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Settlement Agreement - In Tennessee can a party revoke a settlement agreement that was announced in open court before the final settlement order is entered?

Posted on Apr 1 2013 7:51AM by Attorney, Jason A. Lee

Analysis:  The recent Tennessee Court of Appeals decision of Thomas Grigsby v. W. Arlen Harris, Sr., No. M2012-00370-COA-R3-CV, 2012 WL 6449782 (Tenn.Ct.App. December 12, 2012) discussed whether a party can withdraw a settlement agreement after it has been announced in open court.  This case involved a boundary line dispute between two parties.  Grigsby at 1.  On the morning of the trial, the parties announced in open court that they reached a settlement agreement resolving the boundary line dispute. Grigsby at 1.  The parties agreed to swap two pieces of property and a rough non-scale drawing was presented to the court at the hearing showing the parties agreement to the land swap. Grigsby at 1.  An order of the court was not entered at that time but rather the parties represented they were going to determine the exact terms of the swap based on a new survey that was to be completed and then the parties would submit a final order. Grigsby at 1, 2. 

 

After the hearing one of the parties decided they no longer wanted to submit to the terms of the settlement agreement.  They informed the court that they “misunderstood the amount of land that they were giving away and that land swap deprives them of their only means of access; to wit, the driveway, to their property” Grigsby at 2.  The trial court ultimately enforced the settlement agreement that was announced on the day of trial and entered an order approving the land swap.  Grigsby at 2, 3.

 

On appeal the Tennessee Court of Appeals found that Tennessee courts "now uniformly hold that if the terms of a settlement are announced to the court or memorialized in a signed, enforceable contract, a judgment may be entered thereon, even if one party later repudiates."  Grigsby at 4 (citing In re Estate of Creswell, 238 S.W.3d 263, 268 (Tenn.Ct.App. 2007)).  The fact the settlement agreement in this case was expressly stated in open court with a verbatim transcript made of the announcement supported the enforceability of the settlement agreement. Grigsby at 4.  Also, the fact there was a rough boundary line sketch that was made an exhibit at the open court settlement announcement further supported the sufficiency of the settlement agreement. Grigsby at 4.  As a result, the Tennessee Court of Appeals stated “we find no error with the entry of judgment based upon the above facts, notwithstanding Plaintiffs' repudiation of the settlement agreement prior to entry of the judgment.” Grigsby at 4.  The settlement agreement was therefore found to be enforceable. 

This case shows how important it can be to put specific settlement terms on the record, if possible, and the situation is appropriate.  If you are at a deposition, a motion hearing or at trial and the case settles based on a verbal agreement, you should try to put the agreement details on the record, if possible.  I recently had a case where in the middle of the deposition of the plaintiff, he decided to settle the case.  We therefore put a brief statement on the record about the settlement when we returned from a break in the deposition.  Later, I had difficulty with obtaining a final release because of a disagreement about some common release terms that are found in most settlement agreements (we did not specify that these terms would be part of the release at the time of the settlement announcement).  When the dispute arose I wished I had been more specific about the settlement terms in the settlement announcement we made at the deposition.  In the end we worked it out but I learned a valuable lesson that there are times where greater specificity is better when making a settlement announcement in a deposition or at a hearing in open court.  I think the Grigsby case supports this further.

Follow me on Twitter at @jasonalee for updates from the Tennessee Defense Litigation site.


TAGS: Settlement
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