Earline WADDLE v. Lorene B. ELROD.
Supreme Court of Tennessee, at Nashville.
April 24, 2012.
Feb. 15, 2012 Session.
Mary Beth Hagan and John T. Blankenship, Murfreesboro, Tennessee, for the appellee, Earline Waddle.
OPINION
CORNELIA A. CLARK, C.J., delivered the opinion of the Court, in which JANICE M. HOLDER, GARY R. WADE, WILLIAM C. KOCH, JR., and SHARON G. LEE, JJ., joined.
In this appeal we must determine whether the Statute of Frauds,
Facts and Procedural History
On January 29, 2007, Regent Investments 1, LLC (“Regent“) sued octogenarian Earline Waddle,1 and her niece, Lorene Elrod. According to the allegations of the complaint, Regent contracted to purchase from Ms. Waddle approximately four acres of real property located at 2268 Prim Lane, in Rutherford County, Tennessee (“the Prim Lane property“), for $230,000. Regent paid Ms. Waddle $10,000 earnest money when the contract was signed. However, in preparing to close the deal, Regent learned of a quitclaim deed by which Ms. Waddle had conveyed one-half of her interest in the Prim Lane property to Ms. Elrod. Regent sued Ms. Waddle, alleging breach of contract, fraud, and intentional and negligent misrepresentation. Regent requested specific performance, $1,000,000 in damages, attorney‘s fees, costs, and pre-judgment interest. Regent also asked the trial court to set aside the quitclaim deed, arguing that Ms. Elrod had wrongfully obtained her one-half interest by exercising undue influence over Ms. Waddle.
On May 14, 2007, Ms. Waddle filed a cross-claim against Ms. Elrod, also alleging that Ms. Elrod had acquired her one-
On July 10, 2007, Ms. Elrod filed an answer to the cross-claim, denying all allegations of undue influence and wrongdoing and arguing that the assistance she had provided Ms. Waddle served as consideration for the quitclaim deed.
On April 28, 2009, Regent agreed to dismiss with prejudice its claims against Ms. Waddle and Ms. Elrod. In exchange, Ms. Waddle agreed3 to return Regent‘s $10,000 earnest money, and both Ms. Waddle and Ms. Elrod agreed that Regent would not be responsible for any portion of the court costs.4 Ms. Waddle‘s cross-claim against Ms. Elrod remained pending, however, with a jury trial scheduled for June 2 to June 4, 2009.
The day before trial, Ms. Elrod‘s attorney, Mr. Gregory Reed, advised Ms. Hagan, counsel for Ms. Waddle, that Ms. Elrod was willing to return her one-half interest in the Prim Lane property to avoid going to trial if Ms. Waddle would settle the case and release all other claims against her. Through her attorney, Ms. Waddle agreed to settle the case on the condition that she would not be responsible for any of the court costs. Around 4:00 p.m., Mr. Reed advised Ms. Hagan that Ms. Elrod had agreed to settle the case with Ms. Waddle‘s condition. At 4:34 p.m., Ms. Hagan sent the following email to Mr. Reed:
Greg,
This confirms that we have settled this case on the following terms:
Elrod deeds property interest back to Waddle, Both [sic] parties sign full release, Waddle bears no court costs.
Let me know if I have correctly stated our agreement.
Thanks,
Mary Beth
At 5:02 p.m., Mr. Reed responded:
That is the agreement. I understand that you will draft the deed and take a shot at the court‘s order. No admission of guilt is to be included.
Greg Reed
The attorneys thereafter advised the trial court of the terms of the agreement. Believing that a settlement had been reached and that a written order memorializing the settlement would be entered later, the trial court cancelled the jury trial and excused prospective jurors. Counsel for Ms. Waddle prepared and forwarded the settlement documents to counsel for Ms. Elrod. Ms. Waddle, understanding that the settlement had returned sole ownership of the Prim Lane property to her, paid all outstanding property taxes. Approximately three weeks later, however, Ms. Elrod advised her attorney that she had changed her mind and no longer wanted to settle the case. When Ms. Elrod refused to sign the settlement documents, Mr. Reed moved to withdraw from further representation, and the trial court granted Mr. Reed‘s motion.
On July 13, 2009, Ms. Waddle filed a motion asking the trial court to enforce the settlement agreement. On September 2, 2009, Ms. Elrod filed a response, arguing that the discussions on June 1, 2009, resulted merely in an agreement to agree, with many important material terms unresolved. Alternatively, Ms. Elrod argued that the Statute of Frauds,
Following a hearing, the trial court entered an order on September 15, 2009, enforcing the settlement agreement. The trial court found that Ms. Elrod had agreed through her attorney and authorized agent to settle the case on the terms set out in the June 1, 2009 email. As a result, the trial court divested Ms. Elrod of any right, title, or interest in the Prim Lane property and vested ownership of the property in Ms. Waddle. The trial court also dismissed with prejudice Ms. Waddle‘s remaining claims against Ms. Elrod, ordered each party to bear her own attorney‘s fees and discretionary costs, and taxed court costs to Ms. Waddle. The trial court‘s order did not expressly address either Ms. Elrod‘s argument that the Statute of Frauds precluded enforcement of the settlement or Ms. Waddle‘s argument that the emails constituted writings signed by the party to be charged under the UETA and satisfied the Statute of Frauds.
Ms. Elrod appealed, but she did not challenge the trial court‘s factual finding that the parties had reached an agreement to settle the case. Rather, she argued that the Statute of Frauds precludes enforcement of the settlement agreement. The Court of Appeals rejected this argument and affirmed the trial court‘s judg-
We granted Ms. Elrod‘s application for permission to appeal.
Standard of Review
The issue before this Court is whether the Statute of Frauds applies to a settlement agreement that requires the transfer of an interest in real property. This is an issue of statutory construction, which we review de novo with no presumption of correctness. See Brundage v. Cumberland Cnty., 357 S.W.3d 361, 364 (Tenn.2011). Similarly, whether a writing is sufficient to satisfy the Statute of Frauds is a question of law subject to de novo review. Blair v. Brownson, 197 S.W.3d 681, 683 (Tenn.2006) (citing Holms v. Johnston, 59 Tenn. (12 Heisk.) 155, 155 (1873)).
Analysis
As the Court of Appeals recognized, Ms. Elrod does not dispute that the parties reached an agreement;6 rather, she argues that the Statute of Frauds applies and precludes enforcement of the settlement agreement because it required the transfer of an interest in real property. In contrast, Ms. Waddle argues that the Court of Appeals’ judgment should be affirmed because the relevant portion of the Statute of Frauds applies only to contracts for the sale of land. Alternatively, Ms. Waddle maintains that the emails counsel exchanged and the legal description of the Prim Lane property in Ms. Waddle‘s cross-claim satisfy the Statute of Frauds.
A settlement agreement made during the course of litigation is a contract between the parties, and as such, contract law governs disputes concerning the formation, construction, and enforceability of the settlement agreement. See Barnes v. Barnes, 193 S.W.3d 495, 498 (Tenn.2006); Ledbetter v. Ledbetter, 163 S.W.3d 681, 685 (Tenn.2005); Sweeten v. Trade Envelopes, Inc., 938 S.W.2d 383, 385 (Tenn.1996); Envtl. Abatement, Inc. v. Astrum R.E. Corp., 27 S.W.3d 530, 539 (Tenn.Ct.App. 2000). Like other contracts, a settlement agreement may be subject to the Statute of Frauds. The Statute of Frauds precludes actions to enforce certain types of parol contracts unless the action is supported by written evidence of the parties’ agreement.
The settlement agreement in the present case requires a conveyance of real property. With respect to real property, Tennessee‘s Statute of Frauds provides:
No action shall be brought ... [u]pon any contract for the sale of lands, tenements, or hereditaments, ... unless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person lawfully authorized by such party. In a contract for the sale of lands, tenements, or hereditaments, the party to be charged is the party against whom enforcement of the contract is sought.
The primary purpose of the Statute of Frauds is to reduce the risk of fraud and perjury associated with oral testimony. See, e.g., Cobble, 230 S.W.2d at 196; Yates v. Skaggs, 187 Tenn. 149, 213 S.W.2d 41, 43 (1948). The Statute of Frauds also fosters certainty in transactions by ensuring that contract formation is not “based upon loose statements or innuendoes long after witnesses have become unavailable or when memories of the precise agreement have been dimmed by the passage of time.” Price, 682 S.W.2d at 932 (citing Boutwell v. Lewis Bros. Lumber Co., 27 Tenn.App. 460, 182 S.W.2d 1, 3 (1944)). Another purpose of the Statute of Frauds is to protect property owners against “hasty or inconsiderate agreements concerning a valuable species of property” and “misunderstandings as to the nature and extent of such agreements.” Brandel v. Moore Mortg. & Inv. Co., 774 S.W.2d 600, 604 (Tenn.Ct.App.1989).
While this Court has long emphasized that the Statute of Frauds should be strictly adhered to and construed to accomplish its intended purposes, Newman v. Carroll, 11 Tenn. (3 Yer.) 18, 26 (1832), the Statute of Frauds is an affirmative defense. See
The word “sale,” used in the statutory phrase “contract for the sale of lands, tenements, or hereditaments,”8 has long been broadly interpreted to mean any alienation of real property, including even a donation of realty. Bailey, 143 S.W. at 1127. This Court has previously explained that such a broad construction is consistent both with the purposes of the Statute of Frauds and with the common law understanding of the term:
The word “sale” in our statute of frauds (section 3142, Shannon‘s Code)9 means alienation, and an action on a parol contract made by the owner binding him to give or donate land to another, would, we think, fall within the terms of that statute. A contrary holding would open a wide door to perjury and fraud, and defeat, as we think, one of the purposes of the statute.
....
Plaintiff insists that a parol donee of land does not, in legal contemplation, stand upon a parity with a parol vendee.... We cannot assent to this proposition.... At common law the word “purchase” in its largest and most extensive sense is defined by Littleton to be the possession of lands and tenements which a man hath as by his own act or agreement, and not by descent by any of his ancestors or kindred. In this sense it is contradistinguished from acquisition by right of blood, and includes every other method of coming to an estate but merely that of inheritance, wherein the title is vested in a person, not by his own act or agreement, but by the single operation of law. And says Mr. Blackstone: “Purchase, indeed, in its vulgar and confined acceptation, is applied only to such acquisitions of land as are to be obtained by way of bargain and sale for money, or some other valuable consideration; but this falls far short of the legal idea of purchase, for if I give land freely to another, he is in the eyes of the law a purchaser, and falls within Littleton‘s definition, for he comes to the estate by his own agreement; that is, he consents to the gift.”
Bailey, 143 S.W. at 1127-28 (footnote added).
In the century since Bailey, the Tennessee General Assembly has not amended the Statute of Frauds to ascribe a more narrow meaning to the word “sale.” Relying on a legal dictionary, Ms. Waddle asks this Court to construe “sale” as meaning “[t]he transfer of property or title for a price ... in money paid or promised.” See Black‘s Law Dictionary 1364 (8th ed.2004) (emphasis added). However, Ms. Waddle has failed to provide any persuasive rationale for overruling Bailey, and we decline to do so. Applying Bailey, we conclude that the Court of Appeals erred by holding that the Statute of Frauds does not apply to this settlement agreement.
While this Court has not previously decided whether the Statute of Frauds applies to settlement agreements requiring the transfer of an interest in real property,
Consistent with the rule applied by a majority of jurisdictions, we hereby hold that the Statute of Frauds applies to any settlement agreement requiring a transfer of an interest in real property. See, e.g., Nicholson v. Barab, 233 Cal.App.3d 1671, 285 Cal.Rptr. 441, 447-49 (1991) (holding that the Statute of Frauds applies to parol judicially supervised settlement agreements requiring the transfer of an interest in real property); Perimeter Inv., Inc. v. Amerifirst Dev. Co., 423 So.2d 586, 587 (Fla.Dist.Ct.App.1982) (holding that the Statute of Frauds applies to parol settlement agreements requiring the transfer of an interest in real property); Ogden v. Griffith, 149 Idaho 489, 236 P.3d 1249, 1253 (2010) (applying the Statute of Frauds to a settlement agreement that called for a deed of trust but concluding that equitable estoppel permitted enforcement of the agreement); Schmidt v. White, 43 S.W.3d 871, 874 (Mo.Ct.App. 2001) (holding that a settlement agreement involving the transfer of an interest in real property is subject to the Statute of Frauds); Omaha Nat‘l Bank of Omaha v. Mullenax, 211 Neb. 830, 320 N.W.2d 755, 758 (1982) (“An alleged oral compromise and settlement agreement [involving a transfer of an interest in real property and] not made in open court is unenforceable where it is in violation of the [S]tatute of [F]rauds or in violation of a court rule requiring all stipulations and agreements of counsel or parties to a suit to be in writing, signed by the parties or their attorneys.“); Byblos Corp. v. Salem Farm Realty Trust, 141 N.H. 726, 692 A.2d 514, 516-17 (1997) (“[W]hen a settlement agreement includes the transfer of an interest in land, it necessarily implicates the [S]tatute of [F]rauds.“); Gogel v. Blazofsky, 187 Pa.Super. 32, 142 A.2d 313, 316 (1958) (“We therefore hold that the alleged oral [settlement] agreement [requiring a conveyance of realty] was unenforceable as being within the Statute of Frauds.“); Mangum v. Turner, 255 S.W.3d 223, 227 (Tex.Ct.App.2008) (reciting the general rule, but refusing to apply the Statute of Frauds because the settlement at issue did not involve the transfer of an interest in real property); see also 37 C.J.S. Frauds, Statute of § 104 (2008); 15B Am.Jur.2d Compromise and Settlement § 16 (2011). As the Nebraska Supreme Court explained: “It would be strange indeed if an agreement which would be unenforceable under the [S]tatute of [F]rauds were to become enforceable simply because the matter involved in the settlement agree-
We emphasize, however, that in determining whether the Statute of Frauds applies, courts must consider the terms of the settlement agreement, not the subject matter of the litigation. Settlement agreements arising from litigation that involves real property are subject to the Statute of Frauds only if the terms of the settlement agreement require the transfer of an interest in real property. See, e.g., Meyer v. Lipe, 14 S.W.3d 117, 120 (Mo.Ct.App.2000) (explaining that the Statute of Frauds does not apply to settlements which fix a disputed or uncertain boundary line because no conveyance of land or passage of title is involved, only an effort to clarify and give effect to the title the parties already possess); Mangum, 255 S.W.3d at 227 (refusing to apply the Statute of Frauds in a suit seeking rescission of three deeds because the terms of the settlement did not require the transfer of a real property interest). Because the settlement agreement herein required Ms. Elrod to transfer her one-half interest in the Prim Lane property to Ms. Waddle, the Statute of Frauds applies.
We next consider whether the Statute of Frauds bars enforcement of the settlement agreement at issue in this appeal. As already explained, parol contracts are enforceable if “some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith, or some other person lawfully authorized by such party.”
The general rule is that the memorandum, in order to satisfy the statute, must contain the essential terms of the contract, expressed with such certainty that they may be understood from the memorandum itself or some other writing to which it refers or with which it is connected, without resorting to parol evidence. A memorandum disclosing merely that a contract had been made, without showing what the contract is, is not sufficient to satisfy the requirement of the Statute of Frauds that there be a memorandum in writing of the contract.
Id. (quoting 49 Am.Jur. Statute of Frauds § 353, 363-64); see also Blair v. Snodgrass, 33 Tenn. (1 Sneed) 1, 25 (1853) (“The contract must be in writing, be certain in its terms, and be signed by the party to be charged with its performance. The form of the instrument is perfectly immaterial, as the statute of frauds merely requires that the contract, ‘or some memorandum or note thereof, shall be in writing.’ But the written evidence of the contract must be reasonably certain in itself, as to the estate intended to be sold, and the terms of sale, as parol evidence to supply a writing defective in this respect is inadmissible.“); Williams v. Buntin, 4 Tenn.App. 340, 347 (1927) (“[T]he memorandum or note required ... may be in two or more papers.... [I]t is not required that each paper of itself be sufficient in content to satisfy the statute.“).
Of course, even if one or more memoranda are produced sufficiently describing the terms of a parol agreement, the Statute of Frauds also requires that one of the writings be signed by the party to be charged or by some other person authorized to act on that party‘s behalf.
The [S]tatute [of Frauds] does not specify any particular form of signing. It merely requires that the party to be charged shall have signed the memorandum. It has been held that a cross mark is a good signature; also initials; even numerals, when used with the intention of constituting a signature; and a typewritten name or imprint made by a rubber stamp has the same effect; and this is equally true, though the typewriting or stamp impression be made by another, if the person to be charged has directed it.
....
This has been the law in England for more than a century, and has been followed quite generally in this country.
Id. at 794 (citations and internal quotation marks omitted).
While Gessler predates email, its holding appears broad enough to encompass typed names appearing in emails. However, we need not rely upon Gessler to determine whether the email that includes the name of Ms. Elrod‘s attorney satisfies the Statute of Frauds requirement of a writing signed by the party to be charged. In 2001 the General Assembly enacted the UETA. Ms. Waddle relied upon the UETA in the trial court when arguing that the email constituted a writing for purposes of the Statute of Frauds and that Mr. Reed‘s name on the email constituted the signature of an agent of Ms. Elrod, the party to be charged. She has continued to advance these arguments on appeal.10
The UETA “applies to electronic records and electronic signatures relating to a transaction.”
must be construed and applied to:
(1) Facilitate electronic transactions consistent with other applicable law;
(2) Be consistent with reasonable practices concerning electronic transactions and with the continued expansion of those practices; and
(3) Effectuate its general purpose to make uniform the law with respect to the subject of [the UETA] among states enacting it.
(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.
(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.
(c) If a law requires a record to be in writing, an electronic record satisfies the law.
(d) If a law requires a signature, an electronic signature satisfies the law.
Applying the foregoing principles, we conclude that the Statute of Frauds does not bar enforcement of the settlement agreement at issue in this appeal. The parties, through their attorneys, evidenced an intent to finalize the settlement by electronic means; thus, the UETA applies. See, e.g., Crestwood Shops, L.L.C. v. Hilkene, 197 S.W.3d 641, 651-53 (Mo.Ct.App. 2006) (holding that the UETA applied because the parties manifested their intent to conduct business by email). Pursuant to section
Additionally, under the principles discussed in Lambert, the emails, considered along with the legal description of the Prim Lane property in the cross-claim, described the terms of the parol agreement with sufficient specificity to satisfy the Statute of Frauds. In particular, the emails described the following four material terms of the settlement: (1) Ms. Elrod would convey her interest “in the property” back to Ms. Waddle; (2) each party would sign a release giving up any claims she may have had against the other party; (3) Ms. Waddle would not be responsible for court costs; and (4) Ms. Elrod would not admit guilt. Ms. Elrod‘s attorney confirmed the settlement, responding electronically “[t]hat is our agreement.” While the emails referred only to “the property,” the Prim Lane property was the only realty at issue in the litigation, and Ms. Waddle‘s cross-claim included a full legal description of the Prim Lane property.12 As stated in Lambert, a writing is sufficient if the terms of the agreement may be understood either from the writing itself or from some other writing connected with it. The emails and cross-claim satisfy this standard.
Furthermore, although Ms. Elrod did not sign the email, there is no dispute that Mr. Reed was acting as her agent when he negotiated the settlement. Had he written his signature on a printed version of the email, rather than typed his name at the
Conclusion
The Statute of Frauds applies to settlement agreements requiring the transfer of an interest in real property. However, the Statute of Frauds does not bar enforcement of the settlement agreement at issue in this appeal. The emails counsel for the parties exchanged, along with the legal description of the Prim Lane property included in the cross-claim, constitute a sufficiently definite writing, note, or memorandum, and the email confirming the terms of the settlement agreement included the electronic signature of the attorney and authorized agent of Ms. Elrod, the party to be charged. Thus, on these alternate grounds we affirm the Court of Appeals’ judgment enforcing the settlement agreement, including the taxing of court costs to Ms. Elrod. Costs of this appeal also are taxed to Ms. Elrod, for which execution may issue if necessary.
CORNELIA A. CLARK
CHIEF JUSTICE
Cyrus Deville WILSON v. STATE of Tennessee.
Supreme Court of Tennessee, at Nashville.
April 20, 2012.
Feb. 16, 2012 Session.
Notes
Shannon‘s Code of Tennessee § 3142 (1896).No action shall be brought ... [u]pon any contract for the sale of lands, tenements, or hereditaments, or the making of any lease thereof for a longer term than one year ... [u]nless the promise or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person by him thereunto lawfully authorized.