County, 45 Md.App. 512, 516 , 413 A.2d 1355 (1980), where we said: “One year after Horst[ 3 ] the Court of Appeals announced a favorable policy with regard to the compromise or settlements of law suits in the interest of efficient and economical administration of justice and the lessening of friction and acrimony.” (Citations omitted.) See also Welsh v. Gerber Products, 315 Md. 510, 524 , 555 A.2d 486 (1989). “It is well established that forbearance to exercise a legitimate right or claim is sufficient consideration to support an agreement.” Beall v. Beall, 291 Md. 224, 230 , 434 A.2d 1015 (1981). The federal courts and other courts have looked with favor on the formulation of a policy encouraging the settlement of litigated issues.

The United States District Court in Mungin v. Calmar Steamship Corp., 342 F.Supp. 484 (D.Md.1972), was faced with a case which involved an insurance claim that had resulted in litigation. After litigation had commenced, an agreement of settlement was allegedly reached. As in the case at bar, the matter proceeded on a Motion to Enforce Settlement. The Court said at 485: It is well established that this Court has inherent power to summarily enforce settlement agreements entered into in an action pending before it____ As a general principle, the settlement of disputes is favored by the courts. [T]hat a settlement agreement enjoys great favor with the courts; consequently it is only in the most extraordinary circumstances that such a pact will be vacated for the general principle is that “a settlement agreement ... voluntarily entered into cannot be repudiated by either party and will be summarily enforced by the Court.” [Citation omitted.] ³¹² In Autera v. Robinson, 419 F.2d 1197, 1199 (D.C.Cir.1969), the Court opined: Voluntary settlement of civil controversies is in high judicial favor____ When the effort is successful, the parties avoid the expense and delay incidental to litigation of the issues; the court is spared the burdens of a trial and the preparation and proceedings that must forerun it.

By the same token, there is everything to be gained by encouraging methodology that facilitates compromise. [Footnotes omitted.] See also Brown v. Brown, 343 A.2d 59 (D.C.1975) (the law favors the settlement of controversies). We thus accept, as we must, that agreements to settle litigation are favored. We now address the specific issues raised by the appellant. I An oral agreement, for purposes of a motion to enforce a settlement pertaining to the purchase of real property, was subject to disavowal under the statute of frauds because it contemplated the execution of a formal written document.

Appellant asserts that the arguments of counsel before the hearing judge would support a finding that, even if the parties had agreed to settle, the alleged agreement contemplated a written agreement executed by the parties which would finalize the terms not already finalized. They argue that as no such written agreement was made, settlement had not in fact occurred. They further argue that, even if an oral agreement involving the conveyance of land had occurred, it would be unenforceable unless it was in writing to satisfy the requirements of the statute of frauds. There was an option to purchase realty in the case of Beall, 291 Md. 224 , 434 A.2d 1015 .

The Court examined the effect of the statute of frauds: An option to purchase land concerns the sale of land and is, therefore, governed by the statute of frauds____ ³¹³ In sum, we have stated that the statute of frauds requires a memorandum for the sale of real estate to contain all the elements of a valid contract. Totally absent from the 1975 memorandum is any recitation of consideration for Calvin and Cecilia’s extension of their offer to sell for three additional years.... Carlton argues, however, that the extension contract is nevertheless enforceable in his action for specific performance under the equitable doctrine of part performance. He asserts that the consideration for the extension was his forbearance upon exercising his 1971 option, which, in October 1975, was good until February 1976.

It has generally been accepted in Maryland that forbearance to exercise a legal right is sufficient consideration to support a promise. Id. at 228-30 , 434 A.2d 1015 (citations omitted). We addressed a statute of frauds issue similar to the one raised in the case at bar in Litzenberg v. Litzenberg, 57 Md.App. 303 , 469 A.2d 1279 (1984) (Litzenberg I), saying: In contending that the settlement agreement does not comply with the statute of frauds and, therefore, is unenforceable, appellant correctly notes that the agreement contemplates the transfers of two interests in land.... Admissions of a party in testifying, though in form evidence, are in essence not mere evidence, but make evidence against him unnecessary....

We think the Statute of Frauds requires no more. Furthermore, admissions of a party in the form of testimony would constitute sufficient “memoranda” under Section 4 or Section 17, or “writings” under Section 7, of the statute. For this purpose we think recorded testimony should be regarded as equivalent to signed depositions. ³¹⁴ Such statements would be sufficient to constitute admissions for the purpose of satisfying the statute of frauds if, in fact, Mr. Lockhart was authorized to enter into the agreement. If he had such authority, any document that he would have signed for appellant would have satisfied the Statute of Frauds.

It follows then ... that if Mr. Lockhart’s signing of a document would satisfy the statute, then the admissions in his testimony would also satisfy the statute. Thus, we hold that Mr. Lockhart’s testimony may satisfy the signed writing requirement of the Statute of Frauds. While having trial counsel testify in the proceeding “is looked on with disfavor except in unusual circumstances, ... such testimony is not inadmissible....” Such testimony is particularly relevant on issues concerning the validity, formation, and enforcement of settlement agreements. Id. at 315-17 , 469 A.2d 1279 (citation omitted).

We then remanded the matter to the trial court because of procedural inadequacies. After the remand, a motion to enforce the settlement agreement was made at the trial court. The wife opposed it, raising the statute of frauds defense. The trial court granted the husband’s motion to enforce.

We affirmed in an unreported opinion (Litzenberg II). The Court of Appeals issued its writ of certiorari on the wife’s petition. That Court reversed in Litzenberg v. Litzenberg, 307 Md. 408 , 514 A.2d 476 (1986) (Litzenberg III). It first opined: This Court has held that various sections of . the 1677 Statute of Frauds or modern versions thereof, are satisfied by admissions in the form of sworn testimony in court or on deposition, or in an answer to a complaint....

Id. at 415 , 514 A.2d 476 . It then stated: The party to be charged can satisfy the above rule by making the admissions through an agent. For example, testimony in court by an authorized officer of a corpora ³¹⁵ tion who acknowledges an oral contract on which the corporation is charged would satisfy the statute. In the case before us, however, Lockhart was not the agent of Dorothy when he acknowledged the settlement agreement in his testimony.

His testimony is not an in-court admission by Dorothy. [Id. at 417, 514 A.2d 476 , footnote omitted.] Our cases also make it clear that the Statute of Frauds, at least as it applies to executory land contracts, is