Opinion
226-2022-CV-00218 226-2022-CV-00235 216-2021- CV-00139
06-07-2023
Curtis Commons, LLC, by and through its co-manager Cliff Williams v. Melissa Arel, et al.
ORDER
David A. Anderson Associate Justice
This consolidated matter consists of various contract, tort, and statutory claims arising from a breakdown in a business relationship. (See generally, Nos. 226-2022-CV-235, Doc. 1; 216-2021-CV-139, Doc. 1; 226-2022-CV-218, Doc. 1.) Presently before the Court is a motion filed by Plaintiff, Curtis Commons, LLC ("CC"), by and through Cliff Williams, to enforce a settlement agreement between Williams and Defendant Matthew Arel. Arel objects. The Court held hearings relevant to this motion on November 10 and December 7, 2022, and January 11 and April 11, 2023. For the reasons that follow, Plaintiff's motion is DENIED.
Factual Background
Detailed descriptions of the facts underlying this consolidated matter are set forth in the Court's prior order, incorporated by reference herein. (See No. 235, Doc. 16 at 1-3.) By way of brief and additional background, CC is a limited liability company formed for the purpose of building a residential development in Milford called Curtis Commons (the "Project"). (No. 235, Doc. 1 ¶ 8.) Arel and Williams each have a 50% membership interest in CC. (Id. ¶¶ 9, 10.) Arel is also a member of Better Built Homes, LLC ("BBH"), which CC retained to install roads and construct homes for the Project. (Id. ¶¶ 12, 13.)
In early 2021, as the work was ongoing, disputes arose between Arel and Williams over certain expenditures. For example, Williams began questioning why Arel was allegedly holding himself out as the sole member of CC to third parties. This led to Williams's refusal to authorize CC to make a number of payments to BBH and other entities. (Id. ¶¶ 15, 16, 19; No. 218, Doc. 1 ¶ 4.) These disputes ultimately led to the parties filing complaints in the three dockets, beginning in March 2021.
The parties have had considerable difficulty resolving disputes between themselves since initiation of the suits. One such dispute relevant to this Order pertains to payments CC owes resulting from the Project, including to the New Hampshire Department of Revenue ("NHDOR"), and to Williams and Arel for their individual contributions to the Project. In order to pay these bills and keep the case moving forward, the parties agreed to a stipulation (the "Stipulation"), which provides, in relevant part:
The parties hereby stipulate that the following payments shall issue by duly signed check payments from the Curtis Commons, LLC escrow account:
At the time of the April 11, 2023 hearing, there was approximately $950,000 in CC's escrow account.
1. $3,287.00 to Hanover Insurance Company;
2. $1,903.13 to Melanson, P.C.;
3. $40,230.31 to the New Hampshire Department of Revenue;
4. $68,000.00 to Clifford Williams; and
5. $71,295.00 to Matthew Arel.
(No. 218, Doc. 59, Ex. A.) The parties read the Stipulation into the record at the November 10, 2022 hearing.
However, at the December 7, 2022 hearing, the parties represented that they have not made the payments specified in the Stipulation because they cannot agree on the first source of funds to be applied to resolve those payments. At issue is whether the funds from a bond surety reimbursement should be deposited into CC's escrow account and used to make the payments. On October 30, 2020, CC, using funds provided by BBH, paid $101,331.56 to the Town of Milford (the "Town") (in lieu of posting a bond) as security for its installation of roads in the development. On November 13, 2020, CC provided a check to BBH for the same amount. (See No. 235, Doc. 13 at 30.) According to Williams, approximately one year later and after partial completion of the roads at issue, the Town released the bond funds to CC via a check that was deposited into an account under CC's name. Around the time of the December 7, 2022 hearing, Williams learned that Arel had also deposited the check from the Town into BBH's account without Williams's approval. (See id. at 27.) Arel does not dispute that he deposited the check from the Town.
At the January 11, 2023 hearing, the Court advised the parties to come to an agreement about paying the outstanding bills. The next day, Williams's attorney, James Steiner, emailed Arel's attorney, Joseph Carnavale, about finalizing the payments. This email, which includes a proposed modified version of the Stipulation (the "Proposed Modified Stipulation"), is as follows:
Are we good on [Arel] paying as follows and the remainder coming from the $950,000 [in CC's escrow account]. If so, I suggest we draft a stip to that effect. I would like said stip to indicate the $110,000 still being held shall not be released absent an agreement by [CC], by both co-managers, and that the funds will be deposited into the escrow account until the matter is resolved:
Since the settlement provided for Mr. Arel to receive $71,295.00 he shall pay the NH Dept of Revenue $30,036.56 directly, or from BBH, to cover the $101,331.56 taken by Mr. Arel for BBH and the balance of the settlement, listed below, shall be paid from the $950,000 escrow. This narrows substantially pending issues and leaves nearly $1,000,000 (over $860,000 remaining in the escrow fund as well as $110,000 being held as the remaining road bond by Eastern Bank):
1. $3,287.00 to Hanover Insurance Company;
2. $1,903.13 to Melanson, P.C.;
3. $40,230.31 to the New Hampshire Department of Revenue With $30,036.56 paid directly by Mr. Arel from BBH and $10,193.75 paid from the $950,000 escrow; and
4. $68,000.00 to Clifford Williams
This refers to an additional road bond for $110,000 held by Eastern Bank that will be deposited into CC's account upon final inspection by the Town.
(No. 218, Doc. 58 at 1-2.) The same day, Attorney Carnavale replied, in pertinent part:
I'm not saying "no" now, but more "not yet." Before any money flows to/from Cliff and to/from Matt, we're going to make sure there is some formal "understanding" on the accounting ....
Additionally, on your proposed escrow stipulation, we are not in a position to agree to that. The original escrow stipulation is attached, and is very specific to closing proceeds from those enumerated home sales. The escrow stipulation does not apply to the return of bond collateral put up by [BBH]. We can have that discussion at a later time once these other items work themselves out.(Id. at 2.)
The parties have continued to disagree as to whether Arel was entitled to take two withdrawals of $101,331.56 from both the reimbursement check provided by CC to BBH as well as the Town's release of the road bond. At the January 11, 2023 hearing, Arel represented that one of the checks was deposited not as a reimbursement for the road bond but instead to offset construction costs paid by BBH. Williams has continued to assert that Arel improperly reimbursed himself twice for the road bond, and that $101,331.56 must be deposited into CC's escrow account. At the April 11, 2023 hearing, the parties agreed that whether BBH retains the $101,331.56 or deposits it into CC's escrow account is material with respect to the Stipulation and that there has never been an agreement on how to treat that $101,331.56. Williams told the Court that not requiring Arel to give the money to CC would be tantamount to allowing Arel to get away with a fraudulent transfer. Arel is not moving to enforce the Stipulation, and Williams wants it enforced only if Arel transfers the money to CC's escrow account.
Analysis
Williams asserts that he is entitled to enforcement of the Stipulation that includes use of the reimbursed $101,331.56 for the first payments because: (1) it is binding as to those funds as they are CC's funds; and (2) Arel is acting in bad faith by failing to fulfill his obligations. (No. 218, Doc. 58 ¶¶ 3, 4.) Arel replies that: (1) the $101,331.56 at issue was properly used to reimburse BBH; and (2) Williams has reneged on the Stipulation by raising issues that were not part of that agreement. (See generally, No. 218, Doc. 59.)
"A valid and enforceable settlement, like any contract, requires offer, acceptance, consideration and mutual assent." Hogan Family Enters., Ltd. v. Town of Rye, 157 N.H. 453, 456 (2008). "Mutual assent requires that the parties have the same understanding of the agreement's essential terms, and manifest an intent to be bound by them." Id. In deciding whether to enforce a settlement agreement, the Court is "mindful of the strong public policy favoring the settlement of civil matters." Id. Whether a binding settlement agreement existed is a question of fact for the trial court to decide. Byblos Corp. v. Salem Farm Realty Trust, 141 N.H. 726, 728-29 (1997). The Court will first address the enforceability of the Stipulation before turning to the enforceability of the Proposed Modified Stipulation.
(1) The Stipulation
As set forth above, the Stipulation provides that each of the amounts to be paid to Hanover Insurance Co., Melanson, P.C., the NHDOR, Williams, and Arel was to come from "duly signed check payments from the Curtis Commons, LLC escrow account." (No. 218, Doc. 59, Ex. A.) On its face, this would appear to be a valid and enforceable agreement and that the payments would come from CC's escrow account. However, the parties agree that the $101,331.56 road bond reimbursement is material to the Stipulation, and they cannot agree on how to resolve the dispute over these funds. As a result, neither party wants the Stipulation enforced as originally phrased, which is "inconsistent with the continued existence of the [Stipulation]." Axenics, Inc. v. Turner Const. Co., 164 N.H. 659, 666 (2013). Accordingly, the parties have abandoned the Stipulation. See id. ("Generally, contract abandonment occurs when both parties depart from the terms of the contract by mutual consent," which may be express or implied through their actions). As such, the Court will not enforce the Stipulation. See Laton v. King, 19 N.H. 280, 286 (1848) (holding that an abandoned contract provision "became as if it had never existed.").
(2) The Proposed Modified Stipulation
The Proposed Modified Stipulation that Attorney Steiner emailed to Attorney Carnevale provides that the $101,331.56 in BBH's account be used to pay the NHDOR. However, Attorney Carnavale unequivocally rejected this provision. (See No. 218, Doc. 58 at 2 (in which Attorney Carnevale replies to the "proposed escrow stipulation" with "we are not in a position to agree to that.")). Accordingly, the Proposed Modified Stipulation was an offer that was not accepted, and so no valid, enforceable contract was entered into. See Hogan Family Enters., Ltd., 157 N.H. at 456. For the same reason, even if the Stipulation were still an enforceable agreement, the Proposed Modified Stipulation would not constitute a valid modification thereof. See In re Larue, 156 N.H. 378, 381 (2007) ("It is a fundamental principle of contract law that one party to a contract cannot alter its terms without the assent of the other party").
Allegation of Fraud
Lastly, to the extent Williams suggests Arel acted fraudulently with respect to the $101,331.56, he has not actually pled a fraud claim and so he is not entitled to relief on that basis. Williams argues that the only reason the term pertaining to the road bond reimbursement was not in the Stipulation was because he was unaware at the time that Arel had deposited the check from the Town into BBH's account. However, granting the relief Williams seeks on this basis would require the Court to essentially make a finding, as a matter of law, on a claim that has not been pled, which the Court will not do.
Finally, Williams requests legal fees. Because he has not prevailed, he is not entitled to such fees. See In re Estate of Couture, 166 N.H. 101, 114 (2014).
Conclusion
In sum, while the parties originally entered into a valid and enforceable settlement agreement-the Stipulation-they abandoned that agreement and never entered into the Proposed Modified Stipulation because of their dispute over what to do with the road bond reimbursement. Accordingly, Plaintiff's motion is DENIED.
SO ORDERED.