Frank, a potential client, comes to you in an agitated state. He was divorced three years ago and, although the underlying child support order requires payments of $600 per month for the parties' daughter Kate, his ex-wife Sarah has agreed, as documented through a series of emails, to pay $1,800 per month and has been doing so for the past two years.
Her income skyrocketed after she received a promotion and, as she stated in her emails, she felt it was only fair to increase her support for their daughter accordingly. She further stated that she had run some child support worksheets and she thought this is what the court would order.
Frank has come to rely on the $1,800 to meet his monthly needs and assumed that Sarah would keep her written promises to pay this increased amount for the foreseeable future. Sarah also promised in these emails to buy their daughter a new car on her 16th birthday and even went so far as to state she had "visited dealers" and to suggest specific makes and models.
Some of these emails went to both Frank and their daughter. Kate is 15 and has responded that she is eagerly awaiting her new car and requested a specific car in a blue color, to which Sarah responded, "Sure."
Four months ago, Frank received an email from Sarah stating that she was switching back to the amount listed in the child support order, effective immediately, and Frank can't imagine how he will make ends meet on such a small sum. Sarah also has stated that Kate will need to get a job and pay for her own car now.
Frank kept hoping she would "see the light" and keep her written promises, but it did not come to pass. Aside from the obvious response of filing for a child support adjustment or modification, which the wise practitioner should file right away, is there any other relief that you can provide Frank? Is there any way you can help Frank and Kate get the promised car from Sarah?
Depending upon their content, the series of emails may constitute a valid CR2A agreement between the parties that would be enforceable as a child support adjustment in court. CR2A reads as follows:
No agreement or consent between the parties or attorneys in respect to the proceedings in a cause, the purport of which is disputed, will be regarded by the court unless the same shall have been made and assented to in open court on the record, or entered in the minutes or unless the evidence thereof shall be in writing and subscribed by the attorneys denying the same.
CR2A only applies: 1) when the agreement was made by the parties or attorneys in respect to the proceedings in a cause, and 2) the purport of the agreement is disputed.1 When these elements are met, CR2A "precludes enforcement of a disputed settlement agreement not made in writing or put on the record, whether or not common law requirements are met.2" It does not, however, affect an agreement made in writing or put on the record.3
The purpose of this rule is to avoid disputes and to give certainty and finality to settlements and compromises. Thus, if there is a dispute that negotiations culminated in an agreement where there is non-compliance with the rule, the court must disregard it as evidence.4
As a settlement agreement is a contract, the basic rules of contract law apply.5 The burden of proving this contract would be on the person asserting its existence.6 The goal of construing the contract would then be to determine and effectuate the parties' mutual intent.7
The principal case on the factors necessary to reach a binding CR2A in Washington is Morris v. Maks.8 In determining whether informal writings are sufficient to establish a contract by themselves, a court must consider whether: 1) the subject matter has been agreed upon; 2) the terms are all stated in the informal writing; and 3) the parties intended a binding agreement prior to the time of signing and delivery of a formal contract.9
This article analyzes the three Morris factors in light of subsequent case law in order to determine how the courts have defined the parameters of these requirements.
The Subject Matter Has Been Agreed Upon
Clearly, under basic contract law, there is no valid contract until an offer is accepted and agreement is reached.10 Although agreement is the first of the Morris factors, Washington courts typically bypass this factor in favor of an analysis of the following two factors. Thus, while parties may sometimes couch their arguments as "no agreement was reached,"11 this author could find no published cases on point that were determined on this factor alone.
Rather, the courts have instead focused their analysis on the two remaining Morris factors. Therefore, in deciding whether Sarah's emails constitute a valid CR2A agreement, the prudent practitioner would touch lightly on this initial factor, and focus his or her briefing on the other two factors.
The Terms Are All Stated in the Informal Writing
Multiple cases, many of which are unpublished12 and thus not generally cited here, have discussed what constitutes a "material term" in an informal agreement. If the correspondence "does not contain the details of the settlement," then it is not a valid CR2A agreement.13
In Evans & Sons v. City of Yakima, although an exact settlement figure of $40,000 was expressly listed, the parties never agreed to a release-of-liability term in their exchanged letters. Finding this to be a material term, the court held that while the letters demonstrated the parties' desire to reach a settlement, no binding CR2A agreement existed.14
In general, terms of release, indemnity and hold harmless are material terms.15 However, if those terms aren't material to the facts at hand, they may not be dispositive in determining whether a CR2A agreement exists or not.16 As such, the prudent practitioner analyzes, based upon the specific facts of the case, what the "material terms" would be in a given situation and compares any written documentation to this analysis.
In the hypothetical listed above, for example, Kate's detailed description of the car she desires, followed by Sarah's response of "Sure," and combined with Sarah's earlier written promises to pay for the car in full, might be held to be sufficient to cover all material terms regarding this issue.
The Parties Intended a Binding Agreement Prior to the Time of Signing a Formal Contract
Washington courts have long adopted an "objective manifestation" standard as to whether parties intend to be bound by an agreement.17 The court thus imputes to a person an intention corresponding to the reasonable meaning of his or her words and acts.18
In Morris v. Maks, the court found an "intent to be bound" based upon express language contained in: 1) a confirmation letter sent to Maks outlining the assurance of his acceptance; 2) a letter written by Maks's attorney stating that the terms of this earlier letter accurately reflected the agreement; and 3) Maks's personal representation to his bank that he had settled his case with Morris by agreement.19 The prudent practitioner would thus examine each fact of the case to determine what factors objectively would yield a reasonable conclusion of an intent to be bound.
One key factor is whether the agreement has been signed. A settlement agreement may be found ineffectual under CR2A if it is not signed by the parties to be bound.20
In ieth v. XTerra Wetsuits, LLC,21 although the court found that an "expression (communicated by word, sign or writing to the person making the offer) of the intent to be bound" was a benchmark of contract acceptance, the court nonetheless denied the existence of an enforceable contract, centering at least part of its ruling on the fact that no agreement had been physically signed by the parties.22
Conversely, refusing to sign an agreement is a manifestation that the party did not intend to be bound.23 In the hypothetical listed above, the parties exchanged emails but Sarah didn't actually sign any document. She could thus argue that no valid CR2A agreement existed.
Even a cursory review of the applicable case law shows that the outcomes of this type of litigation are very fact driven. Accordingly, the wise practitioner will closely examine all of the emails exchanged between the parties to determine whether the Morris factors have been met.
Depending upon the exact language in the email chain, for example, Sarah's response of "Sure" to Kate's specific car request might be construed as a binding contract that could be enforced via a motion to enforce under family law concepts. Likewise, Sarah's many emails agreeing to pay $1,800, especially when coupled with her actual performance of this promise for two years, may also yield a valid CR2A agreement.
In both of these instances, Sarah may nonetheless assert: a) that nothing was signed by any party; b) that under Vieth no CR2A agreement was reached; and c) therefore, she is not obligated to purchase a car or pay increased support.
It will be up to the experienced practitioner to sift the facts and writings in the given case to determine whether the Morris factors are present. If they are, and the court agrees with your analysis, Frank may be able to recoup four months of underpaid child support, under a revised child support order, and his daughter Kate may receive her car after all.
1 Marriage of Feeree, 71 Wn. App. 35, 39 (1993).
2 In re Patterson & Taylor, 93 Wn. App. 579, 582–83 (1999).
4 Eddleman v. McGhan, 45 Wn.2d 430, 432 (1954).
5 Morris v. Maks, 69 Wn. App. 865, 868 (1993); Stottlemyre v. Reed, 35 Wn. App. 169, 171 (1983).
6 Johnson v. Nasi, 50 Wn.2d 87, 91 (1957).
7 Hall v. Custom Craft Fixtures, Inc., 87 Wn. App. 1, 7 (1997).
8 69 Wn. App. 865 (1993).
9 Id. at 869.
10 Hansen v. Transworld Wireless TV-Spokane, 111 Wn. App. 361, 370 (2002).
11 See generally Lavigne v. Green, 106 Wn. App. 12, 16 (2001) ("He further contends that the agreement is unenforceable because it contains material terms to which he did not agree.").
12 See, e.g., Marriage of Funk, 141 Wn. App. 1039 (2007) (informal writing providing that "Jodi: You Win: enjoy the spoils of our marriage. Good Bye, Jeff" did not contain any definite terms that might justify a conclusion was reached in which all the parties' properties and liabilities had been conceded to the wife).
13 Evans and Sons v. City of Yakima, 136 Wn. App. 471 (2006).
15 Howard v. Dimaggio, 70 Wn. App. 734, 739 (1993) (regarding estoppel issues).
16 Lavigne v. Green, note 11 at 20 (failure to address indemnity and hold harmless provisions regarding a fire damage lawsuit "may or may not be material" as the appellant had not identified "any liability or adverse consequences to which he would be exposed by the terms of these provisions and he has not offered any evidence of subrogated or lienable claims").
17 Plumbing Shop v. Pitts, 67 Wn.2d. 514, 517 (1965).
19 69 Wn. App. 865.
20 Bryant v. Palmer Coking Coal Co., 67 Wn. App. 176, 179 (1993).
21 144 Wn. App. 362 (2008).
22 Id. at 366.
23 Metro Net Services Corp. v. U.S.W. Communications, 329 F.3d 986, 1015 (2003) (distinguished on an unrelated point in unreported decisions in LinkLine Communications Inc. v. SBC CA, Inc., 2004 WL 5503772 (2004), and McKenzie - Willamette Hosp. v. Peachhealth, 2003 WL 23537980 (2003)).