SC Lawyer, July 2012, #3. A Handshake is Not Enough.

• Author: By Angus Lawton and Erica McElreath

South Carolina BAR Journal

2012.

SC Lawyer, July 2012, #3.

A Handshake is Not Enough

South Carolina LawyerJuly 2012A Handshake is Not EnoughSettlement Agreements Under Rule 43(k)By Angus Lawton and Erica McElreathYou have finally done it. After months of negotiating, you hang up the phone knowing that the big case you have been working on is finally settled. Opposing counsel has a great reputation, and you know you can trust his word. Even so, you immediately draft a letter memorializing the terms of your agreement and send it to opposing counsel. You are a little nervous about his client backing out, so you ask him to have his client sign it. He does, and sends it back to you. You think the deal is done.

Fast-forward several months, and the opposing party is running into obstacles trying to comply with the terms of the settlement. You ask opposing counsel to close the deal, and you get nothing but excuses. After several more months, you hear from opposing counsel that the deal is off. You plan to move to enforce the settlement agreement. Is the agreement enforceable?

The rule

This situation is specifically addressed in Rule 43(k) of the South Carolina Rules of Civil Procedure.

The rule provides:

No agreement between counsel affecting the proceedings in an action shall be binding unless reduced to the form of a consent order or written stipulation signed by counsel and entered in the record, or unless made in open court and noted upon the record, or reduced to writing and signed by the parties and their counsel. Settlement agreements shall be handled in accordance with Rule 41.1, SCRCP.

In the scenario described above, there is (a) no consent order regarding the alleged settlement; (b) no written stipulation signed by counsel and entered in the record regarding any settlement; (c) no hearing in open court where a settlement was noted upon the record; and (d) no writing signed by the parties and their counsel. Stated simply, there is no binding settlement agreement under South Carolina law, and a motion to enforce the settlement should fail.

History of the rule

Rule 43(k) is based on former Circuit Court Rule 14. Like its predecessor, the rule is intended to prevent disputes as to the existence and terms of agreements regarding pending litigation and to relieve the court of the necessity of determining such disputes, which "are often more perplexing than the case itself." Ashfort Corp. v. Palmetto Const. Group, Inc., 318 S.C. 492, 493-94, 458 S.E.2d 533, 534 (1995). The S.C. Supreme Court has gone so far as to say that "[t]he time of the court should not be taken up in controversial matters of this character." Id.

Compliance with Rule 43(k) became easier with the S.C. Supreme Court's most recent amendment, effective on April 29, 2009. The amendment provides that agreements of counsel can be binding if they are "reduced to writing and signed by the parties and their counsel." The amendment eliminates the need for the agreement to be an official part of the record. With this addition to the rule, an enforceable agreement can be signed by all parties and counsel at the conclusion of a successful mediation.

Since the rule was amended, there have been no appellate court...