Lewis v. Woods (In re Davis)

658 B.R. 700

IN RE: Daron Tarrell DAVIS, Debtor.

John R. Lewis, Chapter 7 Trustee for the Bankruptcy Estate of Daron Tarrell Davis, Plaintiff, v. Jeremiah Woods, Brian Michael Douglas, Andrea Hyatt,Brian M. Douglas & Associates, LLC, Thrive Mortgage, LLC,Linda Moore, Keller Williams Realty First Atlanta, Tabitha Caver,EXP Realty, LLC and Daron Tarrell Davis, Defendants.

CASE NO. 21-58807-JWC

ADVERSARY PROCEEDING

NO. 23-5044-JWC

United States Bankruptcy Court, N.D. Georgia, Atlanta Division

Signed February 5, 2024

Neil C. Gordon, Natalie Rowland, Taylor English Duma LLP, Atlanta, GA, for Plaintiff.

Ned Blumenthal, David Andrew Folkner, Weissman PC, Atlanta, GA, for Defendants Keller Williams Realty First Atlanta, Linda Moore.

Brian M. Douglas, Brian M. Douglas & Associates, LLC, Atlanta, GA, Defendant, Pro Se.

Brian M. Douglas, Brian M. Douglas & Associates, LLC, Atlanta, GA, for Defendant Andrea Hyatt.

Dylan W. Howard, Baker Donelson Bearman Caldwell & Berkowitz, P.C., Atlanta, GA, for Defendants Thrive Mortgage, LLC, Jeremiah Woods.

G. Marshall Kent, Jr., Fox Rothschild, LLP, Atlanta, GA, for Defendants EXP Realty, LLC, Tabitha Caver.

Julius M. King, Julius King, LLC, Bonaire, GA, for Defendant Daron Tarrell Davis.

ORDER

Jeffery W. Cavender, United States Bankruptcy Judge

Before the Court is Jeremiah Woods and Thrive Mortgage, LLC's Motion to Enforce Settlement (Doc. No. 27) (the "Motion"). The Motion asserts that John R. Lewis, as chapter 7 trustee ("Trustee"), accepted an offer to settle his claims asserted in this adversary proceeding against Jeremiah Woods and Thrive Mortgage, LLC (together, "Defendants"). Trustee responded to the Motion and denies that an enforceable settlement agreement exists between him and Defendants. After considering the Motion, Defendants' brief in support, the Affidavit of Dylan W. Howard and exhibits (the "Howard Aff."), Trustee's response, the Affidavit of Neil C. Gordon and exhibits, and Defendants' reply, the Court finds no enforceable settlement agreement arose between the parties and will deny the Motion.

A. Background and Factual Findings

This adversary proceeding arises from the chapter 7 bankruptcy case of Daron Tarrell Davis. Trustee alleges, in brief, that Mr. Davis sold certain real property belonging to the bankruptcy estate to defendant Jeremiah Woods without authority from Trustee or this Court. Thrive Mortgage financed the purchase by Woods and purports to hold a mortgage on the property. Trustee asserts claims against what appears to be everyone involved in the case, including Woods, Thrive Mortgage, closing counsel, the real estate agents, and Debtor.

The specifics of Trustee's claims are not particularly relevant to the Motion. What is relevant are several emails between Neil Gordon (counsel for Trustee) and Dylan Howard (counsel for Woods and Thrive Mortgage) in August of 2023 discussing settlement. Both Trustee and Defendants have included affidavits of counsel with their papers, and both attach and rely upon the same seven emails exchanged between August 3 and August 30. The Court considers the contents of those seven emails to be undisputed and dispositive of the issue.¹

Mr. Howard sent the first email on the morning of August 3, 2023, in which he asked Trustee's counsel, "Can you get me a new number for a full and complete settlement with all parties please?" Howard Aff., Ex. A. Mr. Gordon responded the same day with an email stating, "the Trustee has authorized a gross settlement from all of the defendants in the above adversary proceeding in the amount of $87,000." Id. Mr. Gordon made clear that the offer expired at the close of business on August 14, 2023, unless accepted by all defendants. Id. The next email came from Mr. Howard on the morning of August 15, 2023—the day after Trustee's offer expired. Mr. Howard acknowledged that he was a day late but expressed his hope that Trustee would honor the settlement offer:

I have authority to agree in full. My client will pay $87,000 in exchange for y'all, and if necessary the seller in his capacity as a pending debtor in the bankruptcy proceeding, ratifying the existing deed into Jeremiah Woods and releasing claims against Mr. Woods's vesting and Thrive Mortgage's security deed upon title. The title insurance company will make the payment and anticipate this being a settlement agreement that just involves the estate and my clients, so it should be dead simple. My client informs me they will need a W-9. My understanding is that there may be exemptions to this normal tax requirement that apply in this situation. If so, please let me know which exemption you contend applies so that my client rep may pass it along to their tax people.

Glad to be able to put this one to bed in as simple a manner as possible. Please confirm. If you have a settlement agreement form you've approved in the past that would be helpful. Otherwise I'll draft something for your review.

Id. Mr. Gordon responded a couple of hours later with a short email requesting clarification about whether the settlement covers the realtors or closing attorneys, and Mr. Howard responded soon after that it would not cover the realtors or closing attorneys, only his clients (Mr. Woods and Thrive Mortgage). Id. Later in the evening on August 15, Mr. Gordon sent an email central to this matter:

Dylan, the trustee is willing to accept the $87,000 subject to checking with the estate accountant about the exemptions you mentioned below. This is in addition to the $30,000 earlier received from debtor out of approximately $72,000 he received at closing. The trustee's preference is to have a single settlement agreement whereby all defendants release the trustee and estate and its professionals, but the other defendants are not required to pay anything. In addition, your client would get an unsecured claim for $87,000 that will be subordinated to all other allowed claims in the case. All other claims are waived by your client and the other defendants. Upon payment in full and a final order approving the settlement agreement, the trustee would dismiss the lawsuit with prejudice. Please let me know if this would be acceptable.

Id. The next email came again from Mr. Gordon two weeks later, on August 30:

In my email below, the trustee accepted the $87,000 offer subject to checking with the estate accountant. What we have learned is not good . . . . [T]he sale, although unauthorized, will nevertheless cost the bankruptcy estate $25,500 in tax liability. This means that the amount the trustee would need to settle this case is $112,500. If this is not an amount your client can pay in settlement, we will need to proceed with the lawsuit.

Id. The question before the Court is whether this chain of emails constitutes an enforceable settlement agreement between Defendants Woods and Thrive Mortgage, on the one hand, and Trustee, on the other hand. Specifically, did Mr. Gordon's last email on August 15 accept the offer by Defendants to settle Trustee's claims against them for a payment of $87,000?

B. Legal Analysis

"The construction of settlement contracts is governed by the state law applicable to contracts in general. Here, Georgia law governs both whether there was a settlement agreement and the construction of any alleged settlement agreement." First Am. Title Ins. Co. v. King (In re King), 604 B.R. 93, 96 (Bankr. N.D. Ga 2019) (quoting Hopson v. Hopson (In re Hopson), 216 B.R. 297, 301 (Bankr. N.D. Ga. 1997)). "For an agreement to be binding, 'it should be clear that it is full and complete, covers all issues, and is understood by all litigants concerned.' " In re King, 604 B.R. at 96 (quoting Thomas v. Phillips, 240 Ga. App. 600, 602, 524 S.E.2d 298 (1999)); see also Providers Benefit Life Ins. Co. v. Tidewater Group Inc. (In re Tidewater Group, Inc.), 8 B.R. 930, 931 (Bankr. N.D. Ga. 1981). The agreement must be "definite, certain and unambiguous." In re King, 604 B.R. at 96 (quoting In re Hopson, 216 B.R. at 301). The party asserting the existence of a contract has the burden of proving its existence and its terms. In re King, 604 B.R. at 96 (citing Torres v. Elkin, 317 Ga. App. 135, 730 S.E.2d 518 (2012)).

"The consent of the parties being essential to a contract, until each has assented to all the terms, there is no binding contract; until assented to, each party may withdraw his bid or proposition." O.C.G.A. § 13-3-2. "[A]n agreement between two parties will occur only when the minds of the parties meet at the same time, upon the same subject matter, and in the same sense . . . . If there was in fact any essential part of the contract upon which the minds of the parties had not met, or upon which there was not an agreement it must follow that a valid and binding contract was not made." In re King, 604 B.R. at 96-97 (quoting Thomas v. Phillips, 240 Ga. App. 600, 603, 524 S.E.2d 298 (1999)). When deciding whether mutual assent or meeting of the minds occurred, courts can "consider the whole of the agreement and the surrounding circumstances, such as correspondence and discussions, and courts are free to consider such extrinsic evidence." In re King, 604 B.R. at 97 (citing Frickey v. Jones, 280 Ga. 573, 575, 630 S.E.2d 374 (2006)).

Attorneys may bind their clients to a settlement agreement, but the agreement must be in writing if the existence or terms of the settlement agreement are disputed. See O.C.G.A. § 15-19-5; In re King, 604 B.R. at 97; In re Hopson, 216 B.R. at 301; Brumbelow v. Northern Propane Gas Co., 251 Ga. 674, 676, 308 S.E.2d 544, 547 (1983). Although the writing "ideally consists of a formal written agreement signed by the parties[,] letters or documents prepared by attorneys which memorialize the terms of the agreement will suffice." Brumbelow, 251 Ga. at 676, 308 S.E.2d 544. "Such correspondence must contain all of the material terms of the agreement, as a settlement does not exist until all of the essential terms have been agreed to." In re Hopson, 216 B.R. at 301 (...