Duff v. McKay
89 Mass. App. Ct. 538
| Mass. App. Ct. | 2016Background
- In 2010 the Duffs hired the defendants for a home renovation; disputes over workmanship and permits followed.
- The Duffs initiated arbitration under the state program in May 2012; on March 21, 2013 counsel exchanged emails memorializing settlement terms including a $27,500 payment and mutual releases.
- Defendants’ counsel confirmed the listed terms by email; counsel for the Duffs then notified the arbitrator that the parties had reached a settlement and would prepare a formal agreement.
- Over the next ~2½ weeks the parties negotiated a final written agreement but disagreed only about the timing of payment (Duffs demanded immediate payment on signing; defendants proposed $17,500 immediately and $10,000 in three weeks).
- The Duffs withdrew from arbitration and filed suit in Superior Court on their underlying claims instead of alleging a breach of the settlement; defendants moved to enforce the settlement and to dismiss.
- The Superior Court granted enforcement and entered judgment requiring payment; Duffs appealed. The appellate court affirmed, holding the March 21 email exchange formed an enforceable settlement and any delay in payment was not a material breach permitting repudiation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parties formed an enforceable settlement despite no agreed payment date | Duff: absence of a specific payment date made agreement too indefinite to be binding | Defs: essential terms were agreed; payment timing was a subsidiary term that could be reasonably fixed | Court: Enforceable contract existed; missing date was not a material term and could be supplied by customs or reasonableness |
| Whether parties intended to be bound before a formal signed document | Duff: agreement was contingent on execution of final written agreement | Defs: parties manifested present intent; counsel’s unqualified report to arbitrator evidenced intent to be bound | Court: Parties intended to be bound when agreement was reported; execution was intended as memorialization, not a condition precedent |
| Whether defendants’ proposed delayed payment (three weeks) constituted a material breach justifying repudiation | Duff: defendants breached by refusing immediate payment; breach justified rescission | Defs: proposed staggered payment was reasonable and immaterial | Court: Delay was not a material breach; remedy would be enforcement/damages, not repudiation |
| Standard of review for motion to enforce prelitigation settlement | Duff: motion should be treated like summary judgment and reviewed de novo; evidentiary hearing required | Defs: courts have leeway to enforce settlements; summary disposition appropriate | Court: Treated as summary-judgment–style review and applied de novo review; affirmed enforcement on the merits |
Key Cases Cited
- Sparrow v. Demonico, 461 Mass. 322 (settlement agreements are contracts evaluated under general contract law)
- Fecteau Benefits Group, Inc. v. Knox, 72 Mass. App. Ct. 204 (motions to enforce settlement are permissible; email agreements can be binding)
- Fidelity & Guar. Ins. Co. v. Star Equip. Corp., 541 F.3d 1 (courts have authority to enforce settlements and resolve open issues summarily)
- Targus Group Intl., Inc. v. Sherman, 76 Mass. App. Ct. 421 (enforceability requires sufficiently definite terms and present intent to be bound)
- Situation Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875 (undefined terms do not necessarily preclude contract formation)
- McCarthy v. Tobin, 429 Mass. 84 (missing subsidiary terms may be resolved by industry norms without defeating agreement)
- Basis Technology Corp. v. Amazon.com, Inc., 71 Mass. App. Ct. 29 (email exchanges can form clear and complete settlement agreements; reports to a tribunal indicate seriousness)
- Lease-It, Inc. v. Massachusetts Port Authy., 33 Mass. App. Ct. 391 (only material breaches justify rescission; immaterial breaches permit damages/enforcement)
- K.G.M. Custom Homes, Inc. v. Prosky, 468 Mass. 247 (anticipatory breach and duty of good faith context for enforcement remedies)
- Rosenfield v. United States Trust Co., 290 Mass. 210 (no contract where parties did not agree on all material terms)