Attorney At Law Magazine – Minnesota Edition
Author: Peter J. McElligott
As every litigator knows, most cases settle. Quite often, parties reach an agreement in principle and later reduce that agreement to writing. At some point, the parties have to inform the court.
What happens when the parties inform the court that they have reached a verbal settlement agreement but one party later changes its mind? In a recent case, Doran Dev., LLC v. Se Props., Inc., 2017 WL 2062055 (Minn. Ct. App. May 15, 2017), the Minnesota Court of Appeals affirmed the district court’s use of discretion not to enforce the settlement agreement.
In the fall of 2013, Doran Development and related entities (“Doran”) made plans to build a boutique hotel in Dinkytown. In connection with that development, Doran sought an easement across two nearby properties for hotel access. One of those properties was a commercial office building owned by Southeast Properties, Inc. (“Southeast”). Soon thereafter, Doran entered into negotiations to purchase the building owned by Southeast, but Doran discovered that an individual named Wael Sakallah had a right of first refusal. After Doran and Southeast drafted the purchase agreement, Sakallah exercised his right by crossing out Doran’s name and adding his own as purchaser. However, the purchase agreement Sakallah signed contained provisions granting Doran an access easement and a temporary construction easement.
Doran commenced suit against Southeast and Sakallah as a third-party beneficiary to the purchase agreement to exercise its rights pursuant to the easements. Sakallah subsequently brought claims against Doran and Southeast. A few months later, Doran and Southeast stipulated to dismiss the claims between them, but the dispute with Sakallah remained.
Nearly a year later, in May 2015, attorneys for Doran and Sakallah held an off-the-record conference call with the district court. During that call, the attorneys informed the court that they reached a verbal settlement agreement in which Sakallah would purchase properties recently acquired by Doran on the condition that they were appraised at or above the agreed purchase price. Despite this representation to the court, the case did not settle.