Court: Louisiana Court of Appeal; February 5, 2008; Louisiana; State Appellate Court
The case involves a dispute between homeowners, the Peltiers, and their builder, Manuel Builders, LLC, regarding the alleged defective construction of a home. After the Peltiers filed suit, the builder invoked an arbitration clause in their contract. The arbitration was postponed at both parties' request while settlement negotiations occurred. Manuel’s attorney proposed buying back the house, which led the Peltiers to assert that a settlement was reached for the appraised value of $218,500. After a lack of communication from Manuel, the Peltiers filed a Motion to Enforce Settlement, which the trial court granted without any opposition from Manuel.
Manuel appealed, arguing that the evidence did not substantiate a valid settlement, as there was no written agreement or recitation in open court, as mandated by Louisiana Civil Code Article 3071. The appeal court concurred with Manuel, stating that the letters exchanged did not constitute a formal agreement, thus reversing the trial court's decision and imposing all costs of the appeal on the Peltiers. The court emphasized that a valid transaction or compromise must be documented in writing or presented in open court to be enforceable.
The agreement allows for judicial enforcement, provided that any transaction or compromise is either documented in writing or recited in open court. The Louisiana Supreme Court's ruling in Felder v. Georgia Pacific Corp. established that a compromise not reduced to writing is unenforceable, a principle that remains unless a recitation in open court is documented. In this case, there is no evidence of such a recitation, as neither Manuel nor his counsel attended the proceeding. The Peltiers argue that correspondence between the parties' attorneys indicates a reached compromise. However, their reliance on Felder is misplaced; the court clarified that an agreement can be valid if there are separate written documents showing offer and acceptance. The letters cited by the Peltiers do not demonstrate a clear offer from Manuel, as one letter merely expresses his willingness to purchase the house back without specifying a price, implying an invitation for the Peltiers to make an offer. Additionally, a letter to an arbitrator indicates that the parties were close to a resolution, not that a formal agreement had been finalized.
The letter in question indicates that the parties are "on the verge" of a settlement but does not confirm that a settlement has been reached. Additionally, since the letter is not addressed to the Peltiers, it cannot be considered a signed offer or acceptance of settlement from Manuel to them. The Peltiers reference two other documents as evidence of a transaction or compromise: a letter from their attorney to Manuel's attorney and a letter from the arbitrator to both parties' attorneys. However, these letters do not include a written offer or acceptance signed by Manuel or his representative, which is required by law.
The Peltiers also argue that Manuel's failure to oppose their Motion to Enforce Settlement, despite being notified, justified the trial court's decision. However, this argument is flawed as neither Manuel nor his counsel were legally obligated to respond, and it appears Manuel was unaware of the Peltiers' attempts to communicate. The absence of opposition does not automatically validate the motion, and the Peltiers failed to meet their burden of proof regarding the settlement's validity.
Consequently, the trial court erred in ruling that the exchanged letters constituted an enforceable settlement, as there was insufficient evidence of a valid transaction or compromise. The judgment in favor of the Peltiers is reversed, with all appeal-related costs to be borne by them. The revisions to the Louisiana Civil Code affirm that a compromise must be documented in writing, maintaining the original legislative intent.
