In any real estate dispute that winds up in litigation, there are several things that you have to weigh carefully. One of the biggest decisions you’ll make is whether to settle your case or continue litigating. If you are seriously considering a settlement, it is vitally important to understand exactly what the settlement agreement you sign will — and won’t — do. The wrong choice may substantially handicap your legal rights and options down the road. The right choice may provide you with essential forms of protection. A knowledgeable Atlanta real estate lawyer can help you determine what choices make the most sense for you and your business.
When it comes to the importance of a good release agreement, this recent case from Cobb County makes for a useful example.
The underlying dispute arose after the failure of a mixed-use real development project. The project involved many players, including the developer, the developer’s investors, the law firm hired to handle the closing, the title insurance company the law firm hired to draft a title commitment, another attorney retained to do a title abstract, and a title researcher.
When the project fell apart, the failure triggered numerous lawsuits, some of which overlapped. One of the lawsuits pitted the developer against the law firm responsible for the closing.
The law firm settled with the developer and, as a part of that settlement agreement, assigned all of its legal rights (including any right to sue and obtain compensation against the other entities involved) to the developer.
Along the way, the developer also filed a claim with the title insurance company. The insurance company resolved the claim and, as part of that resolution, created a “Release, Settlement Agreement and Covenant Not to Sue” that it and the developer signed.
Subsequently, though, the developer sued the title insurance company. The developer argued that it was advancing the law firm’s claims, not its own, so its lawsuit was not barred by the covenant not to sue.
The Breadth of the Agreement Shielded the Insurance Company From Suit
That argument did not win the day. One of the keys to the insurance company’s success was the way that it drafted the release agreement that the developer signed. As the appeals court noted, that contract “was broadly written,” meaning that it covered a wide range of possible claims. The agreement expressly stated that the developer released the insurance company, from any and all “rights and causes of action of whatsoever kind and nature, resulting from or in any way arising or growing out of, and by reason of, any and all known and unknown, fixed or contingent, in law or in equity, in tort or in contract, at common law or statute, compensatory or punitive, foreseen and unforeseen claims, and the consequences thereof which [i]nsured [p]arties now have or may hereafter have against” the insurance company “from the beginning of time to the time of the execution of this [a]greement.”
The agreement was so broad, according to the appeals court, that it clearly encompassed not just claims arising from the developer’s own harm, but also claims arising as a result of other parties assigning their rights to the developer.
In the end, the title insurance company succeeded in getting the developer’s signature on the broad agreement it needed to protect itself and, as a result, obtained the judgment it wanted in this case.
When it comes to negotiating, drafting, and agreeing (or not agreeing) to a settlement and release agreement in a business dispute, make sure you have all the information you need before making a decision. Part of that means getting knowledgeable legal advice from an experienced pro. Look to the skilled Atlanta real estate attorneys at Poole Huffman, LLC to be that kind of powerful resource and advocate for you. Contact our attorneys online or by calling (404) 373-4008 to schedule your confidential consultation.