If it quacks like a settlement agreement


I was pleased this afternoon to receive the New Jersey District Court's decision granting the Motion to Dismiss that our firm filed on behalf of the Borough of Keansburg, its Chief of Police and governing body. Keelen v. Keansburg et al., Civil Action No. 17-04521 (D.N.J. Mar. 27, 2018).

The case is about a longtime bar owner in a Jersey shore town, who ran into a bit of trouble with Alcohol Beverage Control ("NJABC"). Neither the NJABC nor the town liked the fact that there was a high level of narcotics activity being reported at plaintiff's tavern.

Rather than risk losing his liquor license, the plaintiff decided to cut his losses by agreeing to sell his bar and pay a nominal fine to the State authorities. To accomplish this, the plaintiff had to settle first with the Borough, and then with the NJABC. No written settlement agreement was officially entered into between plaintiff and the Borough's attorney, but plaintiff's attorney plainly agreed to release the Borough and its employees from future lawsuits as evidenced by emails exchanged between counsel.

Once the smoke cleared and the bar was sold, plaintiff decided to sue the Borough anyway. According to the plaintiff, it was his LLC which made any settlement agreement, not him. The court found that the emails along with a Borough resolution were enforceable not only on plaintiff's LLC, but also on plaintiff himself.

The Court's decision reinforces that a formal writing is not necessary to create a contract. Slip op. at 9, citing Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div. 1983). Courts will enforce a settlement agreement as long as the parties agree on its essential terms, and should "strain to give effect to the terms of a settlement whenever possible." Id., citing Dept. of Pub. Advocate v. N.J. Bd. of Public Utilities, 206 N.J. Super. 523, 528 (App. Div. 1985).

While this was a solid win for our firm and our client, it was a bigger win for fairness. Litigants in New Jersey are on notice. If you don't want to be bound by a contract not to sue, then don't enter into an agreement - whether the agreement is by handshake, telephone, email or a formal written settlement.


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