Cooke, Keating Secure Reversal in Illinois Appellate Court of Contempt Order and Trial Court's Enforcement of Unsigned Settlement AgreementSwanson, Martin & Bell, LLP partner Patrick G. Cooke obtained the reversal of a contempt order in connection with the enforcement of an unsigned settlement agreement.
The plaintiff bank sought to foreclose on certain properties and was defending against claims prepared by partner Emily J. Fitzgerald on behalf of the firm's client (the mortgagor), including notary misconduct and allegations involving fraud and aiding and abetting fraud. The bank claimed a settlement was reached at a mediation in which certain of the terms discussed at the mediation were reduced to a term sheet. However, the first “term” in the term sheet indicated that upon the “execution of a fully drafted and negotiated settlement agreement,” the parties would perform certain obligations. Two drafts of a settlement agreement were circulated after the mediation by the bank; neither were signed and the additional terms included by the bank were not accepted by the mortgagor.
The bank then moved to enforce the unsigned settlement agreement, which the trial court eventually granted. The order entered by the trial court required the mortgagor to execute a settlement agreement and releases that included terms not raised at the mediation and not included in the term sheet. Cooke filed a motion for finding of friendly contempt to seek appellate review. The court eventually found the mortgagor in indirect civil contempt and assessed a monetary penalty of $50.00.
On appeal, the appellate court found that the settlement terms in the term sheet did not include any mention of the mortgagor’s counterclaims of notary misconduct or other bank misconduct. Because the bank sought to enforce a settlement agreement that included terms and releases not delineated in the term sheet in any respect, the appellate court reversed the trial court’s order granting the motion to enforce the settlement agreement and vacated the contempt order and fine.