Reported / Citable
Background
Traxxas, L.P. moved to enforce a proposed settlement with Foshan Zhengze Model Technology Co., Ltd. after Foshan indicated that it did not intend to execute the settlement agreement. Traxxas relied on emails from defense counsel stating that counsel had discussed a revision with the client, that the parties were “in agreement,” and that the client had internal approval to proceed.
Traxxas also cited the parties’ third motion for an extension, which stated that they had reached agreement on all settlement terms and that Traxxas had executed the settlement agreement. Foshan did not respond to the enforcement motion after terminating its attorneys’ authority to take substantive positions, and the court subsequently permitted those attorneys to withdraw.
The Court’s Holding
The court denied Traxxas’s motion to enforce the settlement. Because the proposed agreement did not expressly require signatures as a condition of enforcement, the court considered whether the evidence showed that Foshan had unconditionally assented to its terms.
The emails reflected a “settlement in principle,” agreement between Foshan and its counsel concerning a proposed final draft, and internal approval to proceed. But the court concluded that none of those communications established Foshan’s unconditional assent to the settlement agreement Traxxas sought to enforce.
The parties’ extension motion did not change the result. Although it stated that the parties had agreed on all settlement terms, it did not establish that they had assented to the terms of the particular settlement agreement before the court. The court therefore found no agreement to enforce and denied Traxxas’s motion to expedite briefing as moot.
Key Takeaways
- An unsigned settlement may be enforceable when signatures are not expressly required, but the proponent must show unconditional assent by both parties.
- Statements describing a “settlement in principle” or internal approval to proceed did not establish unconditional assent to the proposed agreement.
- A filing stating that the parties agreed on all settlement terms was insufficient because it did not tie that assent to the specific agreement presented for enforcement.
Why It Matters
The decision underscores the evidentiary gap between progress toward settlement and a binding agreement. Counsel’s statements that a draft is final or internally approved may not suffice if the record does not clearly demonstrate the client’s unconditional assent to the specific terms at issue.
Parties seeking enforceable settlements should document final assent clearly, particularly when execution will occur later or when communications refer only to an agreement “in principle.”