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Chancery Enforces Settlement Reached in Court--After Parties Add Material Terms

By Francis G.X. Pileggi

Rizzo v. Joseph Rizzo & Sons Construction Company, Inc., C.A. No. 2551-VCS   (Del. Ch. March 12, 2010), read letter decision here.

Overview

This short letter decision is useful for those litigators who find themselves in a situation where a settlement is reached in principle while all parties and counsel are at the courthouse and the primary terms of the settlement are entered on the record in open Court - - but, as Shakespeare would say, there is a 'slip between the cup and the lip,' and the parties are unable to finalize a formal, complete Settlement Agreement. This letter ruling addressed such a situation.

Although the pithy ruling may not provide these background facts, the hearing on the Motion to Enforce the Settlement Agreement was open to the public and at that hearing, referenced in footnotes in the letter ruling, the Court was not able to enter a judgment to enforce the Settlement Agreement because there were key terms that the parties had either overlooked or otherwise were too material for the Court to enforce without being addressed by the parties. The Court instructed the parties to address those issues and report back to the Court. The parties eventually resolved the material term that was open which allowed the Court to enforce the agreement.

Legal Analysis

The Court cited to several decisions that address the issue about whether a Settlement Agreement or other agreement is enforceable when some issue or matter is left for future negotiation. See footnotes 12 and 13. That is, if the matter left open is 'so essential to the bargain, that to enforce that promise would render enforcement of the rest of the agreement unfair.' Id. Moreover, this Court has added that enforcement of an incomplete agreement is proper 'when the only issue left open by an agreement is resolution of minor terms, such as appropriate documentation.' Id. See also decision cited at footnote 15. As a result of enforcing the agreement and entering it as a judgment, the Court dismissed the plaintiffs' complaint.
 

Full post as published by Delaware Corporate and Commercial Litigation Blog on March 18, 2010 (boomark / email).