Brian Rhodes v. Stockwell Homes, L.L.C.

• Court: Court of Appeals of Minnesota
• Decided: March 4, 2024
• Docket: a230884
• Status: Published

Opinion

STATE OF MINNESOTA IN COURT OF APPEALS A23-0884

Brian Rhodes, et al., Appellants,

vs.

Stockwell Homes, L.L.C., et al., Respondents.

Filed March 4, 2024 Reversed and remanded Frisch, Judge

Hennepin County District Court File No. 27-CV-22-4312

Robert J. Shainess, Monica L. Davies, Capstone Law, LLC, Edina, Minnesota (for appellants)

Christopher R. Jones, Brian N. Niemczyk, Hellmuth & Johnson PLLC, Edina, Minnesota (for respondents)

Considered and decided by Worke, Presiding Judge; Frisch, Judge; and Smith, John,

Judge. ∗

SYLLABUS

A party’s authorized attorney may sign a “mediated settlement agreement” under

Minn. Stat. § 572.33, subd. 4 (2022), on behalf of that party.

∗ Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. OPINION

FRISCH, Judge

Appellants challenge the district court’s order enforcing a settlement agreement

reached as part of mediation proceedings. Because the district court properly concluded

that a party may authorize their counsel to sign a mediated settlement agreement but

erroneously concluded that the record established as a matter of law the existence of an

enforceable, signed mediated settlement agreement, we reverse and remand.

FACTS

Appellants Brian and Briana Rhodes commenced this action against respondents

Stockwell Homes L.L.C. and Jennifer Stockwell (together referenced as Stockwell)

following a failed residential remodeling project. The Rhodeses alleged that they engaged

Stockwell for a design contract and a subsequent remodeling contract. After the Rhodeses

paid Stockwell a deposit representing 20% of the estimated project cost under the

remodeling contract, Stockwell informed the Rhodeses that the project would cost much

more than previously estimated. The Rhodeses declined to sign another remodeling

contract with the new project cost. Stockwell refused to manage the project and refused to

return the Rhodeses’ deposit.

The Rhodeses alleged two counts of breach of contract and one count each of unjust

enrichment, promissory estoppel, conversion, and civil theft against Stockwell Homes, and

one count each of negligent misrepresentation and fraudulent inducement against

Stockwell Homes and Jennifer Stockwell. The Rhodeses sought damages against

2 Stockwell Homes in excess of $172,575.69 and against Jennifer Stockwell in excess of

$50,000. The matter proceeded to mediation.

On November 16, 2022, Stockwell and Brian Rhodes attended mediation with their

respective counsel but did not reach an agreement. On November 17, the mediator emailed

a “mediator’s proposal” to counsel for both parties, requesting a confidential response to

two options—“OPTION A” and “OPTION B”—by 9:00 a.m. on November 19. The

mediator explained that upon receipt of “matching CONFIDENTIAL YES answers to

OPTION A, that will be the DEAL.” On November 19, the mediator emailed counsel for

both parties, “My congrats . . . . We have an OPTION A DEAL. Terms below. [The

Rhodeses’ counsel] mentioned one clarification that is both standard and fair. If the

Settlement Payment is not timely made, the muzzles come off. No arguments on this one.”

The mediator anticipated “a draft agreement early next week.” The following day, the

Rhodeses’ counsel emailed the mediator and Stockwell’s counsel stating, “I regrettably

write to let you know that we do not have an agreement. After careful consideration, my

clients are unwilling to accept the terms.”

The Rhodeses moved for partial summary judgment on one of their

breach-of-contract claims. Stockwell separately moved to enforce the settlement

agreement or, in the alternative, for summary judgment on the Rhodeses’ unjust-

enrichment, promissory-estoppel, conversion, civil-theft, negligent-misrepresentation, and

fraudulent-inducement claims, and to dismiss Jennifer Stockwell as a defendant. Stockwell

argued that a binding settlement agreement was formed when the Rhodeses’ counsel

emailed the mediator that the Rhodeses agreed to the mediator’s proposed settlement terms.

3 The Rhodeses opposed the motion to enforce the settlement agreement and Stockwell’s

motion for summary judgment.

Following a hearing on the motions, Stockwell’s counsel filed a declaration noting

that the district court agreed to leave the record open “to allow the parties to submit more

complete copies of the email communications between the mediator and parties’ attorneys,

setting forth the terms of the parties’ settlement agreement.” 1 The declaration provided

that the parties agreed to submit the attached portion of the November 17 email from the

mediator, which included nonconfidential details about each settlement option. The

exhibits to the declaration do not include, and the record does not otherwise contain, an

email from the Rhodeses’ counsel to the mediator stating that the Rhodeses agreed to the

mediator’s proposed Option A.

The district court denied the Rhodeses’ motion for summary judgment and granted

Stockwell’s motion to enforce the settlement agreement. The district court reasoned that

counsel for the Rhodeses electronically signed a mediated settlement agreement on their

behalf by responding to the mediator that they would agree to the mediator’s proposed

Option A. The district court ordered the parties to execute a settlement agreement

consistent with Option A and dismissed the matter with prejudice.

The Rhodeses appeal the district court’s order granting Stockwell’s motion to

enforce the settlement agreement.

1 The record on appeal does not include a transcript of the hearing.

4 ISSUES

I. Did the district court err by determining that a party’s attorney may sign a mediated settlement agreement on that party’s behalf?

II. Did the district court err in determining that an enforceable, signed mediated settlement agreement existed as a matter of law?

ANALYSIS

The Rhodeses argue that the district court erred in enforcing the settlement

agreement because (1) Minn. Stat. § 481.08 (2022), which permits an attorney to bind their

client by agreement, does not apply to “mediated settlement agreements” made pursuant to

the Minnesota Civil Mediation Act (MCMA), Minn. Stat. §§ 572.31-.40 (2022); (2) the

record does not contain evidence of an agreement that the settlement agreement may be

signed electronically, as required to apply the Minnesota Uniform Electronic Transactions

Act (UETA), Minn. Stat. §§ 325L.01-.19 (2022); and (3) the record does not contain

evidence that an attorney electronically signed a settlement agreement on behalf of the

Rhodeses. We address each argument in turn.

I. A party’s authorized attorney may sign a mediated settlement agreement on behalf of that party.

The Rhodeses first question whether counsel for a party may sign a mediated

settlement agreement on that party’s behalf. The Rhodeses argue that only a party, and not

counsel authorized to sign on behalf of a party, may sign a mediated settlement agreement

under the MCMA. Stockwell, on the other hand, argues that authorized counsel may sign

a mediated settlement agreement on behalf of a party pursuant to Minn. Stat. § 481.08. We

agree with Stockwell.

5 Although the MCMA itself is silent as to whether an authorized attorney may sign

a mediated settlement agreement on behalf of a party, Minnesota law recognizes the ability

of an authorized attorney to sign a settlement agreement on behalf of a party. Pursuant to

Minn. Stat. § 481.08, “[a]n attorney may bind a client, at any stage of an action or

proceeding . . . made in writing and signed by such attorney.” And we have interpretated

this language to mean that an attorney may settle a claim on behalf of their client if

authorized to do so. Skalbeck v. Agristor Leasing, 384 N.W.2d 209, 212-13 (Minn. App.

1986) (reasoning that “[Minn. Stat. § 481.08 (1984)] does not allow counsel to settle a

client’s cause of action without authority from the client” but that the district court had

sufficient evidence to conclude that appellants had authorized their counsel to settle). We

see no principled basis why settlement agreements governed by the MCMA are excepted

from this rule, particularly when section 481.08 expressly provides that an attorney may

bind a client at “any stage” of an action. 2 (Emphasis added.)

Our conclusion is consistent with Minnesota law, including provisions in the

MCMA incorporating the application of common-law contract principles in the

consideration of mediated settlement agreements. See Minn. Stat. §§ 572.35, subd. 1

(providing that the “effect of a mediated settlement agreement shall be determined under

2 We express no opinion as to whether a party must be personally informed of the conditions set forth in Minn. Stat. § 572.35, subd. 1, or must personally sign an agreement to mediate pursuant to Minn. Stat. § 572.33, subd. 3, as neither question is before the court. We note that the record contains an unsigned agreement to mediate—which under the MCMA is distinct from a mediated settlement agreement—that contains the disclosure of conditions as required under the MCMA. The parties do not dispute that they were informed of the required disclosures.

6 principles of law applicable to contract”), .36 (providing that a mediated settlement

agreement may be set aside or reformed “if appropriate under the principles of law

applicable to contracts”). Our conclusion is also consistent with well-settled public policy

encouraging the settlement of claims. See Voicestream Minneapolis, Inc. v. RPC Props.,

Inc., 743 N.W.2d 267, 271 (Minn. 2008) (stating that the “[s]ettlement of claims is

encouraged as a matter of public policy”).

We therefore hold that a party’s authorized attorney may sign a “mediated

settlement agreement” on behalf of that party. We discern no error in the district court’s

determination that counsel for the Rhodeses may sign a mediated settlement agreement if

authorized to do so. 3

II. The district court erred in determining the existence of both an agreement to electronically sign a settlement agreement and a signed mediated settlement agreement.

The Rhodeses next challenge the district court’s enforcement of a mediated

settlement agreement between the parties based on purported electronic communications

between their counsel and the mediator. They argue that application of the UETA requires

evidence of an agreement to conduct business through electronic means, Minn. Stat.

§ 325L.05(b); that the UETA defines an electronic signature as “an electronic sound,

symbol, or process attached to or logically associated with a record and executed or adopted

by a person with the intent to sign the record,” Minn. Stat. § 325L.02(h); and that the record

does not contain evidence of an agreement to electronically sign a settlement agreement

3 In reaching this conclusion, we express no opinion as to whether the Rhodeses authorized their counsel to agree to the mediator’s proposal.

7 and does not contain evidence of an electronic signature on a settlement agreement. We

agree.

We first address our standard of review. A party seeking to enforce a settlement

agreement bears the burden of establishing the existence of a binding settlement agreement.

See Berndt v. Berndt, 149 N.W. 287, 288 (Minn. 1914) (assigning burden to party seeking

relief that would effectively result in a decree for specific performance of an alleged

contract to convey real property to clearly prove the existence of the contract and that the

terms of the contract were “so specific and distinct as to leave no reasonable doubt of their

meaning” (quotation omitted)). The district court treated the motion to enforce the

settlement agreement as a motion for summary judgment, which is consistent with the

supreme court’s directive in Voicestream. 743 N.W.2d at 273 (“[W]e hold that a district

court shall treat a motion to enforce a settlement agreement as it would a motion for

summary judgment, and explicitly grant or deny each claim.”). And the parties do not

dispute that our review of the district court’s decision to enforce the settlement agreement

is de novo. We therefore “review de novo whether a genuine issue of material fact exists.”

STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 77 (Minn. 2002).

Whether the parties agreed to sign an agreement electronically and whether a

purported electronic signature meets the definition of an electronic signature under the

UETA are questions of fact. See SN4, LLC v. Anchor Bank, fsb, 848 N.W.2d 559, 566-69

(Minn. App. 2014) (analyzing whether a reasonable fact-finder could conclude that the

parties agreed to use electronic signatures and whether a reasonable fact-finder could

conclude that a party electronically signed the agreement), rev. denied (Minn. Sept. 16,

8 2014); see also Minn. Stat. § 325L.02(a) (defining agreement as “the bargain of the parties

in fact” (emphasis added)). We therefore consider whether the facts in the record establish

the existence of (1) an agreement to electronically sign a settlement agreement and (2) a

signed mediated settlement agreement. 4

The record does not contain evidence that the parties agreed to electronically sign a

settlement agreement. 5 Minn. Stat. § 325L.05(b) (stating that the UETA “applies only to

transactions between parties, each of which has agreed to conduct transactions by

electronic means” and that “whether the parties agree to conduct transactions by electronic

means is determined from the context and surrounding circumstances, including the

4 The district court in its conclusions of law wrote that the Rhodeses “do not claim that a genuine issue of material fact exists as to whether a binding settlement agreement was created” and that the Rhodeses “have not raised any factual issues.” But in their brief opposing the motion to enforce the settlement agreement, the Rhodeses asserted that “the parties did not agree that they could be bound by email exchanges between their attorneys and the mediator” and that “[n]one of the parties electronically signed the agreement” and therefore UETA did not apply. (Emphasis added.) While we acknowledge that the Rhodeses framed their argument as an issue of law, we conclude that these assertions amount to disputes as to the course of events giving rise to the purported agreement. And we cannot consider any possible concessions made at the hearing on the motions because the transcript for this hearing is not in the record on appeal. In addition, given the timing of events giving rise to the motion to enforce the settlement agreement, the parties did not conduct any discovery regarding the issues pertinent to the motion. The district court ultimately determined that there were no genuine issues of material fact regarding an agreement to sign the settlement agreement electronically and the existence and nature of an electronic signature. We therefore do not consider this argument forfeited. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that appellate courts generally address only those questions previously presented to and considered by the district court). 5 The district court pointed out that the “vast majority of filings in the case have been electronically signed by counsel.” The electronic filing of documents in the district court does not establish an intent to sign the settlement agreement electronically. See SN4, 848 N.W.2d at 568 (stating that the “record was devoid of evidence showing intent to transact electronically with respect to the subscription of the agreement” (emphasis added)).

9 parties’ conduct.”). As in SN4, the record contains no express agreement between the

parties to electronically sign a settlement agreement. 848 N.W.2d at 567. Although the

district court inferred the existence of such an agreement, the Rhodeses argued to the

district court that they did not agree to electronically sign a settlement agreement. And the

evidence does not support a determination as a matter of law that the parties’ conduct

evinced an intent to sign a settlement agreement electronically. This record therefore does

not contain evidence allowing a determination as a matter of law that the parties agreed to

electronically sign a settlement agreement.

Nor does the record contain evidence of a signed mediated settlement agreement.

The district court speculated that “a signed writing almost certainly exists.” (Emphasis

added.) But no such document appears in the record. We acknowledge that an email

signature can be an electronic signature under the UETA, SN4, 848 N.W.2d at 568, but this

record does not contain any email from the Rhodeses’ counsel accepting the mediator’s

proposed Option A. The mediator’s email does not contain “an electronic sound, symbol,

or process attached to or logically associated with a record and executed or adopted by a

person with the intent to sign the record.” Minn. Stat. § 325L.02(h). And, again, the

Rhodeses disputed the existence of a signed agreement before the district court. 6 On this

6 Stockwell moved to enforce the settlement agreement after the close of discovery. At oral argument before this court, counsel for the parties represented that they did not conduct formal discovery regarding the underlying facts giving rise to the motion to enforce the settlement agreement and that neither counsel was aware of the substance of communications between the mediator and the Rhodeses’ counsel who represented them at mediation and before the district court.

10 record, it is not possible to conclude as a matter of law that a signed mediated settlement

agreement exists.

DECISION

We hold that a party’s authorized attorney may sign a “mediated settlement

agreement” on behalf of that party. Accordingly, the district court did not err in

determining that the Rhodeses’ counsel could have signed a mediated settlement agreement

on their behalf if authorized to do so. But we reverse and remand to the district court for

further proceedings because it is not possible on this record to conclude (1) that the parties

agreed to electronically sign a mediated settlement agreement or (2) that a signed mediated

settlement agreement exists, and the Rhodeses dispute the validity of any mediated

settlement agreement. On remand, the district court may in its discretion reopen the record,

including allowing for additional discovery.

Reversed and remanded.