Motion to Enforce Settlement Cannot be Granted Without First Determining No Genuine Issues of Material Fact


McKenna v. AOAO of Elima Lani (HSC June 25, 2020)

Background. Carol McKenna owned a condominium in South Kohala on the Big Island. The Association of Apartment Owners of Elima Lani Condominiums governs the building. In 2010, McKenna discovered water damage that appeared to have been caused by a leak coming from her neighbor’s unit above her owned by Ross Andaloro. McKenna alleged that she contacted her AOAO about the leak, but the AOAO did not fix it and did not allow her to do so. Months later, McKenna claimed to find mold and suffered symptoms associated with exposure to mold. She claims that she was forced to vacate due to contamination. She filed a complaint in the circuit court against her AOAO, Andaloro, and Wells Fargo Bank, the previous owner of Andaloro’s condo, averring negligence and misrepresentation.


For two years in the circuit court—Hon. Judge Elizabeth Strance presided over much of the case, but Hon. Judge Melvin Fujino entered the final judgment—the parties worked toward settlement. At a settlement conference in 2014, the parties went on the record and acknowledged that a settlement had been reached. The parties described “essential terms” of the agreement. The defendants agreed to pay McKenna $60,000 cash and the AOAO would release any lien and outstanding amounts owed by McKenna. It would be a general-damages only release and the parties would execute a settlement agreement with mutual releases, standard settlement terms, and dismissal. The circuit court asked McKenna—not her lawyer—on the record if she agreed to these terms. “Yes,” she replied.


The bank drafted a settlement agreement and circulated it among the parties. McKenna instructed her lawyer not to sign anything on her behalf because she did not agree to the terms. She did not sign the agreement and her lawyer withdrew as counsel. McKenna became pro se.


Nine days later the defendants filed a motion to enforce the settlement agreement. McKenna filed a memorandum in opposition and attached a declaration claiming that her verbal assent to the settlement was invalid. She asserted that the circuit court told her “It is not about the merits of the case, you cannot afford $100,000 to go to trial.” She replied that she felt she had a good case, but the circuit court told her she could not afford the “professional witnesses.” She also claimed that near the end of the settlement conference, the parties were somewhere between $30,000 to $60,000 and she started to feel sick. She asked to leave, but was told she could not.


At the hearing on the motion to enforce the settlement, McKenna argued there was no meeting of the minds at the conference and the conference lacked essential terms about repairing her unit. It also had terms she did not agree to and the settlement was invalid because the other parties only sent their attorneys. The defendants countered that they gave their counsels full authority to settle.  The circuit court granted the motion and found that there had been a meeting of the minds about the essential terms. The circuit court did recognize that there were some terms that were not hashed out at the conference and took that under advisement.


McKenna objected and filed another motion claiming genuine issues of material fact. She requested an evidentiary hearing to determine whether there was a meeting of the minds. She made further claims that she was under duress and coerced by her counsel and the defendants. At the hearing, the circuit court characterized her motion as a motion for reconsideration and denied it.


The circuit court revised some of the terms that had been under advisement and ultimately ordered the submission of a stipulation to dismiss the case. Final judgment was entered and McKenna appealed. The ICA—Chief Judge Ginoza, Judge Reifurth, and Judge Chan—affirmed.


Order Enforcing Settlement Terms Require no Genuine Issues of Material Fact (About the Settlement). The HSC adopted the analysis and holding in Miller v. Manuel, 9 Haw. App. 56, 64, 828 P.2d 286, 292 (1991). There the ICA held that an order granting a motion to enforce a settlement agreement is similar to an order granting summary judgment—that there are no genuine issues of material fact and the settlement must be enforced as a matter of law. Id. at 64, 828 P.2d at 292. It is reviewed by the same standards as a motion for summary judgment. Id. Therefore, a motion to enforce a settlement agreement should be granted when there are “no genuine issues of material fact and [] as a matter of law the parties [] entered into a valid compromise agreement.” Id.


According to the HSC, the Miller case is consistent with Hawai'i law, the law of other jurisdictions and supported by public policy. See Kaneohe Bay Cruises, Inc. v. Hirata, 75 Haw. 250, 258, 861 P.2d 1, 6 (1993) (“summary judgment is proper where the moving party demonstrates that there is no genuine issue of material fact and it is entitled to judgment as a matter of law.”); Resnick v. Valente, 637 P.2d 1205, 1206 (Nev. 1981) (agreement cannot be reduced to judgment upon motion without evidentiary hearing); Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987) (when “material facts concerning the existence or terms of an agreement to settle are in dispute, the parties must be allowed an evidentiary hearing.”).


The HSC held that the circuit court cannot grant a motion to enforce the settlement when there are genuine issues of material fact relating to the existence and terms of the agreement.


There was a Genuine Issue of Material Fact About the Settlement Agreement Here. A settlement agreement is a contract. Dowsett v. Cashman, 2 Haw. App. 77, 83, 625 P.2d 1064, 1068 (1981). That requires mutual assent or a meeting of the minds to make it binding. Carson v. Saito, 53 Haw. 178, 182, 489 P.2d 636, 638 (1971). The circuit court was required to determine if there was a meeting of the minds of the essential and material terms among the parties. But see Restatement (Second) of Contracts § 204 (when parties do not agree to term, court may supply it when reasonable under the circumstances). The alleged facts and inferences must be “viewed in the light most favorable to the non-moving party.” Miller, 9 Haw. App. At 65, 828 P.2d at 292.


In this case, McKenna presented adequate evidence that here had not been a meeting of the minds. In other words, there was a genuine issue of material fact as to the actual existence of a settlement agreement. After all, the question of whether or not parties entered into an agreement in the first place is a question of fact. Island Directory Co. v. Iva’s Kinimaka Enters., Inc., 10 Haw. App. 15, 23, 839 P.2d 935, 940 (1993). Moreover, there appeared to be genuine issues of material fact about the terms of the agreement. Due to these issues of fact, the circuit court erred in granting the motion to enforce the settlement without first holding an evidentiary hearing or setting it for a new trial.


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