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Sylvester v. Merchants Credit Corp.
United States District Court, W.D. Washington, Seattle
August 2, 2019
KENNETH S. SYLVESTER, et al. Plaintiffs,
MERCHANTS CREDIT CORPORATION, Defendant.
following Minute Order is made by direction of the Court, the
Honorable Thomas S. Zilly, United States District Judge:
(1) Plaintiffs Kenneth and Lisa Sylvester
(“plaintiffs”) seek an order enforcing a
settlement agreement in this matter. See Motion to Enforce
Settlement Agreement, docket no. 36. The motion is not
opposed. Having considered plaintiffs' brief filed in
support of the motion, the Court DENIES the
motion to enforce settlement agreement, docket no. 36.
Trial courts may “summarily enforce . . . a settlement
agreement entered into by the litigants” while the
litigation is pending. In re City Equities Anaheim,
Ltd., 22 F.3d 954, 957 (9th Cir. 1994).
“Settlement agreements are interpreted according to the
principles of contract law.” Tucker v. Tucker,
203 F.3d 832, 832 (9th Cir. 1999); see also Jeff D. v.
Andrus, 899 F.2d 753, 760 (9th Cir. 1989) (“The
construction and enforcement of settlement agreements are
governed by principles of local law which apply to
interpretation of contracts generally.”).
To form a valid and enforceable contract in Washington, the
parties must objectively manifest their mutual assent to the
essential terms. Yakima Cnty. Fire Prot. Dist.
No. 12 v. City of Yakima, 122 Wn.2d 371, 388, 858 P.2d
245 (1993). Under Washington law, a contract may be
established by agreement of counsel even though the parties
contemplated signing a more formal writing in the future.
Loewi v. Long, 76 Wn. 480, 484, 136 P. 673 (1913);
Morris v. Maks, 69 Wn.App. 865, 850 P.2d 1357
(1993). The party asserting the existence of the contract
must show the terms of the contract are stated, agreed upon,
and that “the parties intended a binding agreement
prior to the time of the signing and delivery of a formal
contract.” Plumbing Shop v. Pitts, 67 Wn.2d
514, 520, 408 P.2d 382 (1965) (quoting Loewi, 76 Wn.
at 484); see also Keystone Land & Dev. Co. v. Xerox
Corp., 353 F.3d 1070, 1073 (9th Cir. 2003).
“Equally certain is that if the parties intended their
legal obligations to be deferred until the execution of the
formal writing, the preliminary writings and negotiations
cannot constitute a contract.” Keystone, 353
F.3d at 1073 (citing Plumbing Shop, 67 Wn.2d at
520-21); see also KVI, Inc. v. Doernbecher, 24 Wn.2d
943, 967, 167 P.2d 1002 (1946). The parties' intent to
enter into a subsequent agreement “is strong evidence
to show that they do not intend the previous negotiations to
amount to any proposal or acceptance.” Pac. Cascade
Corp. v. Nimmer, 25 Wn.App. 552, 556, 608 P.2d 266
(1980) (quoting Coleman v. St. Paul & Tacoma Lumber
Co., 110 Wash. 259, 272, 188 P. 532 (1920)).
When a party moves to enforce the terms of a settlement
agreement, that party bears the burden of “proving that
there is no genuine dispute over the existence and material
terms of the agreement.” Bringerhoff v.
Campbell, 99 Wn.App. 692, 696-97, 994 P.2d 911 (2000).
The court must view the facts in the light most favorable to
the non-moving party to “determine whether reasonable
minds could reach but one conclusion.” Id. at
697. Here, defendant's counsel confirmed “[w]e have
a deal” after conferring with his client in response to
plaintiffs' offer. See Declaration of Ryan L.
McBride, Ex. B, docket no. 36-4 (“Email
Correspondence”), at 7. However, that email and
subsequent correspondence reflects an intent to enter into a
subsequent agreement and that the parties would need to
review and approve that subsequent agreement. For example,
defendant's counsel-in the same email in which he stated
“[w]e have a deal”-stated that he “had a
question on how [plaintiff] wanted to handle the
payments.” Id. Plaintiffs' counsel later
emailed a draft settlement agreement and asked “if
[defendants' counsel had] any redlines.”
Id. at 12. Plaintiffs' counsel subsequently
emailed defendants' counsel, stating that “you
indicated you did not have any edits to the settlement
agreement I proposed to you and were going to run the
agreement by your decision maker and get back to me soon . .
. .” Id. at 17. Although in some instances the
parties may enter an enforceable settlement agreement even
though they contemplate executing a future, more formal
agreement, see, e.g., McKelvey v. Am.
Seafoods, No. C99-2108L, 2000 WL 33179292, at *1 (W.D.
Wash. Apr. 7, 2000), this is not such a case. Taking the
facts in the light most favorable to the non-moving party,
the email correspondence indicates that although the parties
agreed to certain terms of the settlement, defendants'
counsel expressly indicated that he would need to obtain
client approval for the final agreement. The Court finds
plaintiffs have failed to show that the parties
“intended a binding agreement prior to the time of the
signing and delivery of a formal contract.”
Plumbing Shop, 67 Wn.2d at 520. Moreover, Washington
law requires “a stipulation in open court on the
record, or a writing acknowledged by the party to be
bound” in order to bind a party to a settlement
agreement negotiated by the party's attorney. Bryant
v. Palmer Coking Coal Co., 67 Wn.App. 176, 178 (1992)
(citing CR 2A and RCW 2.44.010). The purpose of this rule is
to avoid situations where one party seeks to enforce a
settlement agreement against another party that has not
agreed to the settlement terms. Id. at 179.
(2) The parties are ORDERED to file a Joint Status Report on
or before August 30, 2019, addressing potential trial ...
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