COURT OF CHANCERY OF THE STATE OF DELAWARE MORGAN T. ZURN MASTER IN CHANCERY LEONARD L. WILLIAMS JUSTICE CENTER 500 NORTH KING STREET, SUITE 11400 WILMINGTON, DE 19801-3734
Final Report: June 8, 2017 Date Submitted: March 17, 2017
David A. Boswell, Esquire Hudson Jones Jaywork & Fisher, LLC 18354 Coastal Highway Mr. Robert L. Moore, Jr., Rehoboth Beach, DE 19971 P.O.A. for Martha M. Landon 14052 Union Street Ext. Ms. Martha Landon Milton, DE 19968 1125 Milford-Harrington Highway robertlmoore@netzero.com Milford, DE 19963
Re: IMO John T. Landon, Jr. Estate C.A. No. 5230-MZ
Dear Counsel and Litigants:
When John T. Landon Jr., passed away, his testamentary documents left his
second wife a life estate in several real properties and named his children by his
first marriage as remaindermen. Two of those children are the current executors of
the estate. The second wife and children have been involved in litigation since
2006. Pending before me is the executors’ motion to enforce a settlement
agreement. For the reasons that follow, I find there is an enforceable settlement
agreement because the parties agreed on all the essential terms. I therefore
recommend the Court grant the executors’ motion. C.A. No. 5230-MZ June 8, 2017 Page 2
I. Background
John T. Landon Jr. (the “Decedent”) died on March 30, 2006. The
documents reflecting the Decedent’s testamentary plan include a last will and
testament dated September 28, 1994 (the “Will”), the first codicil dated June 10,
1996 (the “First Codicil”), the second codicil dated January 16, 2002 (the “Second
Codicil”), and the third codicil dated October 26, 2005 (the “Third Codicil”)
(collectively, the “Testamentary Documents”). The Decedent was survived by his
wife, Martha Landon (“Martha”),1 who he married in November 1992. The
Decedent also was survived by five children from a previous marriage: Keith
Landon (“Keith”), Ann Richter (“Ann”), Byron Landon (“Byron”),2 William
Landon (“William”), and John T. Landon III (“Tommy”). The Will appointed
Keith and Ann as co-executors of the Decedent’s estate (the “Estate”).
The bulk of the Estate is comprised of five parcels of land and some
personal property, along with certain debts that were owed to the Decedent. The
parcels of land (and improvements thereon) consist of: (1) a residential property in
Sussex County the parties call “Tommy’s Home,” (2) a lot consisting of 4.9 acres
the parties call “Keith’s Nassau Lot,” (3) a residential property in Kent County the
1 Because some of the parties share the same last name, their first names have been used for purposes of this report. No disrespect is intended. 2 Byron died shortly after the Decedent and is survived by his wife and two children. C.A. No. 5230-MZ June 8, 2017 Page 3
parties call the “Milford Residence,” (4) a lot in Sussex County the parties call the
“Billboard Lot,” and (5) another lot in Sussex County the parties call the “Adjacent
Lot.”
The Decedent made a number of specific bequests in the Testamentary
Documents, including bequests of all of his real property. Among other things, the
Decedent devised to Martha life estates in the Milford Residence, the Billboard
Lot, and the Adjacent Lot, and devised the remainder interests in those three
properties among his various children.
The Will contained a clause apparently intended to dissuade beneficiaries
from contesting the Testamentary Documents. That clause was deleted and revised
by the Third Codicil. The clause (the “No-Contest Clause”) contained in the Third
Codicil provides:
Should any person entitled to share in my estate either as an heir at law or a legatee or devisee under this Will contest or oppose or seek to set aside this Will or establish any legal right to share in my estate other than as herein approved and provided, or if any such person shall violate my wife’s right to quiet enjoyment, as legally defined, of any real property and any income therefrom bequeathed to her by me, or shall claim a right to any income from investments which I have bequeathed to her, I hereby give and bequeath to each such person the sum of ONE DOLLAR ($1.00) only, and expressly direct that he or she shall receive no other or further share in my estate to the extent any such interest in my estate is continuing, and the share to which any such person might otherwise have been entitled had he or she not participated in such contest or opposition, or participated in any violation of my wife’s quiet enjoyment, I give, devise and bequeath C.A. No. 5230-MZ June 8, 2017 Page 4
such person’s share to the AVENUE UNITED METHODIST CHURCH, of Milford, Delaware.3
On November 30, 2006, Martha filed a lawsuit (the “Billboard Lawsuit”) in
this Court against Keith and Byron, in which she sought a constructive or resulting
trust over the Billboard Lot.4 Martha asserted the Billboard Lot was marital
property because it was purchased during the marriage using a combination of
funds from the spouses’ joint account and funds obtained through a mortgage that
was paid with funds from the joint account. Martha alleged that, upon the
Decedent’s death and by operation of law, she now owned the property outright as
the surviving spouse. Martha voluntarily dismissed the Billboard Action in June
2007.
The Executors began this action in 2010, seeking instructions regarding the
proper distribution of the Estate. The Executors’ Petition for Instructions asserts
that the Billboard Lawsuit ran afoul of the No-Contest Clause, and seeks
instructions regarding the proper distribution of the bequests to Martha of life
estates in certain real and personal property, along with lifetime interests in the
principal and interest due on certain loans payable to the Decedent. The Petition
3 Pet. ¶ 10 & Ex. A. Exhibit A to the Petition for Instructions appears to contain an incomplete copy of the Third Codicil. The foregoing recitation of the final sentence of the No-Contest Clause therefore is drawn from the Petition for Instructions. 4 C.A. No. 2582-MA. C.A. No. 5230-MZ June 8, 2017 Page 5
for Instructions also seeks additional instructions regarding whether a mortgage
Decedent obtained on the Milford Residence is a debt of the Estate, whether
Martha’s claim against the Estate for funeral expenses is valid, whether Martha
properly has a claim for a spousal allowance, and whether Ann continues to be
obligated to the Estate for a mortgage the Decedent held on Ann’s home, as well as
instructions regarding the order of abatement or sale of the Decedent’s property to
the extent necessary to pay debts against the Estate.
The parties engaged in discovery and motion practice. In the summer of
2015, the parties twice agreed to extend pretrial deadlines in order to allow for
continued settlement discussions.
The Executors filed the pending motion to enforce a settlement agreement
(“Motion”) on August 12, 2015. The Motion required Martha and the Executors to
obtain substitute counsel to litigate the Motion, as their counsel to date would
necessarily serve as witnesses in connection with the Motion. Martha sought and
received several continuances to obtain substitute counsel, but ultimately
proceeded without the benefit of counsel.5 Martha responded to the Motion on
5 Docket Item 105, dated Nov. 3, 2015; Docket Item 108, dated Nov. 24, 2015; Docket Item 111, dated May 17, 2016 (providing Martha had identified replacement counsel but had not yet retained them); Docket Item 112, dated July 1, 2016 (moving to withdraw as Martha’s counsel as Martha had not heeded former counsel’s recommendations and advice in retaining replacement counsel). C.A. No. 5230-MZ June 8, 2017 Page 6
October 17, 2016.6 The Executors did not file a reply. I held an evidentiary
hearing on March 17, 2017. This is my final report.
II. Analysis
The Executors contend they and Martha reached a settlement agreement in
July 2015, and seek enforcement of that agreement. Martha disagrees. Delaware
courts encourage negotiated resolutions to contested cases, and for that reason,
among many others, settlement agreements are enforceable as a contract.7 As the
parties seeking to enforce an alleged agreement, the Executors bear the burden of
proving the existence of a contract by a preponderance of the evidence.8 In
determining whether the Executors have met their burden, I must inquire:
whether a reasonable negotiator in the position of one asserting the existence of a contract would have concluded, in that setting, that the agreement reached constituted agreement on all of the terms that the parties themselves regarded as essential and thus that that agreement concluded the negotiations.9
6 Martha’s pro se response included a pleading signed by one of her sons, Robert L. Moore Jr. (“Robert”) as Martha’s power of attorney, an affidavit signed by Martha, and an affidavit signed by another son, John T. Moore (“John”). Docket Item 115. At the hearing, Robert indicated he wished to litigate on Martha’s behalf as her power of attorney. See Docket Item 114. The Executors objected. I concluded that Robert’s intended representation of Martha would constitute the unauthorized practice of law and was impermissible. See Snyder v. Martin, 820 A.2d 390, 392-93 (Del. Fam. Ct. 2001) (“[T]he Courts of this State … must prohibit the lay person from taking on the function of an attorney at law under the guise of a document which makes that lay person an attorney-in-fact.”). Robert and John assisted Martha in proceeding pro se. 7 Schwartz v. Chase, 2010 WL 2601608, at *4 (Del. Ch. Jun. 29, 2010); Asten, Inc. v. Wangner Sys. Corp., 1999 WL 803965, at *1 (Del. Ch. Sept. 23, 1999). 8 Schwartz, 2010 WL 2601608 at *4. 9 Id. C.A. No. 5230-MZ June 8, 2017 Page 7
Overt manifestations of assent control over subjective intent.10
The relevant settlement discussions began in July 2014. Martha’s counsel,
Bruce A. Rogers, Esquire (“Rogers”), suggested potential terms for resolving the
case to both Martha and the Executors’ litigation counsel, David A. Boswell,
Esquire (“Boswell”).11 Among other terms, Rogers suggested payment of the
Decedent’s funeral bill (although Rogers’ letter did not specify the payor(s)), that
the heirs return all personal property to Martha, that Martha have quiet enjoyment
of the Milford Residence, that the heirs repair the roof of and insure the Milford
Residence, that Martha receive rental income from other properties “as
heretofore,” and that Martha pay a “reasonable amount” of interest on a home
equity line of credit secured by the Milford Residence that was used to purchase a
different property. This suggestion did not gain traction.
The next settlement proposal came from the attorney handling the
administration of the Estate, Stephen P. Ellis, Esquire. In response, on March 24,
2015, Rogers conveyed a “counter-offer of settlement” for the Executors’
consideration.12 Rogers’ counteroffer proposed Martha would receive the Milford
10 United Health All., LLC v. United Med., LLC, 2013 WL 6383026, at *6 (Del. Ch. Nov. 27, 2013). 11 Pet’rs Hr’g Ex. P1; Hr’g Tr. 49. 12 Pet’rs Hr’g Ex. P2. C.A. No. 5230-MZ June 8, 2017 Page 8
Residence as her free and clear property; the heirs would be responsible for the
home equity line of credit; Martha would receive rental income from the Billboard
Property; and upon Martha’s death, the Milford Residence would be conveyed to
Martha’s sons and Ann.
Boswell rejected Rogers’ counteroffer and made “another settlement
proposal” via letter dated June 23, 2015.13 Boswell proposed Martha would
purchase the Milford Residence at a price adjusted for assuming the home equity
line of credit, the actuarial value of her life estate in the Milford Residence, and her
life estate in the Billboard Lot and Adjacent Lot, which she would convey to the
heirs. Boswell also proposed that Ann would exchange her claim to the personal
property at the Milford Residence for $25,000 so long as she received family
photographs. Boswell’s proposal did not address the Decedent’s funeral bill.
Rogers responded with a “counter proposal” dated July 16, 2015.14 Rogers
proposed that Martha assume the home equity line of credit and take the Milford
Residence free and clear, and release rental income from the other properties.
Rogers testified that Martha authorized this proposal.15 Rogers suggested that Ann
list items of personal property she wanted from the Milford Residence, and that
13 Pet’rs Hr’g Ex. P3. 14 Pet’rs Hr’g Ex. P4. 15 Hr’g Tr. 114, 116. C.A. No. 5230-MZ June 8, 2017 Page 9
upon agreement, those items would be transferred without any equalizing payment.
Finally, Rogers proposed Martha would release the Estate “upon payment of the
funeral bill of Mr. Landon by the estate.”
When Boswell received this proposal, he concluded “the big issues had been
resolved,” meaning the life estate and remainder interests on the properties, and the
only remaining issues were the funeral bill, personal property, and the scope of
releases.16 Boswell and Rogers agreed Martha’s release would be as to not only
the Estate, but also its personal representatives and remaindermen.17 The next day,
Rogers and Boswell submitted a joint stipulated scheduling order postponing
looming pretrial deadlines to allow for continued settlement negotiation. 18 Rogers
and Boswell informed the Court that “[t]he parties have come a long way towards
settlement, and are now trying to work out only minor details such as personal
property in the Milford residence, and the funeral bill. The parties hope to reach a
settlement within the next few business days.”
Boswell formally responded to Rogers’ July 16 proposal via a July 17 letter,
in which he stated his clients were “generally amenable” and proposed “minor
16 Hr’g Tr. 72-74; see Pet’rs Hr’g Ex. P5 (including Boswell’s response, “It looks like the parties are fairly close at last.”). 17 Hr’g Tr. 74-75. 18 Pet’rs Hr’g Ex. P5; Docket Item 79. C.A. No. 5230-MZ June 8, 2017 Page 10
clarifications” and details as to the mechanics of the agreed-upon terms.19 Boswell
accepted Rogers’ proposal with regard to the Milford Residence, home equity line
of credit, and rental income. He provided Ann’s list of requested personal
property, such that all that remained was Martha’s approval of that list. Finally,
Boswell documented his conversation with Rogers in which Rogers had advised he
believed Martha might be willing to split the funeral bill and that Rogers would
seek her authority on that point.
On July 21, 2015, Rogers advised Boswell that the property list was no
longer an issue.20 Rogers also advised Boswell that Martha was in fact willing to
pay half of the Decedent’s funeral expenses. Martha told the funeral director that
she and the estate were working towards a compromise in which they would split
the bill evenly.21 Boswell updated his July 17 proposal on July 22 to document
that agreement.22 The July 22 letter had a space for Martha to sign to indicate
acceptance. Boswell requested a response within two days.
After Rogers had proposed that Martha assume the home equity line of
credit and release the income streams, and after Boswell had accepted that
19 Pet’rs Hr’g Ex. P7. 20 Pet’rs Hr’g Ex. P9; Pet’rs Hr’g Ex. P10, p. 14 ll. 20-21 (“Mr. Rogers: They provided a list of personal property, and she was okay with that.”); Hr’g Tr. 96-97. 21 Hr’g Tr. 42, 44, 47. 22 Pet’rs Hr’g Ex. P8. C.A. No. 5230-MZ June 8, 2017 Page 11
proposal, Martha and her sons thought that Martha should receive the rental
income after all so that she could carry the line of credit more easily. On July 20,
Martha and John visited a bank to discuss Martha’s ability to carry the home equity
line of credit.23 They concluded Martha would be impoverished by carrying the
line of credit without the rental income.24
Martha and one of her sons discussed this with Rogers.25 Rogers “was
advised there was a desire to modify the counter offer so that Ms. Landon would
receive income from the rental of the billboard for her life.”26 On July 25, Rogers
informed Boswell of this development, which he attributed to the “involvement of
third parties,” but indicated he was recommending Martha accept Boswell’s July
22 proposal and believed she would do so the following week.27 Boswell
understood Rogers to be saying that Martha was in agreement but her sons “were
pulling in different directions.”28 Martha neither formalized any demand for rental
income nor signed Boswell’s July 22 letter.
23 Resp. Hr’g Ex. A; Hr’g Tr. 132. 24 Resp. Hr’g Ex. A; Hr’g Tr. 132. 25 John affirmed to the Court that he spoke with Rogers on July 21, 2015, and informed him Martha rejected the Executors’ offer. Resp. Hr’g Ex. A. Rogers’ contemporaneous emails indicate he spoke with Martha and one of her sons for almost two hours on July 24, 2015. Pet’rs Hr’g Ex. P9. 26 Pet’rs Hr’g Ex. P9. 27 Pet’rs Hr’g Ex. P9. 28 Hr’g Tr. 96. C.A. No. 5230-MZ June 8, 2017 Page 12
On August 4, 2015, the parties agreed to extensions of pretrial deadlines and
stipulated as follows:
The parties have come a very long way towards settlement, and only one issue remains to be resolved. The parties hope to reach a settlement within the next two days. … The parties agree to hold additional settlement discussions without further delay, and to make every possible effort to resolve this matter no later than 5 pm on Friday, August 7, 2015.29
The Motion followed on August 12, 2015.
At the evidentiary hearing, Martha, who was eighty-two years old at the
time, repeatedly testified she had no memory of speaking with her attorney about
this case.30 She could not offer any testimony that informed the issues raised in the
Motion. Her affidavit submitted in response to the Motion was similarly devoid of
any argument specific to settlement. Her affidavit and testimony asserted only
general positions with regard to the Decedent’s testamentary intent and plan.
I conclude that a reasonable negotiator in the Executors’ position would
have concluded that they reached agreement with Martha on all terms the parties
regarded as essential, and thus that the agreement concluded the negotiations.31 By
July 16, 2015, the parties had agreed to the most significant terms – the ownership
29 Docket Item 88. 30 Hr’g Tr. 21, 23, 24, 26. 31 See Schwartz, 2010 WL 2601608 at *4. C.A. No. 5230-MZ June 8, 2017 Page 13
of the Milford Residence, the assumption of the Milford Residence’s home equity
line of credit, and the recipient of rental income from other properties – and were
still negotiating only the funeral bill and the distribution of personal property
between Ann and Martha. On July 17, Ann provided a list of personal property she
wanted, and on July 21, Rogers advised Boswell that Martha agreed to that list.
Between July 17 and July 21, Rogers also advised Boswell that Martha agreed to
pay half the Decedent’s funeral expenses, and the Executors agreed to pay the
other half. Martha further manifested her assent to paying half the funeral bill in a
conversation with the funeral director. By July 21, 2015, the parties had agreed to
all essential terms.
The only sources of equivocation are the fact that Martha never signed
Boswell’s July 22 letter, and the concern about the rental income raised by Martha
and her sons on or after July 21. Boswell’s July 22 letter included a place for
Martha to sign, and Rogers testified that Boswell had requested Martha’s signature
to indicate acceptance of the agreement.32 Martha did not sign.
Where a settlement agreement has been reached, the fact, alone, that it was the understanding that the contract should be formally drawn up and executed, does not leave the transaction incomplete and without binding force, in the absence of a positive agreement that it should not be binding until so reduced to writing and formally executed.
32 Pet’rs Hr’g Ex. P8; Hr’g Tr. 141-43. C.A. No. 5230-MZ June 8, 2017 Page 14
Therefore, the question is whether the parties positively agreed that there will be no binding contract until the document is executed.33
Boswell’s request falls short of proof that that the parties considered Martha’s
signature to be a necessary precedent to making the settlement agreement final and
binding. I conclude the absence of Martha’s signature does not preclude an
enforceable settlement agreement.
Martha’s doubt about releasing the rental income came too late to preclude
an enforceable settlement agreement. Rogers, with Martha’s authority, offered to
assume the home equity line of credit and release the rental income on July 16,
2015.34 Boswell formally accepted that offer on July 17.35 At that point, as Rogers
and Boswell told the Court, the only remaining issues were “minor details such as
personal property in the Milford residence, and the funeral bill.”36 The personal
property was resolved on July 21, 2015, and the funeral bill was resolved on July
21 or 22. That agreement was documented in Boswell’s July 22 letter.37 The
discussion among Martha, her son, and Rogers regarding the rental income
occurred after Rogers and Boswell agreed to all essential terms on behalf of their
33 Whittington v. Dragon Croup LLC, 2013 WL 1821615, at *3 (Del. Ch. May 1, 2013) (internal citations and quotations omitted). 34 Pet’rs Hr’g Ex. P4. 35 Pet’rs Hr’g Ex. P7. 36 Pet’rs Hr’g Ex. P5; Docket Item 79; Hr’g Tr. 76-77. 37 Pet’rs Hr’g Ex. P8. C.A. No. 5230-MZ June 8, 2017 Page 15
clients. Martha’s overt manifestations of assent – her counsel’s explicit and
authorized agreement to all essential terms and her statement to the funeral director
that she would pay half the burial costs – control over subjective doubt later held
by Martha or her sons. Martha’s doubts were never conveyed to Boswell as a
formal demand; to the contrary, Rogers told Boswell that Rogers continued to
recommend the settlement terms and believed Martha would “get to that point” in a
matter of days.38
Martha was already at that point. The record shows Martha authorized
Rogers to offer assumption of the line of credit with release of the income stream,
and that Martha assented to Ann’s requested personal property and to pay half the
funeral cost. There is no evidence that Martha’s authorization or assent was in any
way compromised or ineffective; Martha’s present inability to recall the settlement
negotiations does not invalidate them. The record indicates that third parties might
have cast doubt on Martha’s conclusions after the fact. This is insufficient to
disturb the agreement between Martha and the Executors. The Executors have
proven that they and Martha reached agreement on all of the terms that the parties
regarded as essential.
38 Pet’rs Hr’g Ex. P9. C.A. No. 5230-MZ June 8, 2017 Page 16
III. Conclusion
For the foregoing reasons, I recommend this Court grant the Executors’
motion to enforce a settlement agreement. This is a final report pursuant to Court
of Chancery Rule 144.
Respectfully,
/s/ Morgan T. Zurn
Master in Chancery