Duff v. McKay

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15-P-634 Appeals Court

DANIEL DUFF & another1 vs. JOHN McKAY & others.2

No. 15-P-634.

Plymouth. January 19, 2016. - June 14, 2016.

Present: Grainger, Rubin, & Milkey, JJ.

Contract, Settlement agreement, What constitutes, Performance
and breach. Judgment, Implementing settlement agreement.

Civil action commenced in the Superior Court Department on
April 9, 2013.

A motion to enforce settlement and to dismiss the complaint
was heard by Beverly J. Cannone, J., and entry of separate and
final judgment was ordered by her.

Stephen W. Rider for the plaintiffs.
Colin Black for the defendants.

MILKEY, J. In 2010, plaintiffs Daniel and Lisa Duff hired

the defendants to perform a renovation project at their home in

1
Lisa Duff.
2
McKay Construction Company, LLC, and Artisan Kitchen
Design, Inc. Two additional defendants were dismissed before
the appeal was filed.
 2

Hingham. A dispute ensued regarding the defendants' workmanship

and their alleged failure to obtain a building permit in a

timely manner. In May of 2012, the Duffs sought redress by

initiating arbitration through the State program created in

accordance with G. L. c. 142A.3 The following year, on the eve

of the assigned arbitrator's scheduled view of the property, the

parties reached an apparent settlement of their dispute.

Nonetheless, a formal settlement document was never executed

because of a disagreement regarding payment terms. When the

parties reached an impasse in resolving that issue, the Duffs

withdrew their request for arbitration and filed a multicount

action in the Superior Court asserting their underlying claims.

The defendants moved to dismiss the action and to enforce the

settlement. A Superior Court judge allowed that motion and

entered judgment requiring the defendants to pay the agreed-to

amount within ten days. On the Duffs' appeal, we affirm.

Background. The parties' key communications were

memorialized in electronic mail messages (e-mails), copies of

which were submitted to the motion judge.4 As a result, the

3
Pursuant to G. L. c. 142A, § 4, the director of the Office
of Consumer Affairs and Business Regulation created an
arbitration program through which homeowners can resolve
disputes with home improvement contractors they hired. See 201
Code Mass. Regs. §§ 14.00 et seq. (2003).
4
The e-mails were attached to the parties' affidavits, and
their authenticity has not been questioned.
 3

essential facts pertaining to the parties' negotiations are

uncontested.

At the heart of this case is a March 21, 2013, e-mail

exchange between counsel that followed extended and vigorous

settlement discussions. Counsel for the Duffs wrote to "confirm

what I believe our respective clients have agreed to." He then

listed six terms. Key among those terms were the requirements

that the defendants pay the Duffs $27,500, and that the parties

"exchange mutual general releases, subject only to the

obligations in the settlement agreement."5 The list of terms did

not specify when payment of the $27,500 was due.

The Duffs' counsel concluded his e-mail by asking his

counterpart to "confirm that I got this right by return e-mail."

Six minutes later, the defendants' counsel responded,

"Confirmed." Six minutes after that, the Duffs' counsel sent an

e-mail to the assigned arbitrator canceling the scheduled site

visit because "I am pleased to report that the parties have

reached a settlement agreement." The following morning, the

coordinator for the arbitration program sent an e-mail to

express her happiness "that the parties have settled," and she

requested clarification whether she should "consider this your

5
The remaining terms addressed the return of a wood
countertop to the defendants, confidentiality and mutual
nondisparagement provisions, the retraction of certain comments
that the Duffs had made to the Better Business Bureau, and the
dismissal with prejudice of any arbitration claims.
 4

formal notice of settlement or will you mail written notice of

the settlement." Counsel for the Duffs responded by stating:

"I believe the parties are planning on preparing and
signing a formal settlement agreement and then will file a
stipulation of dismissal, with prejudice, of the claims in
the arbitration. This may take a week or so."

Over the next two and one-half weeks, the parties sought to

complete a formal settlement document. During that time,

counsel for the Duffs expressed concern over delay, stating that

he did not "want to give the clients too much time to rethink

this." As the Duffs acknowledge, some of the delay was caused

by a medical issue related to the defendants' counsel's family.

In the end, the parties agreed on every provision of the

final settlement document save one: when precisely payment of

the $27,500 was required. The Duffs insisted that payment be

made when the agreement was executed, while the defendants

insisted that they be given some time to complete payment. Each

side asserted that its position was consistent with customary

practice. In addition, each attorney asserted that his

counterpart should have raised the payment issue before an

apparent settlement had been reached if the issue had been

important to his client. As of April 8, 2013, the state of play

was as follows: the defendants were willing to pay a majority
 5

of the money ($17,500) the following day,6 with the remaining

payment to be made three weeks later (April 30, 2013), while the

Duffs continued to insist that the full amount be paid

"immediately."7

With the final issue at a seeming impasse, the Duffs on

April 8, 2013, terminated the still-pending arbitration

proceeding by withdrawing their request for arbitration.8 The

following day, they filed the current action in Superior Court.

Notably, their complaint did not allege that the parties had

reached a settlement agreement, with payment due immediately.

Instead, without mentioning the putative settlement agreement or

the abandoned arbitration proceedings, the complaint simply set

forth the Duffs' underlying claims with regard to the

defendants' work on the renovation project (alleging violations

of G. L. c. 93A, breaches of contract, negligence, and

misrepresentation).

6
In fact, the defendants had already cut a bank check for
that amount dated April 8, 2013, a copy of which was sent to the
Duffs' counsel by e-mail that day.
7
The Duffs did state that they would be willing to accept
the defendants' proposed payment schedule if the total amount
paid were increased to $30,000 and various measures were
instituted to secure payment.
8
The Code of Massachusetts Regulations provides that either
party (the homeowner or contractor) may withdraw without
prejudice from arbitration "at any time prior to the hearing."
201 Code Mass. Regs. § 14.12 (2003).
 6

In response, the defendants filed what was styled as a

motion to enforce the settlement agreement and to dismiss the

complaint. The motion was supported by an affidavit from

counsel setting forth the history of the negotiations as

memorialized in the trail of e-mails. In opposing the motion,

the Duffs submitted an affidavit from their own counsel that

covered the same uncontested e-mail history. However, counsel

also set forth his view, based on his experience, that

"attorneys presume that payment of settlement proceeds will be

made at the time the settlement agreements are finalized and

releases exchanged" unless the paying party requests additional

time before the settlement is reached. Daniel Duff himself also

executed an affidavit in which he stated that in authorizing

settlement, he had "understood" that payment would be due when

formal settlement papers were signed and that he otherwise would

not have agreed to settle the case for $27,500.

A Superior Court judge eventually allowed the defendants'

motion and entered judgment requiring the defendants to pay the

settlement amount within ten days.9 Dissatisfied with that

result, the Duffs appealed.

9
The docket reflects that one Superior Court judge had
ruled that an evidentiary hearing on the motion should be held
and such a hearing was scheduled on numerous occasions, but then
postponed. The motion eventually was heard and resolved by a
different judge after a nonevidentiary hearing held on December
 7

Discussion. 1. Procedural posture and standard of review.

We begin by reviewing the procedural posture in which this case

has come before us. "A settlement agreement is a contract and

its enforceability is determined by applying general contract

law." Sparrow v. Demonico, 461 Mass. 322, 327 (2012). In

entering judgment enforcing the parties' apparent settlement

agreement, the judge in effect resolved a contract claim put

forward by the defendants even though that claim was presented

by motion, not as a counterclaim. The case law suggests that

such informality is acceptable where settlements have been

reached while litigation is pending. See Fecteau Benefits

Group, Inc. v. Knox, 72 Mass. App. Ct. 204, 211-212 (2008)

(affirming allowance of "motion to enforce settlement

agreement"). See also Fidelity & Guar. Ins. Co. v. Star Equip.

Corp., 541 F.3d 1, 5 (1st Cir. 2008) ("[B]efore the original

suit is dismissed, the party seeking to enforce the [settlement]

agreement may file a motion with the trial court"). Whether

this practice is appropriate where, as here, the settlement was

negotiated prior to the commencement of litigation is arguably a

23, 2013. The Duffs did not provide a transcript of that
hearing with their appeal.
 8

different matter. We need not resolve that question, as the

Duffs do not press this issue on appeal.10

That said, the parties do debate the applicable standard of

review. As the defendants point out, there is case law to

suggest that in enforcing settlement agreements, judges enjoy

substantial leeway to resolve open issues and to dispose of the

matter summarily. See Fidelity & Guar. Ins. Co., supra. See

also Mathewson Corp. v. Allied Marine Indus., Inc., 827 F.2d

850, 852 (1st Cir. 1987) (noting "inherent power" of courts to

oversee and enforce settlement agreements). The Duffs counter

that even to the extent that might be true with regard to

settlements of pending litigation, ordinary procedural rules

apply to the enforcement of any out-of-court agreements reached

prior to the commencement of litigation. See In re Mal de Mer

Fisheries, Inc., 884 F. Supp. 635, 637 (D. Mass. 1995) ("The

court's inherent power of enforcement, however, is limited to

cases pending before it"). Because the judge here enforced a

prelitigation settlement agreement without an evidentiary

hearing, the Duffs argue that the judge in effect treated the

10
Thus, for example, the Duffs do not challenge the form of
the disposition (a judgment in their favor for the settlement
amount). They seek only to repudiate the settlement agreement
in its entirety.
 9

defendants' motion as one for summary judgment and that his

ruling must be reviewed as such.11

Under the circumstances of this case, we agree with the

Duffs that the defendants' motion should be treated as akin to

one for summary judgment. Thus, we review the allowance of the

defendants' motion de novo, to determine "whether, viewing the

evidence in the light most favorable to the nonmoving party, all

material facts have been established and the moving party is

entitled to a judgment as a matter of law." Bank of N.Y. v.

Bailey, 460 Mass. 327, 331 (2011), quoting from Augat, Inc. v.

Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991).12

2. Merits. The Duffs rest their appeal on two alternative

theories that lie in tension with each other. One is that

because the parties never agreed on a specific date when payment

was due, any agreement they had reached was too indefinite to

constitute an enforceable contract. Without an enforceable

contract in place, they argue, they were free to sue on their

11
The judge did not require the parties to comply with
Superior Court Rule 9A. Although the Duffs touched on that
issue below, they have not pressed it on appeal.
12
"That some facts are in dispute will not necessarily
defeat a motion for summary judgment. The point is that the
disputed issue of fact must be material." Hudson v.
Commissioner of Correction, 431 Mass. 1, 5 (2000), quoting from
Beatty v. NP Corp., 31 Mass. App. Ct. 606, 607 (1991). "A fact
is 'material' only if it might provide a basis for a fact finder
to find in favor of the [nonmoving] party." Liss v. Studeny,
450 Mass. 473, 482 (2008).
 10

underlying claims. The Duffs' other theory is that the two

sides reached a fully enforceable agreement on March 21, 2013,

with payment due immediately upon execution of a formal document

memorializing that agreement. According to the Duffs, the

defendants breached the agreement by refusing to make timely

payment, and this breach justified the Duffs in repudiating the

agreement. We address these arguments in order.

a. Whether there was an enforceable settlement agreement.

The legal standard for whether an enforceable agreement has been

reached is well established. "An enforceable agreement requires

(1) terms sufficiently complete and definite, and (2) a present

intent of the parties at the time of formation to be bound by

those terms." Targus Group Intl., Inc. v. Sherman, 76 Mass.

App. Ct. 421, 428 (2010).

There is no suggestion in the record that the parties ever

discussed when payment of the agreed-to settlement amount would

be due.13 To the contrary, each side faults the other for not

raising the issue sooner. However, "the presence of undefined

or unspecified terms will not necessarily preclude the formation

of a binding contract." Situation Mgmt. Sys., Inc. v. Malouf,

Inc., 430 Mass. 875, 878 (2000). The determinative question is

whether the absence of an agreed-upon specific payment date

13
Nor do the Duffs make any claim that they had informed
the defendants that time was of the essence in completing
payment.
 11

meant that "significant, material terms were still to be

negotiated." Ibid. If so, then no contract was formed. See,

e.g., Rosenfield v. United States Trust Co., 290 Mass. 210, 216-

217 (1935) (no contract where parties had not agreed on all

material terms). If, instead, the date for payment was a

"subsidiary matter[]" that did not alter the essential nature of

the bargain, then there was a contract that could be enforced

(so long as the parties also intended to be bound at the time an

agreement was reached). McCarthy v. Tobin, 429 Mass. 84, 86

(1999). Where, as here, the negotiations were memorialized in a

trail of uncontested e-mails, whether the parties agreed on all

material terms is treated as a question of law that we review de

novo. Basis Technology Corp. v. Amazon.com, Inc., 71 Mass. App.

Ct. 29, 36 (2008).14 Accord Fecteau Benefits Group, Inc. v.

Knox, 72 Mass. App. Ct. at 212 ("[E]-mail exchanges between the

parties formed a clear and complete agreement . . . [under which

t]he material terms were set and agreed upon").

14
The Duffs cannot create a dispute of material fact by
setting forth their own understanding of when payment would be
due under the settlement agreement. As we recently reiterated
and "Justice Holmes said more than one century ago, a party's
'private understanding or intent' regarding the meaning of a
contract is 'immaterial.'" Chambers v. Gold Medal Bakery, Inc.,
83 Mass. App. Ct. 234, 245 (2013), quoting from Equitable Marine
Ins. Co. v. Adams, 173 Mass. 436, 438 (1899). See Beatty v. NP
Corp., 31 Mass. App. Ct. at 612 ("[C]ontracts rest on
objectively expressed manifestations of intent").
 12

The case law recognizes a number of principles that help

inform the analysis of whether an absent term renders an

agreement fatally indeterminate. First, that question is to be

addressed based on the status of things at the time the parties

signaled that an agreement had been reached. See Shea v. Bay

State Gas Co., 383 Mass. 218, 223 (1981), quoting from Bryne v.

Gloucester, 297 Mass. 156, 158 (1937) (contracts should be

interpreted "with reference to the situation of the parties when

they made it"). See also McCarthy v. Tobin, supra at 87-88

(offer to purchase real estate was binding despite subsequent

dispute over entering into purchase and sale agreement). The

fact that the negotiations eventually were scuttled over an

issue does not mean that it necessarily was an essential term of

the settlement.

Second, seeming indeterminacy can be resolved by reference

to professional norms in the practice area in which the

remaining disputes lie (to the extent such norms exist). See,

e.g., McCarthy v. Tobin, supra at 87, quoting from Goren v.

Royal Invs., Inc., 25 Mass. App. Ct. 137, 141 (1987) (fact that

terms of purchase and sale agreement had yet to be negotiated

did not preclude binding agreement based on acceptance of offer

because "norms exist for their customary resolution").

Third, where a written agreement fails to specify a

deadline by which a contractual obligation or right must be
 13

exercised, courts may infer that the parties intended a

"reasonable" date if this can be done without changing the

essence of the contract. See Plymouth Port, Inc. v. Smith, 26

Mass. App. Ct. 572, 575 (1988); Middleborough v. Middleborough

Gas & Elec. Dept., 47 Mass. App. Ct. 655, 658 (1999).15 In turn,

"[w]hat is a reasonable period of time depends on the nature of

the contract, the probable intention of the parties, and the

attendant circumstances." Plymouth Port, Inc. v. Smith, supra.

With these principles in mind, we conclude as a matter of

law that the agreement the parties reached in their March 21,

2013, e-mail exchange was not fatally indefinite. See Basis

Technology Corp. v. Amazon.com, Inc., 71 Mass. App. Ct. at 38-39

(concluding that settlement agreement was sufficiently definite

even though it left open specific ratio for converting one type

of stock to another). Indeed, the Duffs themselves maintain,

supported by their counsel's affidavit, that background

professional norms exist through which the specific payment date

could have been determined. Even if resort to professional

norms alone would not have resolved the extraordinarily limited

15
This principle has long been recognized. See, e.g.,
Atwood v. Cobb, 16 Pick. 227, 231 (1835) ("As to the uncertainty
of the time, at which the agreement is to be executed, the case
is clear, that where on an executory contract, a party
stipulates to do some act, and no time is limited, it is to be
done within a reasonable time, and, therefore, the want of any
stipulation to that effect does not render the instrument
void").
 14

remaining dispute, this could have been resolved -- without

altering the essential terms of the parties' settlement -- based

on what was "reasonable."16 Therefore, we conclude that the

March 21, 2013, e-mail exchange included "terms sufficiently

complete and definite." Targus Group Intl., Inc. v. Sherman, 76

Mass. App. Ct. at 428.17

To enforce the terms of the March 21 agreement, the

defendants also must demonstrate "a present intent of the

parties at the time of formation to be bound by those terms."

Ibid. This issue requires little discussion. Although the

parties appear to have contemplated that they would memorialize

their agreement in a formal settlement document,18 neither side

16
We note that when the settlement fell apart, the matter
was still in arbitration. The parties presumably could have
sought a speedy resolution of the single remaining issue from
the assigned arbitrator.
17
Because the Duffs have sought to avoid the settlement
agreement, not to enforce it, we need not "fill in the blank" of
when precisely payment had to be completed. Thus, we need not
decide which party had the more compelling claim regarding that
payment date. Moreover, we need not address the Duffs'
contention that resolving exactly when payment was due might
involve factual disputes that fall to a jury to resolve.
Compare Targus Group Intl., Inc. v. Sherman, 76 Mass. App. Ct.
at 431-432 (resolving as matter of law when settlement payment
was due where agreement was ambiguous on that point). See
generally Powers, Inc. v. Wayside, Inc. of Falmouth, 343 Mass.
686, 691 (1962) (determining what is "reasonable" period to
exercise contractual right is generally question of fact, but it
becomes one of law where facts are undisputed).
18
The statement by the Duffs' counsel to the arbitration
coordinator that "I believe the parties are planning on
 15

suggested that it would not be bound until that document was

executed. See McCarthy v. Tobin, 429 Mass. at 87, quoting from

Goren v. Royal Invs., Inc., 25 Mass. App. Ct. at 140 ("If . . .

the parties have agreed upon all material terms, it may be

inferred that the purpose of a final document which the parties

agree to execute is to serve as a polished memorandum of an

already binding contract"). Contrast Blomendale v. Imbrescia,

25 Mass. App. Ct. 144, 146-147 (1987) (no enforceable contract

to purchase property where check for buyer's deposit could be

cashed only upon execution of purchase and sale agreement, and

where "sketchy preliminary document . . . . [left] many points

uncovered"). Instead, the Duffs' counsel informed the

arbitrator, without qualification, "that the parties have

reached a settlement agreement." Like a report of a settlement

to a trial court, a report of a settlement to an arbitrator

"presumably comes from careful reflection and contemporaneous

acceptance of an agreement." Basis Technology Corp. v.

Amazon.com, Inc., 71 Mass. App. Ct. at 43. "This court's

decisions have consistently emphasized the qualities of

seriousness and commitment characterizing a settlement agreement

reported to a trial court." Id. at 42. Both parties exhibited

preparing and signing a formal settlement agreement" may cast
some doubt on whether a formal agreement initially was
contemplated. However, if anything, this cuts against the
Duffs' argument that they had not agreed to be bound by a
sufficiently definite settlement agreement.
 16

their intent to be bound by the March 21 settlement agreement,

and each party could have enforced that agreement.

b. The Duffs' alternative theory. As noted, the Duffs

alternatively argue that background professional norms establish

that the parties agreed that final payment would be made when

the formal settlement agreement was executed. Based on that

premise, the Duffs contend that the defendants breached that

agreement, and that this breach justified the Duffs in

repudiating the agreement. For purposes of assessing this

alternative theory, we accept arguendo the Duffs' premise that

the defendants were at fault for insisting that they be given

three weeks to complete payment.19 However, this does not in the

end assist the Duffs, because they are seeking to repudiate the

settlement agreement, not to enforce it.

A party to a contract generally is relieved of his

obligations under that contract only when the other party has

committed a material breach, that is, "a breach of 'an essential

and inducing feature of the contract[].'" Lease-It, Inc. v.

Massachusetts Port Authy., 33 Mass. App. Ct. 391, 396 (1992),

quoting from Bucholz v. Green Bros., 272 Mass. 49, 52 (1930).

19
The Duffs highlight that when the agreement fell apart,
eighteen days had already elapsed since the March 21 e-mail
exchange. However, even under the Duffs' own view of the case,
they would not be receiving payment until a formal agreement was
finalized and executed. There was no agreed-upon deadline for
that to occur (only a voiced expectation that finalizing the
agreement likely would take "a week or so").
 17

"When a party to an agreement commits an immaterial breach of

that agreement, the injured party is entitled to bring an

immediate action for damages; it may not stop performing its

obligations under the agreement." Lease-It, Inc. v.

Massachusetts Port Authy., supra. "[O]nly a material breach of

a contract . . . justifies a party thereto in rescinding it."

Ibid., quoting from 6 Williston, Contracts § 829 (3d ed. 1962).

For the reasons set forth above, a specific deadline by

which full payment of the settlement sum would be due was not a

material term of the March 21, 2013, agreement. It follows that

even if the defendants' demand that they be given three weeks to

complete payment were considered an actual breach of the

agreement,20 this would not be a material breach, and the Duffs

still would not have been entitled to repudiate the settlement

agreement. Their remedy for such a breach would have been for

enforcement of the agreement and damages (including statutory

20
Arguably, even if the parties had agreed that the
settlement payment would be due immediately upon execution of
the formal settlement document, the defendants still had
committed only an anticipatory breach (for which the remedy
would have been, at most, enforcement of the contract). See
K.G.M. Custom Homes, Inc. v. Prosky, 468 Mass. 247, 253-254
(2014). In K.G.M. Custom Homes, Inc., supra at 249, 253, an
anticipatory breach "morphed" into an actual breach, because the
offending party's efforts to "scuttle the deal" amounted to a
breach of the implied covenant of good faith and fair dealing.
The Duffs have not raised such a claim.
 18

interest from the date of the breach).21 The Duffs have not

sought such remedies, seeking instead to avoid the settlement

agreement and to bring their underlying claims. The only remedy

the Duffs have pursued is not available to them.22

Judgment affirmed.

21
The Duffs argue that the defendant materially violated
the settlement agreement by insisting that their interpretation
be accepted before the settlement were implemented. However,
the same logic would apply to the Duffs (who, after all, were
equally insistent that their interpretation be adopted).
22
Because the Duffs' appeal is not frivolous, we deny the
defendants' request for appellate attorney's fees and costs.
 GRAINGER, J. (concurring). I agree with the result of the

majority opinion because I conclude that the plaintiffs'

behavior was commercially unreasonable and tantamount to a

breach of the settlement agreement. The protracted nature of

the parties' dispute before they agreed to a settlement is

irrelevant to this appeal. The plaintiffs have raised only two

issues: (1) Whether the payment schedule was a material part of

the settlement, and (2) Whether the defendants breached the

settlement agreement.

In the absence of a stipulated time for payment and without

even a standard provision that "time is of the essence," the

parties had an obligation to perform within a reasonable time.

The defendants' offer to pay $17,500 at the time of signing the

settlement agreement and to remit the balance of $10,000 within

three weeks was reasonable under any recognizable standard of

commercial dealing.

The payment schedule offered by the defendants cannot

sensibly be characterized as a material departure from the

settlement terms. The use of $10,000 for twenty-one days had an

arguable value between $7.77 and $18.95 at the time in question.1

1
The United States Treasury Department set the Federal
Reserve Prime Interest Rate at 3.25% throughout 2010. See
http://www.federalreserve.gov/releases/H15/data.htm
[https://perma.cc/AZ7B-CHH3]. Application of this rate is
generous to the plaintiffs, as many market rates, including
 2

The offer to pay the second installment within three weeks thus,

at most, can be claimed to have reduced the value of the $27,500

settlement by between .0003 and .0018 (.03% and .18%).

I am unpersuaded by the assertion that requiring the

plaintiffs to execute a signed copy of the previously negotiated

agreement including the defendants' proposed payment schedule

was a repudiation of the settlement. For whatever reason, the

intended execution of a signed copy of the agreement had been

subject to delay.2 The defendants' manifest desire was to

confirm, not repudiate, the agreement. If the plaintiffs

desired to quibble over the point they were required to counter

the proposed payment schedule with a different, but also

reasonable, proposal. While such an exchange might eventually

have resulted in unraveling the agreement, the alacrity with

which the plaintiffs demanded an additional $2,500 and then

filed suit on the following day suggests strongly that the

defendants' desire to secure the plaintiffs' signature on the

existing agreement was based on a legitimate concern, accurately

perceived.

regulated benchmarks (e.g., rates applied to unpaid taxes),
reduce that rate by 200 basis points, in this case to 1.25%.
2
The plaintiffs' counsel expressed concern during the
period of delay that he did not "want to give the clients too
much time to rethink this." Subsequent events have justified
this remark.