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Belatedly Filed Record ? Dismissal, Executed Settlement Agreement = Enforceable

By Sean E. Andrussier

In Hardin v KCS Int?l, Inc., the NC COA ruled today that an appeal should not be dismissed just because the record was filed late. The Court then also held that a plaintiff who had entered into a settlement agreement couldn't pursue claims that he had released.

In this case, the plaintiff bought a defective yacht. When the manufacturer and seller refused to refund the plaintiff's money or give him a new boat, he sued. After the plaintiff sent discovery but before responses were received, the parties entered into a settlement agreement. The agreement contained a broad release of all claims in any way related to the boat dispute though didn't require dismissal of the action until all the repairs to the plaintiff's boat had been completed. Repairs were done, but the plaintiff wasn't satisfied and pursued his suit. At that point, the plaintiff found out that his boat had been in a collision with a tree when it was shipped from the manufacturer to NC. The manufacturer and seller moved to enforce the settlement agreement, and the trial court did. The COA affirmed.

The first issue the COA addressed was a motion to dismiss the appeal because the record was filed somewhat belatedly. The Court made clear that, while not an insignificant Appellate Rules violation, it also was not jurisdictional. The Court pointed out that the Supreme Court clarified , in Dogwood, that nonjurisdictional rules violations shouldn't normally lead to dismissal. So here, the COA chose taxing the appellant's lawyer with the printing costs, not dismissal.

On the merits, the COA, applying the summary judgment standard of review, held that the trial court was right to enforce the settlement agreement. First, the plaintiff had failed to either plead with sufficient particularity or show evidence of fraud as a basis for setting aside the settlement agreement. The Court noted in particular that fraud requires that the plaintiff wouldn't have been able to discover the problems through reasonable diligence. In this case, however, simple civil discovery would have gotten the job done, but the plaintiff instead chose to enter into a settlement agreement before the civil discovery responses rolled in.

Second, the plaintiff claimed lack of consideration supporting the settlement agreement. However, resolving the law suit was itself the consideration for the settlement agreement. The Court also rejected the plaintiff's rescission argument that because the manufacturer failed to take all steps required by the settlement agreement, the agreement should be jettisoned. Rather, if the steps taken weren't sufficient, the plaintiff could enforce the settlement agreement or seek damages for its breach.

Full post as published by North Carolina Appellate Blog on September 15, 2009 (boomark / email).