Wayne Scheiss has written a terrific article discussing how lawyers should and should not approach the use of email in their practices. The use of email is particularly important to those lawyers who have clients residing in other states in order to facilitate the prompt transmission of documents between lawyers and clients. However, care is needed to ensure that the lawyer makes a good impression [spell check!], ensures privacy and confidentiality, and fully incorporates with specificity all issues that the client needs to resolve, all well-stated in this article.
After reading Scheiss' article, I was prompted to go back and review a 2006 published case involving the formation of a binding settlement through an exchange of emails between counsel for the parties shortly before trial. The points Scheiss makes about using emails as carefully as though you were writing a formal letter or settlement offer are underscored by what transpired in that case involving Kloian (lessor of a building) and Domino's Pizza, L.L.C.
On the same date, Kloian’s attorney received the following email from Domino’s attorney: “Domino's accepts your settlement offer contained in the message below. I spoke with the court, advised it of the settlement and confirmed that we need not appear in court in connection with the settlement. I have ordered a settlement draft from Domino's in the amount of $48,000, made payable jointly to Mr. Kloian and your firm. I will forward a stipulation and order for dismissal with prejudice and a release for approval by you and Mr. Kloian respectively. You should have them in the next few days. Please call with any questions. I'm pleased we were able to resolve this matter without trial. —Neil"
Subsequently, there were exchanges of emails about the scope of the release. One has to read between the lines on that issue, but it seems that the parties were unable to agree on the express terms of the release. Finally, Domino’s attorney filed a motion to enforce the March 18th settlement. The trial court ruled in Domino’s favor, enforcing the settlement described in the March 18th emails, but declining to enforce the subsequent modification attempt dealing with terms of the release. Kloian appealed.
On appeal, the COA held that the March 18th e-mails exchanged by plaintiff's and defendant's attorney constituted what the court described as "an offer of settlement by plaintiff and an acceptance of that offer, essentially expressing Domino’s intent to be bound by plaintiff's offer and all the legal consequences flowing from the offer." The COA stated that "in a clear meeting of the minds, Kloian had offered to settle upon the payment of $48,000 by Domino’s in exchange for a dismissal with prejudice and a release." The COA said this was an unambiguous acceptance in strict conformity with plaintiff’s offer and a contract to settle was formed on March 18, 2005 with a meeting of the minds on the essential terms.
Kloian raised the issue that the settlement agreement didn’t comply with MCR 2.507(H) because it was not “subscribed” by the parties. This is where it gets dicey and where the formality with which one writes emails can have the potential to create real problems for lawyers.
First the COA held that it would enforce the March 18th agreement formed by the clear offer and acceptance holding that an electronic signature satisfies the law. Definitions from the Random House Webster's College Dictionary (2001) and the Uniform Electronic Transactions Act were used to reach this conclusion. The COA said:
Since some statutes of frauds require an agreement "in writing and signed," MCL 566.108 and 566.132, and others require a "writing, subscribed," MCR 2.507(H) and MCL 566.106, we must treat "in writing and signed" differently from a "writing, subscribed."
However, the definition of "subscribed" that supported the finding of a binding contract in the March 18th emails worked to the disadvantage of the plaintiff as to the subsequent modification email dealing with terms of the release. As to that email, the COA declined to enforce the modification agreement because it wasn’t “subscribed” at the end of the email. The COA discussion of this issue reminds me of how difficult it is to count the number of angels on the head of a pin. But it also emphasized how damaging a typo or two can be.
The Kloian case involves a fairly esoteric discussion of what will and will not comprise a writing that satisfies the statute of frauds and the court rule involving binding settlements. I highly recommend that you read this very interesting case carefully and make sure that if you are going to send an email with a settlement offer, you do so with the same amount of care you would take if you were sending a completely drafted settlement agreement. This should not be a casual exchange, and should anticipate settlement of all issues your client needs to resolve.
You may read Schiess, "Email Like a Lawyer," 89 MBJ 48 [July 2010]