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Appellate court upholds enforcing settlement agreement

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The Indiana Court of Appeals affirmed a Marion Superior judge’s decision to enforce a disputed settlement agreement, finding the parties agreed to the essential terms resolving the issues between them.

Debra Sands filed a complaint in Wisconsin against Menard Inc.; John Menard Jr., the founder and majority owner of the home-improvement chain Menard’s; and Indiana-based companies MH Equity and MH Equity Managing Member, seeking a portion of the assets accumulated while she lived with Menard. MH Equity Managing Member then filed a suit against Sands in Marion Superior Court alleging she breached a fiduciary duty by serving as the attorney for MH Equity and Managing Member and taking $170,000 for legal services when she wasn’t licensed to practice in Indiana.

The attorney for MH Equity and Managing Member, Steven Shockley, contacted Sands’ attorney, Daniel Shulman, and proposed the parties dismiss the claims in the Wisconsin and Indiana courts with prejudice. Shulman accepted the offer and also proposed drafting mutual releases. Shulman had another attorney draft a stipulation for dismissal and a mutual release on the Indiana case and asked Shockley to do the same for the Wisconsin case.

The draft stipulation from Sands’ counsel didn’t include a signature block for Menard or the other Menard defendants, which Shockley took issue with because he didn’t believe that complied with Wisconsin Rule 807.05. Sands’ counsel accepted Shockley’s changes to the stipulation, but didn’t believe that all parties had to execute the stipulation. The parties never signed a final agreement.  

Sands then filed a motion to enforce settlement in the Wisconsin suit and that court entered an order of enforcement. She then moved to enforce the settlement in the Indiana case, which the trial court also granted, noting the settlement agreement should be respected as a matter of comity here.   

Managing Member appealed, arguing that the Marion Superior Court improperly exercised comity. While the trial court purportedly found comity appropriate, it actually addressed the merits of the matter before it and held that an enforceable agreement had been reached, wrote Judge L. Mark Bailey in MH Equity Managing Member, LLC v. Debra K. Sands, No. 49A02-1005-CC-495. The Indiana court was enforcing the provision for dismissal of the claim pending in Indiana, which the Wisconsin court had expressly left for disposition here, he continued.

The appellate court also found that a contract had been formed, despite Managing Member’s claim that no contract was formed because the proposal for settlement by respective dismissals weren’t met with “mirror-image” acceptance but a counteroffer including an additional term.

The parties agreed to the essential terms resolving the issues between the parties – to dismiss with prejudice the claims in Wisconsin and Indiana courts. Even though the parties’ communications didn’t “mirror” each other and Sands’ attorney proposed a new term by proposing the execution of releases, Managing Member’s counsel readily agreed to the execution of the releases.

“Two trial courts have made the factual determination that Managing Member and Sands expressed assent to the material term of dismissal with prejudice of the Indiana action against Sands and the Wisconsin action against MH Equity,” wrote Judge Bailey. “The communications of the parties’ attorneys contemplated the execution of mutual releases; thus, they contemplated a subsequent document. However, there is no evidence that the release document would have modified any substantial term of the settlement agreement.”

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