Recently, the Third Circuit Court of Appeals in Papera v Pennsylvania Bluestone Quarry ruled that Plaintiffs whose lawsuit was closed and dismissed after a settlement could re-file the exact same suit after the settlement fell through, because the dismissal order did not clearly specify the settlement was with prejudice, final and binding.
This is just one of the many pitfalls that can arise when we think we are settling a dispute, in court or otherwise. Time and again we have seen self-represented people or those represented by sloppy lawyers getting burned. After all, if you are going to settle, you want it to stick, right? And if you are the Plaintiff or creditor, you want to make sure you get the payment or performance agreed to before you give up your rights.
Like so much else, the devil is in the details, and in careful drafting. Non-lawyers should be especially wary. Too often I have seen contracts or deals that were unclear. So here is a quick and partial list of questions that need clear answers in writing:
- Who is settling, and do they have the authority to do so? (For example, debts are commonly collected by agents who may or may not have authority. And worse, collected by people claiming to own the debt when they do not: debts are often sold off multiple times)
- Who gets paid and when? What happens if they don’t?
- How are the settlement documents going to be signed, and does the signer have authority? Be sure that all parties have settled.
- What else does the creditor or plaintiff have to do: clear adverse references on a credit report? Get the case dismissed? Make sure there is a dismissal with prejudice.
- What happens if either party ends up in bankruptcy court?
Every case is different but getting the right legal advice is critical. We have done deals large and small, and have also unwound deals in bankruptcy court. We can put that experience to work for you. If you are a lawyer facing unusual issues, please feel free to call me to see how we can help.