In Paul R. Ponfil Trust v. Charmoli Holdings, LLC (2018AP1321), the Court of Appeals District II held that a settlement agreement was unenforceable because it lacked agreement on material terms.

During the course of this action, the Trust and Charmoli signed a “Mediation Settlement Agreement,” which included five paragraphs of terms related to their joint ownership of a quarry. The fifth paragraph was an agreement between the parties to sign a separate substantive agreement on liability and indemnity.

However, after many subsequent communications between Trust and Charmoli, the parties were unable to reach an agreement on liability and indemnity. The Trust filed a motion to compel enforcement of the Mediation Settlement Agreement without the separate substantive agreement.

The court held that the Mediation Settlement Agreement was not enforceable because the parties had not reached an agreement on the material terms of paragraph five, related to liability and indemnity. The court cannot enforce settlement agreements under Wis. Stat. § 807.05 if the agreements contain indefinite terms that were never agreed to in writing.

In a dissent, Judge Reilly argued that the Mediation Settlement Agreement was enforceable because the parties expressly agreed it settled the case. The dissent states that paragraph five of the Mediation Settlement Agreement was not a material term but a “clean-up paragraph” to execute details of the agreement. Therefore, the Mediation Settlement Agreement was enforceable even without a separate substantive agreement.