R.J. Marco Construction, Inc., Respondent, vs. Whyte Builders, Inc., Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-1107

 

R.J. Marco Construction, Inc.,

Respondent,

 

vs.

 

Whyte Builders, Inc.,

Appellant.

 

Filed December 21, 2004

Affirmed
Klaphake, Judge

 

Winona County District Court

File No. C3-02-1206

 

Michael A. Koziol, Oakwood Square, Suite 132, 2499 Rice Street, Roseville, MN  55113 (for respondent)

 

C. Todd Koebele, Anissa M. Mediger, Murnane, Conlin, White & Brandt, 444 Cedar Street, Suite 1800, St. Paul, MN  55101 (for appellant)

 

            Considered and decided by Harten, Presiding Judge, Klaphake, Judge, and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N

KLAPHAKE, Judge

            This case involves the settlement and dismissal of three related lawsuits arising out of the construction of a residential health care facility in Winona, Minnesota, known as Callista Court:  a mechanic's lien action, a construction defects action, and an action for contribution and indemnity.  On September 3, 2003, following months of discussions and two days of mediation, a Memorandum of Agreement was drafted and executed by the attorneys for all parties.  In December 2003, however, the attorney for one of the parties, appellant Whyte Builders, Inc., notified respondent R.J. Marco Construction Co. that Bradley White, appellant's corporate principal, had refused to sign the agreement.

            Respondent and St. Anne's Hospice, Inc., the owner of Callista Court, moved to compel the settlement; appellant moved to clarify the settlement by excluding an alleged breach of contract claim against respondent.  By order issued April 22, 2004, the district court denied appellant's motion to clarify and granted the motions by respondent and St. Anne to compel the settlement.

            Because the district court did not err in construing the settlement to include all claims arising out of the project, including any breach of contract claim that appellant might have against respondent, we affirm.

D E C I S I O N

            A settlement agreement is contractual in nature.  Jallen v. Agre, 264 Minn. 369, 373, 119 N.W.2d 739, 743 (1963).  Settlement of disputes is strongly encouraged in Minnesota.  Sorenson v. Coast-to-Coast Stores, Inc., 353 N.W.2d 666, 669 (Minn. App. 1984), review denied (Minn. Nov. 7, 1984).  "[T]he law presumes that parties to a release agreement intend what is expressed in a signed writing," and any party seeking relief from a release bears the burden of establishing facts sufficient to avoid that presumption.  Id. at 670.  In the absence of fraud, misrepresentation, or other inequitable conduct, a plainly worded release is effective, even as to unknown claims or claims which the releasing party did not specifically know it was releasing.  Id. at 699-70 (holding that franchise termination agreement which released "any and all claims, demands or causes of action to the date hereof," included discharge of claims and causes of action of which party did not necessarily know or intend to release).

            Appellant first argues that the "four corners of the [s]ettlement [a]greement do not include [its] breach of contract claims [because those] claims did not accrue until after the mediation."  Appellant asserts that its breach of contract claims did not accrue until respondent refused to pay him out of the mechanic's lien proceeds, which were not received until after the settlement was reached.  Appellant reasons that it had no cause of action until respondent breached its agreement by refusing to pay.  See Thiele v. Stich, 425 N.W.2d 580, 584 (Minn. 1988) (cause of action accrues when damage occurs, or as soon as right to institute an maintain suit arises); Pederson v. Am. Lutheran Church, 404 N.W.2d 887, 889 (Minn. App. 1987) (same), review denied (Minn. June 30, 1987). 

            Appellant's contract claims are within the broad and inclusive language of the global settlement agreement drafted by the parties.  That language states that the parties intended to settle all three lawsuits "in full" and to "include a complete and final release of all claims each and every party has against the other . . . whether by way of claim, counterclaim, crossclaim, claim for contribution and/or indemnity or otherwise."  The agreement further states that "[a]ll parties to the actions shall receive releases in full as to any claims against each other" and that "[t]his release shall be full, final and complete as to all parties and as to all claims each and every party may have had against any other party hereto prior to the date hereof while either directly or indirectly ou[t] of the Callista Court Project."  This language evidences the parties' intent to settle all "claims" each party might have against the other arising out of the Callista Court project.

            The fact that the claim now asserted by appellant allegedly was not due until after termination of the mechanic's lien action does not render this claim outside the ambit of the settlement agreement.  The parties' use of the term "claim," rather than "cause of action," establishes that they intended to include all existing claims, whether accrued or not, and the claim for payment existed prior to the parties' agreement.

            Appellant next argues that because its contract claim was not discussed during the mediation, no agreement was reached resolving that claim.  Again, however, the language of the settlement agreement is broad and evidences the parties' clear intent to settle "all" claims arising between the parties out of the project.  Appellant knew about the existence of its claim for unpaid work, but remained silent during settlement discussions and did not request that its claim be excluded from the agreement.  See Kane v. Oak Grove Co., 221 Minn. 500, 503, 22 N.W.2d 588, 590 (1946) (settlement of rental controversy pending unlawful detainer action held to effect settlement of entire controversy, including any penalties and damages for overcharges of rent, even though separate intent was not expressed as to such penalties or damages).  Appellant cannot now seek to vary or modify that language by parol evidence or by suggesting that because the parties acknowledge that they did not discuss appellant's contract claims against respondent, those claims should be considered excluded.  See In re Hennepin County 1986 Recycling Bond Litig., 540 N.W.2d 494, 498 (Minn. 1995) (stating that when language of written agreement is unambiguous, court determines intention of parties by looking at language of agreement itself, without regard to extrinsic evidence); Triple B & G, Inc. v. City of Fairmont, 494 N.W.2d 49, 53 (Minn. App. 1992) (stating that terms of integrated writing may not be contradicted by parole evidence of previous understanding or negotiations).    

            Finally, appellant argues that equitable principles mandate reformation of the settlement agreement to reflect the parties' intent.  A written instrument can be reformed if (1) there was a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties, or a unilateral mistake accompanied by inequitable conduct by the other party.  Nichols v. Shelard Nat'l Bank, 294 N.W.2d 730, 734 (Minn. 1980).

            Appellant claims mutual mistake because its contract claims were not discussed during mediation.  A mutual mistake occurs when "both parties agree as to the content of the document but that somehow through a scrivener's error the document does not reflect that agreement."  Id.  Appellant does not claim a defect in the process leading to the writing.

            Appellant claims a unilateral mistake occurred on its part and that respondent is guilty of inequitable conduct.  Appellant insists that it was inequitable for respondent to refuse to pay appellant's contract claim, which is based in part on the parties' subcontract agreement and in part on assistance allegedly provided by Bradley White in April 2002, during trial on the mechanic's lien.  Appellant further insists that respondent acted inequitably by remaining silent and inducing it to enter into an agreement settling and releasing its claims.  Appellant, however, fails to acknowledge that it too remained silent during settlement discussions and failed to mention that it believed it had an outstanding claim against respondent for unpaid work.  Appellant's failure to specifically exclude its contract claims against respondent from the language of the settlement agreement precludes it from now seeking to clarify that settlement by adding such an exclusion.

            We therefore affirm the district court's order granting respondent's motion to compel the settlement and denying appellant's motion to clarify.

            Affirmed.