IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
FILED
ENVIRONMENTAL )
ABATEMENT, INC., ) February 29, 2000
) Cecil Crowson, Jr.
Plaintiff and ) AppealAppellate Court Clerk
No.
Counter Defendant/Appellee, ) M1998-00871-COA-R3-CV
v. )
)
ASTRUM R. E. CORPORATION, ) Rutherford County Chancery
) No. 97CV-807
Defendant and )
Counter Plaintiff/Appellee )
)
vs. )
)
ASTRUM R.E. CORPORATION, )
)
Third Party Plaintiff/Appellee, )
)
vs. )
)
MAHAN ROOFING AND SHEET )
METAL COMPANY, INC., )
)
Third Party Defendant and )
Cross Plaintiff/Appellant, )
)
vs. )
)
ENVIRONMENTAL )
ABATEMENT, INC., )
)
Cross Defendant/Appellee. )
COURT OF APPEALS OF TENNESSEE
APPEAL FROM THE CHANCERY COURT
FOR RUTHERFORD COUNTY
THE HONORABLE ROBERT CORLEW PRESIDING
JOHN R. RUCKER, JR.
14 PUBLIC SQUARE NORTH
MURFREESBORO, TENNESSEE 37130
PHILIP N. ELBERT
NEAL & HARWELL, PLC
2000 FIRST UNION TOWER
150 FOURTH AVENUE NORTH
NASHVILLE, TENNESSEE 37219-1713
ATTORNEYS FOR PLAINTIFF/COUNTER DEFENDANT/APPELLEE
ROBERT M. HOLLAND, JR.
G. BRIAN JACKSON
TRABUE, STURDIVANT & DEWITT
511 UNION STREET
2500 NASHVILLE CITY CENTER
NASHVILLE, TENNESSEE 37219
ATTORNEYS FOR THIRD-PARTY PLAINTIFF/APPELLEE
SEAN ANTONE HUNT, ESQ.
SPICER, FLYNN & RUDSTROM, PLLC
424 CHURCH STREET, SUITE 1350
NASHVILLE, TENNESSEE 37219-2305
ATTORNEY FOR THIRD PARTY DEFENDANT/
COUNTER PLAINTIFF/APPELLANT
REVERSED AND REMANDED
PATRICIA J. COTTRELL, JUDGE
CONCUR:
CANTRELL, J.
KOCH, J.
OPINION
This case raises the issue of whether a chancellor designated to serve
as a “settlement judge” under local rules of court can enter a consent decree with
the knowledge that one of the parties has withdrawn its consent to an oral
agreement reached at a “judicial settlement conference” but not reduced to a
writing, transcribed or otherwise entered on the record at the time of the oral
agreement. We answer that question in the negative and reverse.
The parties were engaged in litigation arising out of a construction
project. Astrum R. E. Corporation ("Astrum") owned a factory in Rutherford
County. Astrum entered into an agreement with a general contractor, Mahan
Roofing and Sheet Metal Company, Inc. ("Mahan"), to replace the roof on its
factory. Mahan engaged a sub-contractor, Environmental Abatement Inc.
("EAI"), to remove hazardous material from the roof. While removing the
hazardous materials, EAI's workers damaged the side walls of Astrum’s building.
Astrum responded by withholding payment to Mahan. EAI filed a mechanics’
and materialmen’s lien on Astrum's property.
EAI then filed a lawsuit to enforce these liens pursuant to Tenn. Code
Ann. § 66-11-115. Astrum filed a counterclaim against EAI for damages to the
factory, and a third party complaint against the general contractor, Mahan.
Mahan filed a cross complaint against EAI.
A court-ordered and judicial officer-mediated settlement conference
was held pursuant to the local rules of court. After approximately five hours of
negotiation during which the settlement judge1 acted as mediator, a verbal
agreement was reached. No court reporter was present at the mediation. At the
close of the mediation, the settlement judge restated and confirmed the
settlement’s terms. Then he directed EAI’s counsel to prepare the consent
decree.
1
This case involves the actions of two separate judges who are designated the “trial judge”
and the “settlement judge” in the local rule discussed later herein. To simplify our discussion
of the procedural history of this case, we will use those designations.
3
Early the following morning Mahan notified all parties that it was
withdrawing its consent to the agreement. Nonetheless, EAI prepared and
circulated to all counsel a proposed order reflecting the agreement. Mahan
notified the other parties that it would not sign the order and had withdrawn its
consent. Astrum submitted the proposed consent decree to the settlement judge
with Mahan's letter indicating its withdrawal of consent. Days later, fully aware
of Mahan’s withdrawn consent, the settlement judge entered the Order of
Compromise and Settlement prepared by counsel for EAI. This order was not
signed by any representative of Mahan.
Thereafter, Mahan filed a motion to set aside the decree, asserting that
it no longer assented to the terms of the proposed settlement at the time of entry
of the order and also asserting that the order did not accurately reflect the oral
agreement reached at the conclusion of the settlement conference. The trial judge
denied this motion. Mahan renewed this motion before the settlement judge who
presided over the mediation, and it was again denied. Mahan then brought this
appeal, claiming that the trial court erred in entering a consent decree when the
court was aware that one of the parties had withdrawn its consent.
Our review of this case must begin with the acknowledgment that the
oral settlement agreement announced at the conclusion of the mediation is not
part of the record on appeal. No court reporter was present and no
contemporaneously prepared written document formalized the agreement. No
entry in the court’s record reflecting the conference or the agreement has been
presented to us. No statement of the evidence was provided to memorialize the
unrecorded settlement conference.2 See Tenn. R. App. P. 24(c). This lack of
formality, of course, is due to the fact that the proceeding was a settlement
conference, a fact that has other consequences on our decision.
I.
The procedure followed below plays an important part in our
2
In view of the confidentiality provisions of Tenn.R.Sup.Ct. 31, the omission of evidence
on the merits of the lawsuit is probably mandated.
4
determination and, therefore, must be set out in some detail. This case was
filed in the Chancery Court of Rutherford County. Under a local rule,3 “when
a case is filed, the clerk shall assign a judge (other than the designated trial
judge) for purposes of settlement.” The designated trial judge herein
conducted a status conference and entered an order, which, among other
things, referred the matter to the settlement judge to “conduct a settlement
conference.” Additionally, the settlement judge entered an order at about the
same time setting the case for settlement conference. That order stated, “The
role of the undersigned is to preside over settlement discussions totally and
completely separate and apart from the trial aspects of the case.”
The Order of Compromise and Settlement was signed and entered by
the settlement judge. In pertinent part it recited that “all matters and
controversy by and between the parties hereto have been compromised and
settled under the terms of provisions set forth above.” It then directed all
parties to fulfill and comply with the provisions and terms of the Settlement
Agreement.4
Mahan’s Motion to Set Aside Order of Compromise and Settlement
was heard by the trial judge. The motion stated that Mahan had withdrawn
its consent to the agreement prior to the entry of the Order. The motion and
the oppositions thereto were accompanied by various affidavits from the
lawyers involved in the settlement conference. In denying the motion, the
trial judge found there was not sufficient basis to set aside the order entered
by the settlement judge.
Mahan renewed its Motion to Set Aside the Order of Compromise
and Settlement, wherein it reiterated that all counsel, prior to the drafting of
the order and entry of the order were advised that Mahan had withdrawn its
3
Local Rules of the Circuit and Chancery Courts of Rutherford and Cannon Counties, Rule
13.
4
It also stated that upon completion of the settlement terms, a Satisfaction of Judgment and
Release would be entered by the court (not specifying which judge) together with an order
releasing the lien on the property.
5
consent to the compromise and that this withdrawal of consent was conveyed
to the court. For reasons not apparent in the record, the renewed Motion to
Set Aside Order of Compromise and Settlement filed by Mahan was then
heard by the settlement judge. In the order entered by the settlement judge
denying the Renewed Motion to Set Aside, the settlement judge made certain
findings. Included among those were:
After conducting settlement negotiations involving all of
the parties both collectively and individually, all parties
through their representatives and attorneys indicated their
agreement to the terms of the settlement negotiated with
the assistance of [the settlement judge].
...
The Court then assembled together in open court5 the
representatives of the parties and their attorneys for the
purpose of reviewing the provisions of the settlement. The
terms of the settlement were stated and re-stated in the
presence of all parties and their attorneys. Every person
present fully understood the gravity of the issues and the
complexity of the issues before the Court. All counsel and
party representatives understood the terms of the
settlement and expressed their assent to the terms.
...
After announcing the terms of the settlement in open court
and obtaining the assent of all party representatives and
attorneys, the settlement was a firm settlement which was
accepted by the Court at that time.
The Order concluded by denying the Motion to Set Aside and
further stating,“the settlement reached by the parties on January 29, 1998, was
understood, ratified and approved by all of the parties. The settlement
reached on January 29, 1998, was complete and final and compromised all
issues between the parties.” The Order continued by stating “that the
5
In the hearing on the renewed Motion to Set Aside, for which a transcript is available, the
settlement judge stated, “I’ll acknowledge to you that at one point years ago when we first
started doing these settlement conferences that I did an extra step, which I did not do in this
case. When we first started doing the settlement conferences, after we went through steps,
which we did in this settlement conference in this case, I took a two-minute recess and took the
opportunity to put the robe on and sit behind the bench and restate the agreement. I asked
counsel and parties to state their consent. We did not do that in this case . . . I had the feeling
that the parties felt that somehow there was some show of power or show of authority, I
suppose to the aspect of the Court putting on the robe, sitting behind the bench, and going over
again what had already been done. I haven’t done that for a number of years. I did it initially
to make absolutely sure that we had a formal agreement, which I announced in the courtroom.
It was from that standpoint in open court that all parties were present, counsel was present, that
there was a complete statement of the agreement that was reached.”
6
settlement reached by all of the parties on January 29, 1998, was announced
in open Court and was accepted by the parties. Pursuant to T.R.C.P. 316 and
Rule 13 of the Local Rules of Practice, the settlement became binding on the
parties on January 29, 1998.”
No order appears in the record before us indicating that the case was
ever transferred to the settlement judge for disposition or that the settlement
judge was otherwise (e.g., by agreed order of the parties) given authority to
dispose of the case or to enter orders in a case that was not assigned to him for
adjudication. Rather, the procedure followed herein is based upon a local rule
adopted by the trial courts of Rutherford and Cannon Counties entitled
“Negotiations and Settlements in Civil Cases.” In pertinent part, that rule
provides:
When a case is filed, the clerk shall assign a judge (other
than the designated trial judge) for purposes of settlement
in accordance with Rule 3.01 herein. It shall be the duty of
the settlement judge to attempt to facilitate a settlement of
the issues before the Court. The order for settlement
conference may be entered by the settlement judge on his
own initiative or upon informal written request (an
informal letter is sufficient) from both counsel or either of
them, or upon request of the trial judge. The settlement
judge shall have the authority to conduct a settlement
conference in the manner in which he finds appropriate,
including but not limited to non-binding mediation,
binding mediation, mini-trial, case evaluation, or summary
jury trial. When such conference results in a settlement
of the issues, the settlement judge shall then formally
convene the Court at which time the settlement will be
formally announced, and if approved, will then be
binding on the parties. The Order of Compromise and
Settlement shall then be prepared for the signature of
the settlement judge.
Rule 13, Local Rules of the Circuit and Chancery Courts of Rutherford and
Cannon Counties (emphasis added).
II.
The beginning point for our analysis of the issues presented by this
procedurally complicated situation is Harbour v. Brown for Ulrich, 732
S.W.2d 598, 599 (Tenn. 1987), wherein our Supreme Court considered
6
The parties agree that this reference to Tenn. R. Civ. P. 31 was inadvertent, and the
accurate reference is to Rule 31 of the Rules of the Tennessee Supreme Court.
7
whether “a trial judge can enter a valid Order of Compromise and Dismissal
after being informed by one of the parties that consent to the compromise has
been withdrawn” and held that the trial court could not. See Harbour, 732
S.W.2d at 599.
In Harbour, the parties announced to the court that they had reached
a settlement agreement, but its terms were not recited to the court. See id.
The parties then informed the court that they would submit a consent order at
a later date. Before entry of the order, the court was informed that one of the
parties had withdrawn its consent to settle. The court, however, proceeded to
enter an order dismissing the case with prejudice. See id.
The Supreme Court reversed and held:
The resolution of disputes by agreement of the parties is to
be encouraged. But a valid consent judgment cannot be
entered by a court when one party withdraws his
consent and this fact is communicated to the court prior
to entry of the judgment.
Id. (emphasis added).
The Court adopted the language of Burnaman v. Heaton, 150 Tex.
333, 338, 240 S.W.2d 288, 291 (1951), which stated:
A valid consent judgment cannot be rendered by a court
when the consent of one of the parties thereto is wanting.
It is not sufficient that to support the judgment that a
party’s consent thereto may at one time have been given;
consent must exist at the very moment the court
undertakes to make the agreement the judgment of the
court.
Id. (emphasis added).
In further explaining its reasoning, the Supreme Court stated:
The reason for the rule is that a consent judgment does not
represent the reasoned decision of the court but is merely
the agreement of the parties, made a matter of record by
the court. Van Donselaar v. Van Donselaar, 249 Iowa 504,
87 N.W.2d 311 (1958). And, until entered by the court,
the matter being the question of an agreement between the
parties, either party may repudiate the agreement because
of an actual or supposed defense to the agreement. This is
not to say that the compromise agreement may not be a
binding contract, subject to being enforced as other
contracts, but only that the court may not enter
judgment based on the compromise agreement, when it
has notice that one of the parties is no longer
consenting to the agreement for whatever reason.
8
Id. at 599-600. (emphasis added).
The phrases “until entered by the court,” “enter judgment,” and
“make the agreement the judgment of the court” as used in Harbour, must be
interpreted by reference to the well-settled rule that “[a] court speaks only
through its written judgments, duly entered upon its minutes. Therefore, no
oral pronouncement is of any effect unless and until made a part of a written
judgment duly entered.” Sparkle Laundry & Cleaners, Inc. v. Kelton, 595
S.W.2d 88, 93 (Tenn. Ct. App. 1979); see Massachusetts Mut. Life Ins. Co. v.
Taylor Implement & Vehicle Co., 138 Tenn. 28, 36, 195 S.W. 762, 765
(1917).
Tenn. R. Civ. P. 58 echoes these principles. It provides:
Entry of a judgment or an order of final disposition is
effective when a judgment containing one of the following
is marked on the face by the clerk as filed for entry:
(1) the signatures of the judge and all parties or counsel, or
(2) the signatures of the judge and one party or counsel
with a certificate of counsel that a copy of the proposed
order has been served on all other parties or counsel, or
(3) the signature of the judge and a certificate of the clerk
that a copy has been served on all other parties or counsel.
This Rule clearly provides that all judgments are effective when
they are entered (unless the court orders otherwise) and the filing of the
signed judgment with the clerk of court constitutes the entry. See
Christopher v. Spooner, 640 S.W.2d 833 (Tenn. Ct. App. 1982).
On the basis of the above authorities, it would appear that the issue
in this case is easily resolved since the Order of Compromise and Settlement
herein was entered by the settlement judge after he was informed that one of
the parties no longer consented. However, the cases interpreting Harbour and
the sources relied upon in Harbour must be examined in light of the factual
distinctions between Harbour and the case at hand.
III.
In Harbour, the Supreme Court quoted Corpus Juris Secundum for
9
the general rule that:
The power of the court to render a judgment by consent is
dependent on the existence of the consent of the parties at
the time the agreement received the sanction of the court
or is rendered and promulgated as a judgment.
Harbour, 732 S.W.2d at 599 (quoting 49 C.J.S. Judgments § 174 (b).
(emphasis added)).
To the extent that the “or” in the above-quoted section can be read
to imply that consent of the parties at the time of entry of the judgment is not
required if the parties’ agreement previously existed “at the time the
agreement received the sanction of the court,” meaning the time the court
approved the agreement, that phrase must be interpreted by reference to other
sections of the treatise. Additional relevant sections provide:
Consent to judgment must be made by or on behalf
of the parties in open court or by documentary evidence
of legal sufficiency. If the agreement is made in open
court, it may be made orally; otherwise it should be in
writing and should be signed and filed.
49 C.J.S. Judgments § 184 (1997).
The agreement of the parties has also been held to obviate
the necessity for a hearing [for proof on the underlying
issues in the lawsuit] except for the purpose of
determining the fact or validity of the agreement and
ordering judgment accordingly.
Id. at §183.
A judgment by consent of the parties is a judgment the
provisions and terms of which are settled and agreed to by
the parties to the action in which it is entered by the
consent and sanction of the court;
***
Consent to entry of judgment implies that the terms and
conditions have been agreed on and consent thereto given
in open court or by stipulation. The court has no power to
supply terms, provisions, or essential details not
previously agreed to by the parties.
Id. at § 182.
It is within the jurisdiction of the court to determine the
fact and the sufficiency of such consent. A party’s consent
to a judgment is shown by the fact that he causes the
judgment to be entered up; but consent cannot be shown
by oral statements to the judge out of court . . .
10
Id. at §184.
Thus, in the context of the treatise relied upon by the Supreme Court
in its Harbour decision, even if a settlement agreement can be enforced
through later entry of a consent order if the agreement had consent of all
parties at the time it was approved by the court, the parties’ prior oral
agreement must have been made “in open court” or in a “hearing” wherein
the fact and the terms of the agreement were determined. The terms of the
agreement must also be reflected in the record. Oral statements to a judge in
any other context are not sufficient.
The Iowa Supreme Court has clarified its ruling in Van Donselaar,
another source relied on by our Supreme Court in Harbour. In a later case,
the Iowa Supreme Court disapproved the view that Van Donselaar suggested
that consent may be withdrawn as a matter of right at any time prior to actual
entry of judgment. See In the Matter of Property Seized On Or About
November 14-15, 1989, 501 N.W.2d 482, 485 (Iowa 1993). In that case, the
parties had entered into a stipulation regarding the forfeiture of a portion of
seized property. The stipulation had been read into the record of a hearing in
open court, explained by the judge, and agreed to by counsel for the parties.
One party later moved to rescind the stipulation. Thus, the issue in Matter of
Property Seized was whether the defendant should be allowed to rescind his
earlier stipulation. The Supreme Court of Iowa concluded that the trial court
properly held the defendant to “the terms of the agreement that his counsel
approved on the record in the court proceeding.” Id.
IV.
This court, in interpreting Harbour, has sometimes drawn a
determinative distinction on the basis of whether the terms of the settlement
which preceded the entry of an order of settlement were announced to the
court on the record or whether just the existence of an agreement was
announced.
In REM Enterprises, Ltd. v. Frye, 937 S.W.2d 920 (Tenn. Ct. App.
11
1996), the parties, in a dispute over an option to purchase land, ultimately
entered into a settlement agreement which was read in open court and made
part of the technical record. The parties acknowledged their agreement to the
chancellor. The agreement stipulated that if Frye did not purchase the
property by a specified date, REM was entitled to reduce the agreement to
judgment immediately. On the specified date, Frye informed REM that his
bank required a corporate resolution for good title and until this was
provided, he considered REM in breach. REM did not provide the resolution
or appear at the scheduled closing. Instead, on the next day, REM requested
that the court enter judgment pursuant to the prior oral settlement agreement,
notwithstanding Frye’s withdrawal of his consent to the terms of the
agreement. The trial court entered judgment pursuant to the terms of the oral
settlement agreement. The issue actually before the Frye court was the
validity of the judgment entered against the defendant in accordance with the
terms of the previous oral settlement agreement never reduced to an order.
In Frye, this court upheld the trial court’s decision to enter
judgment. It distinguished Harbour, finding:
In Harbour the settlement had not been read in court and
had not been made part of the technical record. The terms
of the agreement in this case were read in open court to the
Chancellor who personally asked each of the parties if
they consented to the settlement.
Frye, 237 S.W.2d at 922.
In Callison v. Callison, Obion Equity No. 1, 1988 WL 10050 at * 2
(Tenn. Ct. App. Sept. 29, 1988), this court affirmed a trial court’s refusal to
allow a husband to repudiate an oral property agreement. In that divorce
case, the wife testified to the terms of the agreement at trial, the terms were
not disputed, and it was announced that the agreement would be reduced to
writing in the final judgment, which the parties had the opportunity to read
and approve. See Callison, 1988 WL 10050 at *1. Before entry of the
12
decree, the husband sought to repudiate the agreement.7 Id. The trial court
held a hearing and subsequently entered a divorce decree essentially
reflecting the property settlement the parties had initially agreed upon. In
affirming, this court distinguished Harbour because the Callison court “heard
the terms of the agreement and it was sanctioned by the court.” Id. at * 2.
In both of these cases distinguishing Harbour, the detailed terms of
the agreement were presented in open court and on the record, the trial court’s
acceptance of the agreement was also made in open court and on the record,
and a record or transcript existed, independent of the order later entered,
which documented the fact and terms of the agreement.
V.
These interpretations of Harbour by this court are consistent with
our interpretation of the language in Harbour that “the power of the court to
render a judgment by consent is dependent on the existence of the consent of
the parties at the time the agreement received the sanction of the court . . .”
Harbour, 732 S.W.2d at 599 (emphasis added). They are also consistent with
the Iowa Supreme Court’s modification of Van Donselaar and with other
provisions of the treatise from which the quoted language is taken.
In essence, they recognize, in furtherance of other well-settled
principles, an exception to Harbour’s often-quoted general rule. That
exception, when applicable, would allow the entry of a consent order of
compromise and settlement which merely documents an earlier agreement
even where consent does not exist at the time of entry of the written order.
Stated differently, there are situations where a party will not be allowed to
withdraw its consent to an oral agreement prior to entry of a judgment based
7
The husband’s real objection was not that he had not consented to the settlement
agreement, but that he had not gotten the property he was entitled to under the agreement.
13
on that agreement.8 At the least, this exception applies to agreements made in
open court, on the record, where the detailed terms of the agreement are
presented to the court, accepted by the court, and preserved by transcript or
other acceptable record of the court proceedings.
There is no novelty in holding parties bound by representations
made in formal judicial proceedings. For example, oral stipulations made in
open court and accepted by the court are valid and will be enforced. See
Bearman v. Camatsos, 215 Tenn. 231, 235-36, 385 S.W.2d 91, 93 (Tenn.
1964); Town of Surgoinsville v. Sandidge, 866 S.W.2d 553, 555 (Tenn. Ct.
App. 1993); see also Tenn. R. Civ. P. 39.01. This rule applies to stipulations
regarding issues as well as stipulations of fact. See In the Matter of Property
Seized On Or About November 14-15, 1989, 501 N.W.2d at 485. As a
general rule, a stipulation made in the presence of a judge, but not in open
court, must be reduced to writing to be effective. See 83 C.J.S. Stipulations
§4 (2) at 6.
A compromise and settlement agreement is merely a contract
between parties to litigation and, as such, issues of enforceability of a
settlement agreement are governed by contract law. See Sweeten v. Trade
Envelopes, 938 S.W.2d 383, 385 (Tenn. 1996). The Supreme Court
recognized this distinction in Harbour, stating, “This is not to say that the
compromise agreement may not be a binding contract, subject to being
enforced as other contracts, but only that the court may not enter judgment
based on the compromise agreement, when it has notice that one of the parties
is no longer consenting to the agreement for whatever reason.” Harbour, 732
S.W.2d at 599-600.9
8
One obvious exception is the situation where the court’s authority to enter judgment is
limited by a requirement of a written agreement of the parties, e.g., a final order granting
divorce on the grounds of irreconcilable differences. See Elrod v. Elrod, No. 03A01-9108-GS-
260, 1991 WL 238263 at *1 (Tenn. Ct. App. Nov. 18, 1991) (no Tenn. R. App. P. 11
application filed).
9
Those authorities regarding settlements where court approval is required, by statute or
otherwise, are not applicable to the issue in this case. In those situations, a court’s
responsibility in approving a settlement includes review of the substance of the settlement, not
just the fact of an agreement. See, e.g., Tenn. Code Ann. § 50-6-206 (court approval of
14
Where, however, the parties or the court seek to give a contractual
arrangement between the parties the authority and remedies provided by a
court’s judgment, considerations other than, or additional to, the
enforceability of the prior oral agreement come into play. Our Supreme Court
has described the nature of a settlement agreement brought to the court for
entry, finding “a consent judgment does not represent the reasoned decision
of the court but is merely the agreement of the parties, made a matter of
record by the court.” Harbour, 732 S.W.2d at 599. Thus, it is logical to
conclude that an agreement must exist at the time the agreement is made a
matter of record - whether that be by entry of consent judgment or by
stipulation or agreement made in open court and on the record.
From all of the above, we conclude that Tennessee is one of those
jurisdictions where:
the terms of the settlement should be stated to the court
and taken down by the reporter or otherwise reduced to
writing so as to prevent a dispute as to what are the terms
of the settlement, and that an oral stipulation for
compromise and settlement made in open court in the
presence of the parties and preserved in the record of the
court is as binding as a written agreement.
15A C.J.S. Compromise and Settlement § 17 at 214-215 (citations omitted).
In the matter before us, Mahan does not dispute that an agreement
existed at the close of the judicial settlement conference herein, but asserts
that it withdrew its consent the next morning and before the consent order
was presented to the settlement judge. Therefore, our task is to determine
whether Mahan’s agreement at the close of the settlement conference is the
type which should preclude Mahan from later withdrawal of assent. The
appropriate inquiry is whether the agreement was made in open court, on the
record, and its terms were duly recorded.
VI.
As explained in the detailed procedural history set out earlier, the
workers’ compensation settlements); Tenn Code Ann. § 34-11-121 (court approval of
settlements involving a minor or disabled person). Court approval of a settlement is generally
not required, and parties routinely settle litigation without court involvement.
15
settlement judge in this case relied upon Local Rule 13 and upon Rule 31 of
the Tennessee Supreme Court in the procedure he followed. In the order
denying the renewed Motion to Set Aside and during the hearing on the
motion, the settlement judge made reference to Rule 31. The order is based
upon Rule 31, by its own terms. In the hearing, the settlement judge
commented, “the Court recognizes that in all fairness, as far as settlements
and disputes are concerned since the Supreme Court’s rule dealing with this
issue, that it’s a new day from some of the prior case law.” This comment
was in response to arguments of counsel based on Harbour and its progeny.
Having been specifically relied on by the settlement judge, Rule 31 must be
examined.
The Supreme Court of Tennessee, in the exercise of its
responsibility to supervise the administration of justice in our courts, has
adopted procedures “to expedite the efforts of the courts to secure the just,
speedy, and inexpensive determination of disputes,” which procedures have
been promulgated as Rule 31 of the Rules of the Supreme Court.
Rule 31authorizes trial courts, by order of reference, to order parties
to an eligible civil action to participate in a judicial settlement conference,
mediation, or case evaluation. Such referral may be made by motion of the
court and does not require consent of the parties. The record herein includes
an order by the trial judge referring the case to the settlement judge for a
settlement conference.
Rule 31 defines “judicial settlement conference” as a mediation
conducted by a judicial officer other than the judge before whom the case will
be tried. Tenn. R. Sup. Ct. 31 § 2(d). A mediation is “an informal process in
which a neutral person, called a mediator, conducts discussions among the
disputing parties designed to enable them to reach a mutually acceptable
agreement among themselves on all or any part of the issues in dispute.” Id.
at § 2(c). A judicial officer who acts as a mediator in a judicial settlement
conference is, for purposes of that conference and for purposes of alternative
16
dispute resolution, a “dispute resolution neutral.” Tenn. R. Sup. Ct. 31 § 2(i).
A dispute resolution neutral, including a judge acting in that
capacity, has no authority to dispose of a case or to enter an order disposing
of a case. The neutral’s powers include only the filing of a report indicating
whether the case was completely settled or partially settled. Tenn. R. Sup. Ct.
31 § 8. Therefore Rule 31 did not vest the settlement judge herein, in his role
as mediator, with authority to enter an order disposing of the case. Further,
although Local Rule 13 by its explicit terms allows entry of a settlement order
by the settlement judge, a local rule cannot vest the settlement judge acting as
a dispute resolution neutral with authority contradictory to Tenn. R. Sup. Ct.
31. As we have previously stated, we find no other order in the record giving
the settlement judge authority to adjudicate or dispose of this case. Since all
the parties herein did not sign the consent order, we also cannot find that the
parties consented to entry by the settlement judge. Thus, the settlement judge
herein had no authority to enter an order disposing of the case.
Further, the nature of and requirements for a judicial settlement
conference held pursuant to Rule 31 compel the conclusion that such a
conference is not a formal proceeding, is not held in open court, and is not to
be conducted on the record. The settlement judge’s finding herein that the
oral agreement was made in open court referred to the discussion of the terms
of the agreement with all counsel and parties present at the conclusion of the
mediation. We are not of the opinion, however, that that unrecorded
discussion met the formality requirements implied in the phrases “in open
court” and “on the record.” Furthermore, since the agreement was made in
the presence of the dispute resolution neutral (the settlement judge) and not in
the presence of a judge with authority to dispose of the case, the agreement
cannot be said to have taken place in “open court.”
The term “open court” means, in this context, “a court which has
been formally convened and declared open for the transaction of its proper
judicial business.” Black’s Law Dictionary 983 (5th ed. 1979). “Record”
17
means “the aggregate of the various judicial steps taken on the trial below, in
so far as they were taken, presented, or allowed in the formal and proper
manner necessary to put them upon the record of the court” or
a written memorial of all the acts and proceedings in an
action or suit, in a court of record. The official and
authentic history of the cause, consisting in entries of each
successive step in the proceedings, chronicling the various
acts of the parties and of the court, couched in the formal
language established by usage, terminating with the
judgment rendered in the cause, and intended to remain as
a perpetual and unimpeachable memorial of the
proceedings and judgment.
Black’s Law Dictionary 1438 (rev. 4th ed. 1968) (citing State v. Brewer, 19
Ala. App.291, 97 So. 160, 161 (1923)).
We find that Mahan’s consent to the oral agreement reached at the
mediated judicial settlement conference was subject to withdrawal because it
was not made “on the record” or “in open court.” 10
VII.
We have found that the settlement judge herein was without
authority, as a dispute resolution neutral under Tenn. R. Sup. Ct. 31, to enter
the Order of Compromise and Settlement disposing of this case. In addition,
because we have found that Mahan could withdraw its assent to the previous
oral agreement, we also find that the settlement judge was without authority
to enter the Order on the basis of Harbour. Accordingly, the Order of
Compromise and Settlement is vacated. The orders by both the settlement
judge and the trial judge denying the motions to set aside are reversed. The
trial judge herein is aware that the parties no longer consent to the previous
oral agreement and, therefore, is without authority to enter the consent order
we have now vacated. Therefore, the case remains unsettled.
Accordingly, we reverse the decision of the trial court. This case is
remanded for proceedings consistent with this opinion. Costs of this appeal
shall be taxed to the Appellees for which execution may issue.
10
Our holding renders moot Mahan’s claim that the Order does not accurately reflect the
terms of the prior oral agreement. However, we note that the issues raised by this claim
highlight the importance of a record of the details or terms of an oral agreement. The trial
judge herein, faced with that claim, had no objective basis upon which to decide the issue. The
only evidence of the terms of the agreement is found in the Order of Compromise and
Settlement, which was prepared by counsel for one party and entered over objection of the
another party. Where there is no record of the terms of the agreement and a dispute exists as
to the terms, a court has no basis for entry of an order imposing one version of the terms as a
consent order.
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_____________________________
PATRICIA J. COTTRELL, JUDGE
CONCUR:
________________________________________
BEN H. CANTRELL,
PRESIDING JUDGE, (M.S)
________________________________________
WILLIAM C. KOCH, JR., JUDGE
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