Waterfront, L.L.C. v. Shia

Citation: 2022 Ohio 3259Docket: 29377

Court: Ohio Court of Appeals; September 16, 2022; Ohio; State Appellate Court

Original Court Document: View Document

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Defendant-Appellant Johnna Shia appeals a judgment from the Montgomery County Court of Common Pleas that enforced an on-the-record settlement agreement and awarded attorney fees to Plaintiff-Appellee Waterfront, LLC. Shia acquired a house on two plots of land in 2013, securing a mortgage with Waterfront and executing a promissory note for $231,686.33, payable in monthly installments. Following sporadic payments, Waterfront filed a complaint for damages and foreclosure in October 2019, declaring all indebtedness due due to Shia's failure to make payments. The total amount claimed was $235,040.64 with interest and late fees.

After extensive motion practice and settlement attempts, a trial commenced on January 27, 2021, during which the parties reached a settlement agreement, read on the record and accepted by both parties, including Shia. Following the settlement, Shia's attorneys withdrew, citing a breakdown in communication. After a delay in finalizing the agreement, the court ordered a settlement memo. On February 24, 2021, Shia filed a motion to stay the settlement's performance, expressing dissatisfaction with some terms, including automatic payment arrangements and concerns regarding unaddressed material terms from negotiations.

On March 1, 2021, both parties submitted settlement memoranda as per the court's order. Waterfront indicated that Shia had not communicated with either her counsel or Waterfront regarding the draft Settlement Agreement and had not made a required payment. Shia claimed she lacked adequate time to consider the agreement and felt her counsel did not represent her interests, alleging coercion during negotiations. She described her emotional state, stating she felt paralyzed when pressured to decide on her financial contributions to maintain her home.

On March 4, 2021, the trial court denied Shia's request for a stay. Due to Shia's non-compliance with the settlement terms, Waterfront filed motions to enforce the settlement and show cause on March 5, 2021. An evidentiary hearing took place on April 20, 2021, leading the court to determine that a valid settlement agreement existed and that Shia had breached it. Subsequently, Waterfront sought attorney fees, which the court granted on July 26, 2021. 

Shia appealed, raising three assignments of error, primarily contesting the enforceability of the oral settlement agreement and the court's ruling. She argued that the agreement was not a binding contract and that the final version adopted lacked sufficient support in the record. The court, referencing relevant case law, affirmed that the settlement agreement was valid and enforceable as it was established in the presence of the court. It emphasized that once a settlement is recorded, it cannot be repudiated by either party, as allowing such repudiation would undermine the settlement process. The court had previously encouraged the parties to attempt settlement before proceeding with witness testimonies on the trial's first day.

The parties reached an agreement during a lunch break, with Waterfront's counsel outlining the terms on the record. Key points of the agreement include: the continuation of the current note with modifications; a new loan face amount of $250,000, with a principal payment of $225,000 if paid on time; Shia will release $10,000 from escrow to reduce the loan principal; a four-year loan term with a balloon payment; monthly payments of $1,435 withdrawn automatically; a 30-day window for Shia to cure any default; and provisions for attorney's fees to the winning party in case of enforcement. Both parties expressed their agreement, with Shia affirmatively confirming her assent in court.

Despite this, Shia contests the agreement's validity, arguing a lack of "meeting of the minds" and that it was not in writing. The concept of "meeting of the minds" relates to mutual assent, which was established through the parties' actions during negotiations. The transcript confirms their agreement to the modified terms. Shia's claim regarding the absence of a written agreement fails because she did not sign off on the terms, which falls under the "invited error doctrine," preventing her from challenging the resulting judgment. Additionally, the Ohio Supreme Court recognizes that oral settlement agreements can be enforceable if they have sufficient detail to constitute a binding contract. In this case, the terms read into the record provided adequate specificity to establish enforceability.

Shia challenges the binding nature of the settlement agreement by invoking the Statute of Frauds, which is deemed inapplicable to in-court settlement agreements according to Ohio law. Courts have established that such agreements do not require compliance with the statute, as they primarily serve as a resolution mechanism rather than a transfer of real estate interests. Shia further contends that the trial court erred by enforcing the agreement since not all terms were read into the record. However, an agreement is considered enforceable if it includes essential elements, such as the parties involved and the subject matter. In this case, the critical terms were known and expressed during the trial, with only a start date missing, which was acknowledged by both parties. Shia had the opportunity to negotiate the final terms, yet chose not to, indicating a voluntary acceptance of the settlement. The court maintains that even if Shia later wished to retract her agreement, it remains valid unless proven to be the result of fraud or coercion. The trial court recognized that both parties were sophisticated, with Shia being an attorney, and noted that a mere change of heart does not invalidate the settlement. The final judgment was consistent with the settlement terms discussed, with the only discrepancy being the start date, which was inadvertently omitted. Consequently, the court found the settlement agreement valid and enforceable, overruling Shia’s assignments of error.

Shia challenged the trial court's award of attorney fees to Waterfront, arguing that there was no enforceable settlement agreement and that the award violated the 'American Rule,' which generally prohibits the recovery of attorney fees by the prevailing party unless specified by statute, due to bad faith, or by contract. The court determined that a valid settlement agreement existed, thereby affirming the attorney fee award. The agreement explicitly stated that the winning party in enforcement actions would be entitled to recover fees from the losing party, as confirmed in the trial record. Additionally, under Ohio common law, attorney fees can be awarded as compensatory damages if incurred due to a breach of a settlement agreement. Fees incurred after a breach are relevant to compensatory damages, allowing recovery even if other exceptions to the 'American Rule' do not apply. Consequently, the trial court's decision to grant Waterfront attorney fees was justified based on the breach of the settlement agreement, leading to Shia incurring those fees. The court overruled Shia's assignment of error, affirming the trial court's judgment.