Secure Your Settlement by Putting it in Writing

The Utah Supreme Court has reminded the bar in McKelvey v. Hamilton, 2009 UT App 196, __ P.3d __, that confirming an understanding between parties, especially anything that resembles a settlement or agreement as to a particular issue, is likely only enforceable if it is memorialized in writing.  A little background.  You may recall from last year, in Moss v. Parr Waddoups Brown Gee & Loveless, 2008 UT App 405, 197 P.3d 659, that the Utah Court of Appeals refused to enforce a verbal settlement agreement reached during mediation.  The court also refused to allow the mediator to testify concerning the parties’ agreement because the mediator does not constitute an agent for purposes of a party-opponent admission and the existence of the contract was “premised upon the truth of the mediator’s statements.”  Id. ¶¶ 17-18.

In McKelvey, the court examined an alleged agreement among counsel to partially settle a family estate dispute.  Counsel for the McKelvey and Hamilton (Benson Hathaway and Mark Morris, respectively) verbally discussed and agreed to terms for settling the majority of the claims and establishing a procedure for agreeing on a business appraiser.  Mr. Morris followed up the conversation with a letter outlining the parties’ agreement.  Mr. Hathaway responded by letter and identified potential appraisers but did not deny the existence of the agreement, add any terms, or object to any of the stated terms.  Mr. Hathaway later withdrew as counsel and McKelvey subsequently denied that settlement of any issues had been reached.  The district court enforced the agreement that was first verbally agreed upon and later memorialized in the parties’ correspondence.  The court found that the Mr. Hathaway’s and Mr. Morris’s correspondence was sufficient to satisfy the basic requirements for a contract, i.e., offer and acceptance.  As to the assertion that Mr. Morris’ letter was hearsay, the court distinguished Moss and determined that his “letter is clearly admissible because it is proof in itself of a verbal act of contract and is not inadmissible on any other grounds.”

When you were a young attorney, you likely received counsel from seasoned attorneys that any verbal agreement should be memorialized in writing.  McKelvey illustrates this point.  You may have great respect for the honesty and integrity of the attorney on the other side, however, that attorney’s client may not have any such integrity and, in litigation, you can count on it.  Also, counsel who you respect and trust and who may be your best friend may not always be counsel on the other side.  Also, legitimate disagreements as to what was said can arise, especially with the passage of time.  Take the time to put your agreement or understanding in writing and avoid any dispute or at least ensure (hopefully) that the court will see it your way.  Good luck.

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