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Law & Litigation Blog

What If You Settle But The Other Side Doesn't Comply With The Settlement Agreement?

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If you have ever been in the following situation as either a litigant or an attorney, you know how absolutely exasperating it is: you settle a lawsuit but the other side refuses to comply with the agreement reached. Maybe the settlement was that the other side would pay you a certain amount of money in exchange for dismissing your lawsuit but they haven't paid. Maybe the other side agreed to do something but now refuse to do it. You follow up with them, to no avail. You now must involve the Court.

Obviously, you should always check the Court's local rules and all other applicable procedural rules, but you simply have to file a Motion with the Court (assuming the case has not yet been dismissed, in which case you may have to file a new lawsuit). I recently had to move to enforce a settlement in a case in Hamilton County, Ohio. I represented the Plaintiff in an "auto fraud" lawsuit against a local used car dealer. After a few months, we mediated the case and reached a settlement wherein the dealer agreed to pay my client a sum of money, cover her attorney fees, take the car back, and pay off the remainder of her loan. Fair settlement. But then the dealer didn't comply. 

The dealer paid the first installment, a modest amount, and paid off my client's loan. But after my client returned the vehicle, the dealer became upset about the condition it was in (bear in mind the lawsuit alleged that the car was a total piece of crap, with latent structural and mechanical issues that made it unsafe to drive). The dealer asserted that it was entitled to an "offset" of the amount owed due to the condition of the vehicle. But the settlement agreement signed after mediation did not require my client to return the car in any sort of good condition. Everyone was frustrated. We filed a Motion seeking to enforce the settlement agreement. Oral argument ensued, and the Judge later scheduled a full-out oral hearing. In the end, we won and the dealer was required to pay the remainder of the amount owed. We then filed a Motion seeking sanctions and attorney fees for having to move to enforce the settlement agreement, which was ultimately granted by Agreed Entry.

If you need to file a Motion to enforce a settlement agreement, I can save you some time. Here is some language that litigants can use in Ohio Courts in a Motion to Enforce Settlement Agreement:

There is no question that settlement is preferred by Ohio courts. "[A] settlement agreement is a binding contract designed to terminate a claim by preventing or ending litigation…" Riordan's Sporting Good, Inc. v. Riordan's Sports & Equipment, (2003) W.L. 21689860, ¶11. A party seeking to enforce a settlement agreement must simply “prove consensus on all 'essential terms' of a contract before it can obtain judicial enforcement of the deal." Minster Farmers Coop. Exch. v. Meyer, (2008) 117 Ohio St. 3d 459. In general, the elements of a contract include an offer, acceptance, consideration, a manifestation of mutual assent, and legality of object and consideration. Aside from the essential elements of a contract, "terms of an oral contract may be determined from 'words, deeds, acts, and silence of the parties.'" Tepper v. Heck, 1992 W.L. 369283, ¶15 (8th Dist. 1992). Lastly, under Ohio contract law, a court must give effect to the contract’s express terms in determining the rights and objectives of the parties and cannot, in effect, create a new contract by finding an intent not expressed in the clear language used by the parties. Seminatore v. Medical Mut. of Ohio, 136 Ohio App. 3rd 758, 762 (8th Dist. 2000). 

At issue here is the fact that Defendants are attempting to add an additional term to the settlement, after the parties reached a final agreement. Specifically, Defendants seek to add the term that [explain term the other party seeks to add]. First, there is no question that the parties have reached a settlement in this case. The terms of that settlement are embodied in the settlement agreement signed by the parties and counsel. Defendants cannot possibly dispute this fact. The Court cannot now add a material term that the parties did not agree to and did not include in their written settlement agreement. Even if Defendants thought Plaintiff was agreeing to a term that was never discussed, “unilateral mistake” would not allow Defendants to avoid their obligations under the contract/settlement agreement. See Shanker v. Columbus Warehouse Limited Partnership, 1997 W.L. 142723 (10th Dist. 1997) (finding that one of the parties had a "misunderstanding" regarding the rights assigned to a party personally versus the rights assigned to a corporate defendant, but nonetheless enforcing the settlement agreement against that party, holding that “appellants’ mistaken misunderstanding…did not vitiate the contract”); Citizens Federal Bank v. Moncarz, May 31, 1995, Hamilton App. Nos. C- 940300 and C-940301 (In general, a party cannot avoid a contract due to a unilateral mistake); Carucci v. John Hancock Mutual Life Insurance Co., (1968) 15 Ohio App. 2d 1 (Relief for unilateral mistake of a material fact will be denied where the mistake is the result of the party's own negligence). 

Furthermore, pursuant to the parol evidence rule, evidence of the alleged representations claimed by Defendants is barred. Under the settlement agreement, [explain what the settlement agreement says]. Pursuant to the parol evidence rule, even if there HAD been representations about [subject] (which there were not), evidence of such would be inadmissible. “The parol evidence rule states that ‘absent fraud, mistake or other invalidating cause, the parties' final written integration of their agreement may not be varied, contradicted or supplemented by evidence of prior or contemporaneous oral agreements, or prior written agreements.’” Galmish v. Cicchini, 90 Ohio St.3d 22, 27, 2000-Ohio-7, 734 N.E.2d 782, 788 (2000), citing 11 Williston on Contracts (4 Ed.1999) 569-570, Section 33:4. “The parol evidence rule is a rule of substantive law which, when applicable, defines the limits of a contract.” Id., citing Charles A. Burton, Inc. v. Durkee(1952), 158 Ohio St. 313, 324, 49 O.O. 174, 179, 109 N.E.2d 265, 270. As such, the parol evidence rule would bar Defendants’ claims regarding supposed oral representations that were not included in the written agreement.

 

Alex Durst is a Cincinnati civil litigation attorney and appellate attorney with The Durst Law Firm. Licensed in Ohio, Alex has also practiced in Missouri, Florida, Indiana, California, Nevada, Massachusetts, and Kentucky. Alex can be reached at (513) 621-2500 or alex@durstlawfirm.com.