The Tennessee Supreme Court decided Tuesday that a settlement agreement requiring the transfer of an interest in real property must satisfy the Statute of Frauds to be enforceable. The Court also held for the first time that e-mails are sufficient to satisfy the Statute of Frauds.
The Court considered a settlement agreement that resolved litigation between Earline Waddle and her niece Lorene Elrod about property in Rutherford County.
Waddle had agreed to sell the property to a development company, but the deal fell through when the company learned that Waddle had previously executed a quitclaim deed giving Elrod a one-half interest in the property. After the development company sued Waddle and Elrod, Waddle sued Elrod, alleging that Elrod acquired her interest in the property by exercising undue influence over Waddle. The development company settled its lawsuit, but Waddle’s claim against Elrod was set for trial.
The day before trial, Waddle and Elrod verbally agreed to settle the case. Their attorneys exchanged e-mails setting out the terms of the settlement, which required the Elrod to re-convey her interest in the property to Waddle. The trial was canceled, but a month later, Elrod changed her mind about the settlement. Waddle then asked the court to enforce the settlement. Elrod argued that the Statute of Frauds, which requires written evidence of contracts involving the transfer of property interests, precluded enforcement of the settlement.
The trial court ruled that the Statute of Frauds did not bar enforcement of the agreement. The Court of Appeals affirmed that decision holding that the Statute of Frauds only applies to contracts for the sale of land and not settlement agreements. In a unanimous opinion, the Tennessee Supreme Court affirmed the ruling, but disagreed with the reasoning. The Court ruled that the Statute of Frauds applied because the settlement agreement required the transfer of an interest in real property. The Court also ruled that the e-mails exchanged by Waddle’s and Elrod’s attorneys, along with the legal description of the property in Waddle’s cross-claim, satisfied the writing and signature requirements of the Statute of Frauds.
To read the Earline Waddle v. Lorene B. Elrod opinion authored by Chief Justice Cornelia A. Clark, visit http://www.tncourts.gov/sites/default/files/waddlee_opn.pdf.