Opinion
Case No. 03-1279-JTM
April 9, 2004
MEMORANDUM AND ORDER
The present action arises from an airplane lease agreement between plaintiff Raytheon Aircraft Credit Corporation and defendants Southern Air Charter Company, Ltd., Nathaniel Gibbs, and Alexander Gibbs ("Southern Air"). The matter is before the court on the defendants' Motion to Enforce Settlement Agreement. Defendants seek to enforce an unsigned settlement agreement which they contend arose via a series of e-mails between the attorneys for the parties.
The course of negotiations between the parties is recounted in Southern Air's brief, (Dkt. No. 16 at 2-10, ¶¶ 1-36); plaintiff's opposition does not controvert that basic narrative, and the Statement of Facts advanced by defendants is incorporated herein.
Southern Air contends that an enforceable contract arose when it agreed (on February 5, 2004) to Raytheon's requirement that they pay $75,000 by March 1 to settle the dispute. However, upon reviewing all of the evidence, the court cannot find that the parties had entered into an enforceable settlement agreement because the parties had failed to ever reach any agreement as to the material element of the scope of the release which would accompany the settlement agreement.
The court will not enforce the purported settlement agreement. Southern Air can point to no evidence indicating that Raytheon agreed to a unilateral release. There is no evidence in the record that the parties ever intended that the release be unilateral rather than mutual. To the contrary, the course of negotiations between the parties demonstrates that either the parties never reached an agreement on the issue, or indeed simply assumed that any release would be mutual rather than unilateral. In either event, the parties never reached the meeting of the minds essential for the formation of a contract under Kansas law. See Swift-Eckrich, Inc. v. Advantage Systems, 55 F. Supp.2d 1280 (D. Kan. 1999)
After its response to the motion to enforce, Raytheon has separately moved to supplement its memorandum (Dkt. No. 18) by citing an e-mail from early in the parties' negotiations, a September 16, 2003 e-mail which outlines a proposed settlement, and includes a statement that "Mutual releases would be signed." The court will grant the motion to supplement, but notes that even without this evidence, the defendants have simply failed to prove the existence of an enforceable contract.
Raytheon's counsel asked on February 16, 2004 as to the status of the "mutual release that you were going to draft." If the parties had always intended the release to be unilateral, Southern Air's response should have been — " Mutual release? What mutual release?" Or something to that effect. Instead, Southern Air's counsel merely responded that she had been in arbitration all week but would "try to get you the draft in the next day or so."
And when, six days later, Southern Air's counsel forwarded a draft (unilateral) Release of All Claims and Settlement Agreement, counsel for Raytheon promptly objected. Again, Southern Air's counsel made no attempt to suggest that a unilateral release had already been agreed upon. Instead, Southern Air's counsel responded by merely stating, "I'll visit with my client about that but I don't foresee a problem." (Dkt. No. 16, at 24). She asked Raytheon's counsel to suggest appropriate release language, in order to "save time" and because of the "tight schedule to wrap this up." Raytheon's counsel said he was in depositions all day, and asked "Can you just make it mutual?" Southern Air's counsel responded, "Sure." She then submitted a revised, mutual release.
However, on February 26, counsel for Southern Air informed Raytheon that she had shown her client the proposed release, that he would not agree to it, and wished to proceed according to "the previously agreed terms." Southern Air then tried (on March 2) to give Raytheon a check for $75,000, which was refused.
The settlement of commercial litigation between experienced business entities typically involves the completion of mutual releases. A unilateral release in this context is a rara avis indeed, and before enforcing the putative settlement agreement as incorporating such a release, the court must be presented with clear and convincing evidence that this result was the intent of both parties, both during and at the conclusion of their negotiations. It must be shown that the unilateral release was not, as it were, unilaterally grafted onto the settlement contract by the last minute action of one of the parties. Cf. Collins v. Roberson, No. 93-84-4, 1994 WL 419810, at *3 (M.D. Ga., July 27, 1994) (rejecting an "eleventh hour letter [as] ineffective to create a unilateral release where the parties intended a mutual one"). Here, defendants have not only failed to provide such evidence, what evidence there is suggests that, to the extent the nature of the release was contemplated by the parties, it was understood to be mutual in nature.
IT IS ACCORDINGLY ORDERED this 9th day of April, 2004, that the defendants' Motion to Enforce (Dkt. No. 15) is denied; plaintiff's Motion to Supplement (Dkt. No. 18) is granted.