Consolo v. Menter

[Cite as Consolo v. Menter, 2011-Ohio-6241.]

STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )

WILLIAM CONSOLO C.A. No. 25394

Appellant

v. APPEAL FROM JUDGMENT
ENTERED IN THE
RICK MENTER, et al. COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellees CASE No. CV 2007 08 5773

DECISION AND JOURNAL ENTRY

Dated: December 7, 2011

Per Curiam.

{¶1} Appellant, William Consolo, appeals the judgment of the Summit County

Court of Common Pleas. This Court reverses.

I.

{¶2} Consolo and Rick Menter were business partners in a credit card processing

venture. Menter acted as the operating member of the partnership, while Consolo

purchased a membership interest and consulted in the operation of the business.

{¶3} Over time, Consolo became suspicious that Menter was engaging in

fraudulent conduct and appropriating for himself hundreds of thousands of dollars

rightfully payable to Consolo. On August 16, 2007, Consolo filed a complaint in the

Summit County Court of Common Pleas against Menter, EMS Nationwide II, Ltd., and
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the unknown shareholders, members, partners, and the legal and equitable owners of

EMS Nationwide II, Ltd (hereinafter referred to as “Menter”). The complaint included

claims for breach of fiduciary duty, restitution, breach of R.C. 1705.31, conversion,

conspiracy, a shareholders’ derivative action, receiver, civil theft, a request for temporary

restraining order, and a request for injunctive relief. Prior to trial, the parties reached an

agreement in which Consolo agreed to relinquish any ownership interest in the business

and to settle the allegations in exchange for Menter’s agreement to pay Consolo a sum of

money. The agreement was effected through a series of documents, one of which

included an agreed consent judgment entry in which Menter consented to a judgment in

the amount of $500,000.

{¶4} When Menter discontinued making periodic payments to Consolo pursuant

to their agreement, Consolo filed the consent judgment on December 9, 2009. Menter

filed two motions on February 1, 2010, both of which were captioned, “Emergency

Motion to Enforce the Settlement Agreement and for Relief from Judgment Pursuant to

Civ.R. 60(B) with a Request for a Hearing.” The trial court held a hearing on the motions

on February 16, 2010. While the motions were similar in form and content, Menter

asserted at the hearing that one motion was intended to be a motion to enforce the

settlement agreement and vacate the judgment pursuant to Civ.R. 60(B), while the second

was a motion to stay collection on the judgment under Civ.R. 62 while the trial court

ruled on the motion to vacate.

{¶5} In its judgment entry, which was journalized on April 16, 2010, the trial

court made the following findings with respect to the dispute in this case. The problems
 3

with enforcement of the settlement agreement began when Menter, fearing that Consolo

was breaching the agreement, started unilaterally placing the $5,000 monthly payments

into a separate bank account rather than paying them to Menter according to the terms of

the agreement. Specifically, Menter received information that led him to believe that

Consolo was steering Menter’s business customers to other companies and competing

directly with Menter, actions which he believed breached their agreement.

{¶6} The trial court found that Consolo had never agreed to a non-compete

provision; and that Menter could not substantiate his suspicions to a degree that would

justify his failing to make the $5,000 monthly payments to Consolo. By the end of the

hearing, Menter agreed to turn over to Consolo all of the $5,000 monthly payments that

had been set aside.

{¶7} Consolo considered Menter to be in breach of the terms of their agreement

when Menter stopped making the monthly payments. Consolo therefore filed the consent

judgment entry which had been previously executed by the parties as part of the

settlement in this case. According to the consent judgment, Menter owed Consolo a total

of $500,000. According to a document entitled “Mutual Release and Settlement

Agreement,” $270,000 was the figure the parties agreed that Consolo would accept if

payments were made according to the terms set therein.

{¶8} On April 16, 2010, the trial court issued a judgment entry in which it

granted Menter’s motion to enforce the settlement agreement, found the consent

judgment to be void and unenforceable, vacated the consent journal entry that had been
 4

filed by Consolo on December 9, 2009, and overruled Menter’s Civ.R. 60(B) motion as

moot.

{¶9} Consolo filed a notice of appeal on May 13, 2010. On appeal, Consolo

raises two assignments of error. We consolidate those assignments of error to facilitate

review.

II.

ASSIGNMENT OF ERROR I

“APPELLEE MENTER’S ESCROWING OF PAYMENTS OWED TO
APPELLANT CONSOLO WAS NOT MERELY ‘NONCOMPLIANT’
BUT ROSE TO THE LEVEL OF A BREACH OF THE SETTLEMENT
AGREEMENT[.]”

ASSIGNMENT OF ERROR II

“THE TOTAL OF $500,000.00 OWED BY APPELLEES UPON THEIR
BREACH OF THE AGREEMENT ARE NOT LIQUIDATED DAMAGES
OR A PENALTY BUT THE AMOUNT OF THE SETTLEMENT
AGREEMENT THAT BECAME DUE AND OWING UPON
APPELLEE’S BREACH[.]”

{¶10} In his first assignment of error, Consolo argues that the trial court erred in

finding that Menter’s decision to stop making the monthly payments did not rise to the

level of a breach of the contract. In his second assignment of error, Consolo argues that

the trial court erred in concluding that the total amount of the signed agreement was

$270,000 and that the $500,000 consent judgment was void and unenforceable. As the

two issues are closely related, we address them together.

Breach of the Settlement Agreement
 5

{¶11} A settlement agreement is a binding contract between parties which

requires a meeting of the minds as well as an offer and acceptance. Rulli v. Fan Co.

(1997), 79 Ohio St.3d 374, 376. A settlement agreement is subject to enforcement under

standard contract law. Id. “Generally, a breach of contract occurs when a party

demonstrates the existence of a binding contract or agreement; the nonbreaching party

performed its contractual obligations; the other party failed to fulfill its contractual

obligations without legal excuse; and the nonbreaching party suffered damages as a result

of the breach.” (emphasis omitted.) Textron Fin. Corp. v. Nationwide Mut. Ins. Co.

(1996), 115 Ohio App.3d 137, 144, citing Garofalo v. Chicago Title Ins. Co. (1995), 104

Ohio App.3d 95, 108. A plaintiff must prove the elements of a breach of contract by a

preponderance of the evidence. Cooper & Pachell v. Haslage (2001), 142 Ohio App.3d

704, 707.

{¶12} Consolo argues on appeal that Menter’s decision to set aside the funds for

the monthly payments constituted a clear breach of the contract. Menter counters that the

evidence submitted and accepted by the trial court firmly established that Consolo failed

to meet his burden to prove by a preponderance of the evidence the second and third

elements of a breach of contract. Menter further contends that if there was a breach of

the settlement agreement, it was not material.

{¶13} A review of the hearing transcript reveals that issues arose surrounding

compliance with the signed agreement when Menter grew suspicious that Consolo was

steering his former clients to a competing credit card processing company. In light of

these suspicions, Menter began placing the monthly payments in a separate bank account
 6

in lieu of tendering payment to Consolo. During the hearing, the trial judge repeatedly

asked Menter to identify language in the agreement that prohibited Consolo from

soliciting former clients. While Menter could not identify any specific language, he

argued that such an understanding was implicit in the agreement. There was competing

testimony at the hearing as to whether Consolo had, in fact, been involved in his former

clients’ decision to leave Menter. The trial court made a specific finding in its judgment

entry that the settlement agreement did not contain a non-compete provision. The trial

court also concluded that Menter could not substantiate his suspicions that Consolo had

breached the agreement. At the conclusion of the hearing, Menter agreed to “release” the

money that had been set aside as “a show of good faith.” Consolo consented to the

release of the money but insisted that Menter now owed the $500,000 agreed upon as

reflected in the consent judgment.

{¶14} In its judgment entry, the trial court concluded that while Menter was

noncompliant with the settlement agreement, his conduct did not rise to the level of a

breach. Specifically, the trial court stated:

“First, the Court finds that the Defendants did not breach the terms of the
settlement agreement when they escrowed the $5000 monthly payments
until they could look into their suspicions about the Plaintiff. The
Defendants’ failure to make the payments was noncompliant with the terms
of the settlement agreement. But, given the totality of the circumstances –
including the Defendants’ escrowing and then returning the funds – the
Court finds the noncompliance does not reach the level of breach that
would excuse the Plaintiff from further performance of his duties under the
settlement agreement.

“The Defendants are, however, liable for paying interest to the Plaintiff, at
the statutory rate, for the period of time that money owed to the Plaintiff
was escrowed and withheld from him.”
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{¶15} A review of the record reveals that Menter’s conduct did constitute a breach

of the payment terms set forth in the Release. The fact that Menter subsequently offered

to release the payments which had been placed in a separate account does not alter the

reality that he had previously ceased to meet his obligations under the terms of the

agreement. Under Ohio law, it is generally presumed that “[t]he intent of the parties to a

contract is presumed to reside in the language they chose to employ in the agreement.”

Kelly v. Medical Life Ins. Co. (1987), 31 Ohio St.3d 130, paragraph one of the syllabus.

“If the language of [a written agreement] is clear and unambiguous, this Court must

enforce the instrument as written.” Hite v. Leonard Ins. Servs. Agency, Inc. (Aug. 23,

2000), 9th Dist. No. 19838.

{¶16} Here, as set forth in the Release, after making two initial payments totaling

$50,000, Menter was required to tender monthly payments to Consolo. When asked if

Menter stopped making monthly payments due to his suspicion that Consolo was steering

clients to competitors, counsel for Menter stated, “Correct. But instead we escrowed

those payments and we have continued to escrow those [$5,000] payments every

month[.]” At the hearing, a letter was submitted into evidence that Menter’s counsel had

sent to Consolo’s counsel when Menter grew suspicious that Consolo was in breach of

the agreement. In this letter dated September 28, 2009, Menter’s attorney suggested that,

in order to preserve the existing settlement, the monthly payments should be placed “into

escrow” until the issues surrounding a possible breach by Consolo were resolved. A

review of the settlement documents reveals that there was no provision that allowed for

the payments to be withheld, or set aside, in the event of a possible dispute. When asked
 8

at the hearing if he thought there was language in the agreement which permitted him to

place the monthly payments in escrow, Menter testified, “Not that I can read, no.” There

was no evidence presented that Consolo consented to the monthly payments being set

aside. We also note that a second letter drafted by Menter’s attorney, dated October 16,

2009, indicated that the monthly payments would be suspended until the resolution of the

dispute. Thus, this case does not involve a scenario where Menter merely missed a

number of monthly payments. Instead, Menter made a conscious decision to cease

performance in violation of the Release. This course of action was not merely

“noncompliant.” Given the fact that Consolo was not in breach of any of the terms of the

settlement agreement, Menter, by setting aside the monthly payments, failed to fulfill his

contractual obligations without legal excuse. Thus, Menter’s conduct constituted a

breach of the payment provisions delineated in the Release.

{¶17} Menter argues in the alternative that even if refusing to make the monthly

payments did constitute a breach of the settlement agreement, the judgment of the trial

court should be upheld on the basis that the breach was not material. An appellate court

will not consider an argument raised for the first time on appeal. Gannon v. Klockenga,

9th Dist. No. 22946, 2006-Ohio-2972, at ¶21. As noted above, the trial court in this case

did not conduct an analysis of whether the breach was material. Instead, the trial court

concluded that, based on the totality of the circumstances, Menter’s “noncompliance” did

not constitute a breach of the settlement agreement. At the hearing on this matter, Menter

did not argue that his non-performance was not a material breach. Rather, Menter

maintained that he was under no obligation to perform because Consolo had violated the
 9

terms of the settlement agreement. While counsel for Menter went so far as to

acknowledge during closing argument that he sensed he would not prevail on his breach

theory if the matter were tried, Menter did not present an alternative argument in regard

to the materiality standard. As Menter did not make this argument before the trial court,

we decline to address it for the first time on appeal. Gannon at ¶21.

Amount of the Settlement

{¶18} The parties offer sharply contrasting views as to the total amount of the

settlement. Consolo argues that the parties agreed that Menter owed him $500,000 as

damages stemming from the allegations raised in the complaint as memorialized in the

consent entry. Consolo asserts that Menter was permitted under the terms of the

agreement to avoid full payment of the amount by making two initial payments totaling

$50,000, and then subsequently making monthly payments of $5,000 per month until

Consolo had received an aggregate sum of $270,000. The consent judgment, according

to Consolo, reflected the total amount of the settlement and was to be filed only if Menter

failed to meet the requirements necessary to avoid payment in full. Menter, on the other

hand, argues that the parties settled the case for a total of $270,000 and that the $500,000

consent judgment constituted an unenforceable penalty.

{¶19} Courts generally presume that the intent of the parties can be found in the

written terms of their contract. Shifrin v. Forest City Ent., Inc. (1992), 64 Ohio St.3d

635, 638. If a contract is unambiguous, the language of the contract controls and

“[i]ntentions not expressed in the writing are deemed to have no existence and may not

be shown by parole evidence.” Aultman Hosp. Assn. v. Community Mut. Ins. Co. (1989),
 10

46 Ohio St.3d 51, 53. If, however, “a contract is ambiguous, parol evidence may be

employed to resolve the ambiguity and ascertain the intention of the parties.” Illinois

Controls, Inc. v. Langham (1994), 70 Ohio St.3d 512, 521. Terms in a contract are

ambiguous if their meanings cannot be determined from reading the entire contract, or if

they are reasonably susceptible to multiple interpretations. Butler v. Joshi (May 9, 2001),

9th Dist. No. 00CA0058. “The decision as to whether a contract is ambiguous and thus

requires extrinsic evidence to ascertain its meaning is one of law.” Ohio Historical Soc.

v. Gen. Maintenance & Eng. Co. (1989), 65 Ohio App.3d 139, 146.

{¶20} The February 16, 2010 hearing was primarily devoted to consideration of

whether Menter had breached the agreement or alternatively whether the parties had

agreed to a noncompetition provision. Notwithstanding that primary focus, the actual

amount of the settlement also arose as an issue at the hearing. Consolo argued that he

determined the case had a value of $500,000 and the parties agreed to settle the case for

that amount. Thus, according to Consolo, the Release constituted an agreement to accept

a discounted amount on the condition that the payments were tendered as agreed. Menter

testified that the counsel for each party had negotiated a settlement amount of $270,000

but when he arrived at the courthouse to sign the agreement, he was informed by his

attorney that, “They want to put a penalty on you if you miss a payment that it’s going to

– you’re going to be penalized $500,000[.]” The trial court seemed to indicate that

Menter’s testimony on this point was not credible.

{¶21} While the amount of the settlement did arise as an issue at the hearing, the

vast majority of the testimony at the hearing focused on whether the agreement had been
 11

breached. In concluding that the consent judgment was an unenforceable penalty, the

trial court appears to have reached its conclusion based solely on the written terms of the

Release. Specifically, the trial court concluded that the parties settled the case for

$270,000, stating:

“[T]he Court finds – applying the tests of Lake[][R]idge Academy v. Carney
(1993), 66 Ohio St.3d 376 and [Samson] Sales, Inc. v. Honeywell (1984),
12 Ohio St.3d 27 – that the $230,000 added payment in the [$500,000]
Consent Judgment Entry to be an unenforceable penalty, not a legitimate
liquidated damages amount. The Court therefore finds the Consent
Judgment Entry void and unenforceable, and vacates the December 9, 2009
filing of the Consent [] Entry.

“The Court finds that computing actual damages for failure to make
payments on the consent agreement is a simple matter; and that the
$230,000 penalty is unconscionable.”

{¶22} The trial court relied on the precedent of two Ohio Supreme Court

decisions in reaching its conclusion. In Lake Ridge Academy, the Supreme Court held

that the freedom to contract is limited in situations where stipulated damages would

constitute a penalty. Lake Ridge Academy, 66 Ohio St.3d at 381. In Samson Sales, the

Supreme Court held that:

“[w]here the parties have agreed on the amount of damages, ascertained by
estimation and adjustment, and have expressed this agreement in clear and
unambiguous terms, the amount so fixed should be treated as liquidated
damages and not as a penalty, if the damages would be (1) uncertain as to
amount and difficult[y] of proof, and if (2) the contract as a whole is not so
manifestly unconscionable, unreasonable, and disproportionate in amount
as to justify the conclusion that it does not express the true intention of the
parties; and if (3) the contract is consistent with the conclusion that it was
the intension of the parties that damages in the amount stated should follow
the breach thereof.” Samson Sales, 12 Ohio St.3d at 28, quoting Jones v.
Stevens (1925), 112 Ohio St. 43, paragraph two of the syllabus.
 12

{¶23} We hold that the trial court erred as a matter of law in concluding that the

$500,000 consent judgment constituted an unenforceable penalty. A careful review of the

documents reveals that one could reasonably reach multiple conclusions with respect to

the amount of the settlement. Under the portion of the Release subtitled, “Release and

Covenants by Consolo,” the agreement states, in a pertinent part:

“1.6 Counsel for Consolo shall hold in escrow the Consent Judgment
Entry, a copy of which is attached hereto and incorporated herein as Exhibit
3, and the Promissory Note, a copy of which is attached hereto and
incorporated herein as Exhibit 4, in accordance with the terms and
conditions contained herein. Consolo’s counsel may disburse said
Promissory Note to Consolo and may file said Consent Judgment with the
Summit County Clerk of Courts, if and only if, Menter, EMS I and EMS II
default in payments as required by paragraph 2.2 herein.”

{¶24} The following paragraph, designated as Paragraph 1.7, states that counsel

for Consolo would be required to return the original consent judgment to Menter when

Menter had made all of the monthly payments. While Paragraph 1.6 indicated that

Consolo could file the consent judgment if Menter defaulted on the monthly payments,

there is no language indicating that the amount of the consent judgment represented the

settlement amount.

{¶25} Under the portion of the agreement that outlines the release and covenants

by Menter, the agreement contains the following language:

“2.2 Menter, EMS I and EMS II shall pay the total sum of two hundred
and seventy thousand dollars ($270,000) by making the following payments
to Consolo upon the following conditions:

“(a) Twenty Thousand Dollars ($20,000) upon delivery to Menter’s
counsel of an executed original of this Mutual Release and Settlement
Agreement, Voluntary Dismissal with Prejudice (Exhibit 1) and Agreed
Order of Dismissal (Exhibit 2); and
 13

“(b) Thirty Thousand Dollars ($30,000) within thirty (30) days after the
event delineated in subparagraph 2.2(a) has occurred; and

“(c) Beginning thirty (30) days after the event delineated in subparagraph
2.2(b) has occurred, and continuing on the same day of each month
thereafter, the sum of Five Thousand Dollars ($5,000) a month, until the
total sum of Two Hundred and Seventy Thousand Dollars ($270,000) as
required by this paragraph 2.2 has been paid to Consolo;

“***

“(h) The obligation to make aggregate payments of two hundred and
seventy thousand dollars ($270,000) to Consolo may be pre-paid at any
time without penalty.

“2.3 As security for the payments required by paragraph 2.2 above,
Menter, EMS I and EMS II shall tender to Consolo’s counsel a Promissory
Note in the amount of $500,000.00, a copy of which is attached hereto as
Exhibit 4. The original of this Promissory Note shall be held in escrow by
Consolo’s counsel and only distributed to Consolo in the event of a default
in a payment required by paragraph 2.2 herein which is not timely cured. If
all of the payments required by paragraph 2.2 herein are made, then
Consolo’s counsel shall return the original executed Promissory Note
(Exhibit 4) to Menter, along with the original executed Acknowledgment of
Payment in Full of Promissory Note (Exhibit 6). In the event of an uncured
default in a payment required by paragraph 2.2 herein, then the original
executed Promissory Note may be distributed by Consolo’s counsel to
Consolo; however, the balance due on said Promissory Note shall be
reduced by the total amount of any payments made under paragraph 2.2
herein.

“2.4 As further security for the payments required by paragraph 2.2
herein, Menter, EMS I and EMS II shall tender to Consolo’s counsel a
Consent Judgment Entry in the amount of $500,000.00, a copy of which is
attached hereto as Exhibit 3. The original executed Consent Judgment
Entry shall be held in escrow by Consolo’s counsel and only filed with the
Summit County Common Pleas Clerk of Courts in the event of a default in
a payment required by paragraph 2.2 herein which is not timely cured. If
all of the payments required by paragraph 2.2 are made, then Consolo’s
counsel shall return the original executed Consent Judgment Entry to
Menter, along with the original executed Satisfaction of Judgment (Exhibit
5). In the event of an uncured default in a payment required by paragraph
2.2 herein, then Consolo’s counsel may file the original Consent Judgment
Entry with the Summit County Common Pleas Court Clerk of Courts;
 14

however, the balance due on said judgment shall be reduced by the total
amount of any payments made under paragraph 2.2 herein.

“2.5 It is acknowledged and agreed by the parties hereto that the
Promissory Note (Exhibit 4) and the Consent Judgment Entry (Exhibit 3)
represent the same contingent obligation by Menter, EMS I and EMS II to
Consolo; and in the event of an uncured default in a payment required by
paragraph 2.2 herein, the maximum amount that Menter, EMS I and EMS
II could be jointly liable to Consolo for is the sum of $500,000, less the
total of any payments made to Consolo under paragraph 2.2 herein.”

{¶26} Paragraphs 2.3 and 2.4 reference the $500,000 amount in reference to both

the consent decree and the promissory note. This fact could be construed as evidence that

the $500,000 figure represented the parties’ evaluation as to the value of the settlement,

and their decision to provide security as such, much in the nature of a cognovit note.

Conversely the “promissory installment note” that is actually attached as Exhibit 4 to the

Release is for the amount of $270,000, and not the amount of $500,000 as referenced in

Paragraph 2.3 of the Release.

{¶27} The amount of the settlement in this case was not expressed in clear and

unambiguous terms. The parties’ agreement does not contain a provision which

explicitly identifies the amount of the settlement. It is clear that the consent judgment

that could be filed upon Menter’s nonpayment is for the amount of $500,000. It is also

clear, however, that Menter could have satisfied his obligation to Consolo by making

scheduled payments totaling an aggregate sum of $270,000. Unfortunately, the

significance of the $270,000 settlement figure and the $500,000 figure in the consent

judgment is unclear. Further complicating the issue is the fact that the amount of the

promissory note as referenced in Paragraph 2.3 and the actual amount of the promissory
 15

note are inconsistent. Thus, unlike the circumstances this Court confronted in Quality

Mold, Inc. v. Committee to Elect Williams, 9th Dist. No. 23749, 2008-Ohio-2821, it is not

clear that the plaintiff settled the case for a certain amount but was willing to accept less

if certain conditions were met. Upon review of the records before us, this Court

concludes that the amount of the parties’ settlement is reasonably susceptible to more

than one interpretation. As the settlement is ambiguous with respect to the amount of the

settlement, the trial court erred as a matter of law in finding that the $500,000 consent

entry was an unenforceable penalty.

{¶28} To the extent that the trial court concluded that Menter did not breach the

terms of the settlement agreement, Consolo’s first assignment of error is sustained. To

the extent that the trial court found as a matter of law that the consent judgment

constituted an unenforceable penalty, it committed legal error and the second assignment

of error is sustained. In light of Menter’s breach, we remand for further proceedings in

regard to the amount of the parties’ settlement. See Saari v. Saari, 9th Dist. No.

08CA009507, 2009-Ohio-4940.

III.

{¶29} Consolo’s first and second assignments of error are sustained. The

judgment of the Summit County Court of Common Pleas is reversed and remanded for

further proceedings consistent with this decision.

Judgment reversed.
and cause remanded.
 16

There were reasonable grounds for this appeal.

We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(E). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

Costs taxed to Appellees.

EVE V. BELFANCE
FOR THE COURT

BELFANCE, P. J.
MOORE, J.
CONCUR

CARR, J.
CONCURS IN PART, AND DISSENTS IN PART, SAYING:

{¶30} I concur in the majority opinion with respect to the first assignment of error. I

respectfully dissent in regard to the majority's conclusion that the trial court erred in determining

that the $500,000 consent judgment was an unenforceable penalty.

{¶31} Consolo argues on appeal that it is clear from the language of the agreement that

the parties settled this case for $500,000. Consolo specifically argues that “Section I of the

Settlement Agreement resolved the pending lawsuit.” In making reference to “Section I of the
 17

Settlement Agreement,” Consolo is referring to Section I of the Mutual Release and Settlement

Agreement. Consolo’s argument is premised on the fact that the parties agreed that a $500,000

consent judgment in favor of Consolo could be filed if Menter failed to meet his monthly

obligations. Consolo emphasizes that the provision in the Mutual Release and Settlement

Agreement which first identifies the $500,000 consent judgment appears prior to any discussion

of a reduced payment arrangement. There is, however, no language in the Mutual Release and

Settlement Agreement which explicitly states that the parties agreed that Consolo should receive

$500,000 as damages stemming from the allegations raised in the complaint. Rather, the

language in Paragraph 2.2 clearly indicates that Menter was required under the agreement to pay

Consolo an aggregate sum of $270,000. Furthermore, there is no provision indicating that the

sum of $270,000 is less than the total amount of the settlement. Paragraph 1.6 states that

Consolo could file the signed consent judgment, which was attached and incorporated into the

Mutual Release and Settlement Agreement, should Menter default under his obligations under

Paragraph 2.2. Other than noting that the consent judgment is attached as an exhibit, Paragraph

1.6 does not even identify the amount of the consent judgment. While Paragraph 2.4 and

Paragraph 2.5 indicate that Menter could be liable for $500,000 should he default on the monthly

payments, there is no language indicating that the $500,000 figure represented the total amount

of the settlement, as opposed to a penalty provision to encourage performance. As I believe the

Mutual Release and Settlement Agreement makes it clear that the parties resolved the dispute for

$270,000, I would affirm the trial court’s determination that the $500,000 consent judgment was

an unenforceable penalty.

APPEARANCES:

WILLIAM T. WHITAKER and ANDREA L. WHITAKER, Attorneys at Law, for Appellant.
 18

JEFFREY T. WITSCHEY, and ALEX J. RAGON, Attorneys at Law, for Appellee.