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Paul R. Ponfil Trust v. Charmoli Holdings, LLC

Court of Appeals of Wisconsin, District II

September 18, 2019

Paul R. Ponfil Trust, Plaintiff-Respondent,
v.
Charmoli Holdings, LLC, Defendant-Appellant, ABC Company, Defendant.

          APPEAL from an order of the circuit court for Ozaukee County: No. 2016CV429 SANDY A. WILLIAMS, Judge.

          Before Neubauer, C.J., Reilly, P.J., and Gundrum, J.

          NEUBAUER, C.J.

         ¶1 This case addresses the enforceability of a purported settlement agreement entered into by the parties at the end of mediation, in which the parties agreed to sign a separate "substantive agreement" that would address "such things" as liability and indemnity in "usual form." The circuit court found that the agreement was binding, while acknowledging that the additional terms remained to be agreed upon. The settlement agreement is unenforceable as it lacks agreement on material terms. We reverse and remand.

         BACKGROUND

         ¶2 Charmoli Holdings, LLC (Charmoli), and the Paul R. Ponfil Trust (the Trust) jointly own property with a quarry, which an affiliated entity previously operated, in Cedarburg, Wisconsin. The Trust filed this action in November 2016. During a mediation session on February 6, 2018, the parties prepared and signed a handwritten one-page document captioned "Mediation Settlement Agreement" (the Agreement).

         ¶3 The opening line of the Agreement states: "This Case Is Settled In Full As Follows:" The parties then set forth five paragraphs of terms, including (1) Charmoli's payment of $500,000 to the Trust within thirty days, (2) the Trust's quitclaim of its interest in one forty-acre parcel to Charmoli, (3) Charmoli's quitclaim in another forty-acre parcel to the Trust, and (4) dismissal of the lawsuit upon the payment and conveyances. In the fifth paragraph (Paragraph 5) the parties " agree[d] to sign a separate substantive agreement covering such things as liability & indemnity in usual form."

         ¶4 The Trust provided a first draft of an agreement to address Paragraph 5. The draft provided as follows:

This Agreement is intended to incorporate the Mediation Agreement, identify the terms of resolution, and to allow for the resolution and satisfaction of any and all claims between them and do so to the extent such claims were asserted within or outside the Lawsuit, as described below, subject to the rights and obligations that survive this agreement.

         ¶5 The Trust's draft agreement provided a lengthy and involved indemnity/hold harmless provision, which noted that the property at issue is "the subject of operations that include but are not limited to the deposit of materials from outside sources, with such deposits commonly referred to as fill," which activities have been taking place "for an extended time period" and "are expected to continue in the future." The draft addressed the scope as to persons and entities, past and future activities, claims related to the fill materials, and detailed the scope of the indemnity and hold harmless agreement. It addressed a mutual release. The draft addressed affiliated entities, including R&R Excavating and Bulldozing and the R&R Liquidating Trust. The draft also included an integration clause, proposing to supersede all prior agreements, including the Agreement.

         ¶6 Charmoli responded with its own version. Charmoli revised the scope and substance of the indemnity, with an environmental indemnity clause, hold harmless provision, financial limitations as to indemnity, aggregate liability, claims procedures, a cooperation clause, and the control and defense of indemnity claims. The scope of the environmental issues was addressed with multiple definitions, such as definitions of "Clean-up," "Contaminants," "Environmental Laws," "Low Hazard Exemption," "Regulatory Actions," as were the scope of "Indemnitees," "Indemnitors," and "Third Party Claims."

         ¶7 The Trust responded with another draft, which now provided that the "Mediation Agreement and this Agreement represent the entire agreement between the Parties."

         ¶8 Ultimately, despite many communications between the parties, no agreement was reached on "such things as liability & indemnity in usual form."

         ¶9 The Trust filed a motion seeking to compel enforcement of the Agreement under Wis. Stat. § 807.05 (2017-18).[1] The Trust asked the circuit court to draft a release and indemnification in "usual form," requesting the court to "adopt the construction which will result in a reasonable, fair ...


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