Similar to another recent Court of Appeals decision where the Court enforced the terms of a memorandum of understanding, the Court of Appeals has again enforced the terms of a “preliminary” agreement as if it were an enforceable contract where the terms of the agreement establish a “meeting of the minds.” A link to a blog we wrote on the previous case is posted below:
Sometimes the Court will refer a dispute to facilitation. If the dispute is referred to facilitation, a neutral third party is brought in to help the parties resolve the dispute without the need for litigation. This is not always an easy task, and sometimes it is helpful to first establish a framework for further negotiations between the parties. The parties may agree on steps that are necessary for the resolution of their dispute and put these steps into their facilitation agreement that will presumably be followed in resolving the dispute.
However, as seen in the recent Court of Appeals decision in Huntington Bank v. Michael Gordon, where the parties have signed the agreement and included enough information in their facilitation agreement to establish a “meeting of the minds,” the Court may enforce the terms of the agreement as if it were an enforceable contract.
In Huntington Bank v. Michael Gordon, family members were pitted against each other in the division of a family business. The Court referred the dispute to facilitation, where the parties agreed to, and signed, two facilitation agreements. Later, one of the parties attempted to enforce the facilitation agreement as a contract (i.e. settlement agreement). The other family members protested the enforcement of the facilitation agreement, arguing that it was merely an “agreement to agree” and a “framework” for further negotiations.
The Court, however, rejected the argument that the agreement was merely an “agreement to agree,” and pointed specifically to language in the agreement that appeared to have more finality. For example, the document was identified as an agreement and not simply designed to memorialize where the parties were in negotiations. Furthermore, the agreement stated that counsel will draft “the documents necessary to implement this agreement,” further reflecting that the parties viewed the document as an agreement.
Importantly, the Court also made reference to how the document looks to someone that wasn’t there when it was drafted and signed. The trial court stated, “I’m looking at is this document that is signed by everybody that to me if you didn’t complete everything and you expected to get back together with more information why was a document prepared and signed by all of the parties and referenced I believe as an agreement.”
A link to the Court’s full opinion can be accessed below:
http://law.justia.com/cases/michigan/court-of-appeals-unpublished/2014/312884.html
If you or your business is facing potential litigation, or you have any questions regarding the article above, please contact the attorneys at Demorest Law Firm.
