Waddle v. Elrod

Supreme Court of Tennessee · 2012 · Contracts

ContractsStatute of FraudsSettlement AgreementsReal PropertyUniform Electronic Transactions ActStatute of Fraudssettlement agreementreal property

Facts

Waddle sued Elrod by cross-claim alleging Elrod had obtained a one-half interest in the Prim Lane property through undue influence, and the cross-claim included a legal description of that property. On the eve of trial, the parties' attorneys exchanged emails agreeing that Elrod would deed her property interest back to Waddle, both parties would sign a full release, Waddle would bear no court costs, and no admission of guilt would be included. The trial court cancelled the jury trial based on the reported settlement, and Waddle later paid outstanding property taxes in reliance on sole ownership. Elrod then changed her mind and refused to sign formal settlement documents, prompting Waddle to move to enforce the settlement.

Issue

Does Tennessee's Statute of Frauds apply to a settlement agreement that requires the transfer of an interest in real property? If so, do attorneys' emails confirming the settlement, together with the legal description in the cross-claim, satisfy the Statute of Frauds under the UETA?

Rule

The Statute of Frauds applies to any settlement agreement whose terms require the transfer of an interest in real property. To satisfy the statute, there must be a writing or memorandum containing the essential terms of the agreement, which may be assembled from connected writings without resort to parol evidence, and a signature by the party to be charged or a lawfully authorized agent; under the UETA, an electronic record satisfies a writing requirement and an electronic signature satisfies a signature requirement when the parties have agreed to conduct the transaction by electronic means.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a pending business tort suit in Knoxville, Dana Mercer claims that Noah Pruitt wrongfully obtained a 25% interest in a cabin lot in Sevier County. On the morning of trial, their lawyers orally agree that Noah will deed his 25% interest to Dana, both sides will dismiss all claims with prejudice, and each side will bear its own fees.

If Noah later refuses to sign formal papers and pleads the Statute of Frauds, which is the best analysis?

Explanation. The controlling rule is that the Statute of Frauds applies to any settlement agreement requiring transfer of an interest in real property. The focus is on the terms of the settlement, not on the fact that the agreement was made during litigation or on the underlying cause of action. The majority rejected a narrow reading limiting the statute to ordinary priced land-sale contracts.