Pat Doe v. Rudy A. Lozano

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2022 ME 33
Docket: Yor-21-150
Argued: January 11, 2022
Decided: June 16, 2022

Panel: STANFILL, C.J., and MEAD, JABAR, HORTON, and CONNORS, JJ.*

PAT DOE1

v.

RUDY A. LOZANO

STANFILL, C.J.

[¶1] Rudy A. Lozano appeals from a judgment of the District Court

(Biddeford, Mulhern, J.) determining that a settlement agreement that the

parties signed constitutes a binding contract and granting Pat Doe’s motion to

enforce the agreement. We clarify the standards courts should use in enforcing

a settlement agreement, vacate the judgment, and remand for further

proceedings.

*Although Justices Gorman and Humphrey participated in the appeal, they retired before this opinion
was certified.
1 Pursuant to federal law, we do not identify the plaintiff in this appeal referencing a protection from
abuse action and limit our description of events and locations to avoid revealing “the identity or
location of the party protected under [a protection] order.” 18 U.S.C.S. § 2265(d)(3) (LEXIS through
Pub. L. No. 117-130).
2

I. BACKGROUND

[¶2] In September 2018, Doe filed a complaint against Lozano for unjust

enrichment and partition of real estate, alleging that she and Lozano had lived

together for over seven years and that she was entitled to reimbursement or

payment for multiple benefits she conferred upon Lozano during that time. In

November 2018, Doe filed with the court a settlement agreement, signed by

both parties, which stated that the parties were previously in a personal and

business relationship and sought to “resolve all issues of real and personal

property, and any other legal rights” arising from that relationship.

[¶3] The settlement agreement included a section regarding property

described as “marital real estate” that provided that Lozano “shall purchase

[Doe’s] interest in the property” and listed payments that Lozano was to make,

with the first payment due no later than November 1, 2018. The settlement

agreement also provided that Lozano “shall be entitled to a walk-through of the

premises to ensure that the property is in a condition similar to that which

existed on his last date of occupancy” and that the “agreement is conditioned

upon the real estate and buildings thereon being in a satisfactory condition as

mutually agreed” by the parties. The settlement agreement stated that the

parties agreed the civil action “shall be settled and agreed upon by submission
3

of this executed document to the court” and that Lozano agreed to “a default

judgment in the full amount remaining that is due and owed” if he failed to

“fulfill any of the commitments agreed upon” in the agreement.2 Doe filed the

settlement agreement with the court on November 6, 2018. The agreement was

never incorporated into a judgment.

[¶4] Several months passed, and on April 22, 2019, Lozano filed an

answer to Doe’s complaint. Doe filed a proposed judgment two days later,

contending that the settlement agreement resolved the issues between the

parties. On August 12, 2019, the court (Moskowitz, J.) entered a pretrial order

stating that the court had the settlement agreement in its file; that Lozano

disagreed with Doe that the settlement agreement was a binding, enforceable,

contract; and that Doe could move for summary judgment on that issue. Doe

moved for summary judgment, and Lozano filed an opposition. Doe then

moved for permission to withdraw her summary judgment motion and to

amend her complaint to add a claim for breach of contract, which the court

(Foster, A.R.J.) granted.

2 Doe had also filed a complaint for protection from abuse in September 2018. The District Court
(Biddeford, Sutton, J.) issued a temporary protection order on behalf of Doe and her two children and
later issued a second temporary protection order. The settlement agreement stated that the
protection from abuse action “shall be dismissed with prejudice,” and the court (Moskowitz, J.)
granted Doe’s motion to dismiss the protection from abuse complaint in November 2018.
4

[¶5] Doe did not amend her complaint in the District Court but filed a

complaint against Lozano in the Superior Court (York County) for breach of

contract and promissory estoppel. The Superior Court (Douglas, J.) stayed that

case pending further action of the District Court.

[¶6] On August 17, 2020, Doe moved to “enforce” the settlement

agreement in the District Court, arguing that Lozano had failed to make any

payments due to Doe under the agreement. Unlike the withdrawn motion for

summary judgment, Doe did not support her motion to enforce with any

affidavits or other material of evidentiary quality. Lozano opposed the motion,

raising the following defenses: that he entered into the agreement under duress

due to the pending protection from abuse action; that he was mentally

incapacitated when he signed the agreement; that Doe fraudulently induced

him to enter into the agreement by concealing the results of an appraisal of the

real property, which concluded that the property was worth considerably less

than Lozano believed; that the agreement was not enforceable because both

parties knew that the description “marital real estate” was a mistake; that he

was not given a chance for a “walk-through of the premises” and the property

was not in a condition similar to the condition it was in on the last date that he

occupied it; and that a condition of the agreement—that the property be in a
5

satisfactory condition—is ambiguous and was not met. Lozano argued that an

evidentiary hearing on the motion to enforce was required as a matter of due

process and that discovery was necessary before a hearing could be held.3

[¶7] Despite Lozano’s request for an evidentiary hearing, the court

(Mulhern, J.) held a nontestimonial hearing on November 24, 2020. Based on

the parties’ arguments and the settlement agreement, on March 24, 2021, the

court entered a judgment granting in part Doe’s motion to enforce. The court

determined that the settlement agreement is an enforceable contract with

sufficiently definite terms and that the agreement’s material terms “are not in

dispute, so no evidentiary hearing needs to be conducted.” The court rejected

Lozano’s argument regarding mutual mistake, stating that it had “not been

presented any facts that indicate that at the time of the signing . . . the parties

were under the mistaken belief that they were married” and that the language

“marital real estate” was “a simple clerical error.” The court found that the

settlement agreement contained “detailed terms and multiple affirmations of

intent”; that the parties used attorneys to negotiate the agreement, affirmed

“their intent to a notary,” and had the agreement notarized; and that the

3 The court (Mulhern, J.) stayed all discovery in the matter, stating that the granting of the motion to
enforce “would conclude the case without the need for further discovery.”
6

notarized agreement was submitted to the court. The court determined that,

as a result, the parties intended to be bound by the agreement.

[¶8] Finally, the court concluded that there were no grounds to void the

settlement agreement. The court determined that Doe had “performed

significant partial performance” under the agreement, that Lozano accepted

that performance and “stayed silent and did not indicate to [Doe] that he would

challenge” the agreement, and that therefore Lozano could not claim the

settlement agreement was void. The court rejected Lozano’s arguments with

respect to the unsatisfactory condition of the property, duress, incompetence,

and fraud because it determined that Lozano waived “any objection to the

condition of the property” when he moved back into the property and accepted

and recorded the quitclaim deed to the property and that he “ratified the

agreement by his subsequent conduct.” The court thus approved the

settlement agreement, determined that Doe was entitled to enforce the

agreement with respect to the amount Lozano owed for the real property, and

entered a judgment of $80,002 for Doe.4

4 The court denied Doe’s request for enforcement of the agreement regarding the value of personal
property because the claim was “not for a definite amount.” The court also denied all outstanding
motions, including Lozano’s motion for relief and sanctions pursuant to M.R. Civ. P. 37, motion for a
protective order regarding discovery, motion in limine, and motion to test the sufficiency of Doe’s
answers to Lozano’s requests for admissions.
7

[¶9] Lozano moved for further findings of fact, which the court denied.

Lozano timely appealed.5

II. DISCUSSION

[¶10] Lozano argues that the court improperly reached conclusions on

questions of fact “without allowing exhibits, taking evidence or otherwise

weighing fact” and that it violated his “due process rights to test the evidence.”6

Doe contends that the court did not need to hold an evidentiary hearing on her

motion to enforce because “there was no genuinely disputed question of

material fact regarding the existence or unambiguous terms” of the settlement

agreement.7

5 On March 11, 2022, Lozano filed a motion requesting that we decide his appeal without referring
to the protection from abuse matter, a motion which Doe opposed. We accepted the motion and
opposition as additional briefing in considering the merits of Lozano’s appeal.
6 We reject Lozano’s argument that Doe is collaterally estopped from pursuing the motion to enforce
because she did not amend her complaint to assert a claim for breach of contract. Lozano has waived
this argument because he did not develop it or offer case law in support of it. See Mehlhorn v. Derby,
2006 ME 110, ¶¶ 9, 11, 905 A.2d 290; Alexander, Maine Appellate Practice § 404 at 316 (5th ed.
2018). Regardless, his argument fails because there was no final judgment with respect to these
issues. See Portland Water Dist. v. Town of Standish, 2008 ME 23, ¶ 9, 940 A.2d 1097.
7 We reject Doe’s argument that Lozano failed to properly raise and develop any issues relating to
his due process argument. Lozano argued, in his opposition to Doe’s motion to enforce, that failing
to hold an evidentiary hearing would violate his due process rights and, during the nontestimonial
hearing, Lozano also raised the court’s need to take evidence. The court specifically contemplated
whether Lozano’s due process rights would be preserved without an evidentiary hearing. There was
thus “a sufficient basis in the record to alert the court” and Doe of this issue. Warren Constr. Grp., LLC
v. Reis, 2016 ME 11, ¶ 9, 130 A.3d 969 (quotation marks omitted); Alexander, Maine Appellate
Practice § 402(a) at 310 (5th ed. 2018).
8

[¶11] We review “de novo whether an individual was afforded

procedural due process.” Mitchell v. Krieckhaus, 2017 ME 70, ¶ 16, 158 A.3d

951 (quotation marks omitted). “The fundamental requirement of due process

is the opportunity to be heard at a meaningful time and in a meaningful

manner.” Id. ¶¶ 16, 20 (quotation marks omitted). Furthermore, “[w]hen

significant rights are at stake, due process requires: notice of the issues, an

opportunity to be heard, the right to introduce evidence and present witnesses,

the right to respond to claims and evidence, and an impartial fact-finder.”

Jusseaume v. Ducatt, 2011 ME 43, ¶ 12, 15 A.3d 714 (quoting GENUJO LOK

Beteiligungs GmbH v. Zorn, 2008 ME 50, ¶ 18, 943 A.2d 573).

[¶12] We have previously “implicitly endorsed motions to enforce as

appropriate vehicles by which parties may bring an alleged settlement

agreement before a trial court,” and we have broadly stated that whether a

court must hold an evidentiary hearing on a motion to enforce is ordinarily

within the court’s discretion. Est. of Snow, 2014 ME 105, ¶ 18, 99 A.3d 278;

see M.R. Civ. P. 7(b)(7). We have not, however, always clearly articulated

standards to determine when an evidentiary hearing may be necessary, nor

have we clearly articulated the court’s power to enforce a settlement

agreement upon such a motion. We do so now.
9

A. Contract Formation

[¶13] A settlement agreement is analyzed as a contract and the existence

of a binding settlement agreement is a question of fact reviewed for clear error.

2301 Cong. Realty, LLC v. Wise Bus. Forms, Inc., 2014 ME 147, ¶ 10, 106 A.3d

1131; Est. of Snow, 2014 ME 105, ¶ 11, 99 A.3d 278. For a binding agreement

to exist, “the parties must have mutually intended to be bound by terms

sufficiently definite to enforce.” 2301 Cong. Realty, LLC, 2014 ME 147, ¶ 10, 106

A.3d 1131 (quotation marks omitted).

[¶14] “[W]here parties read a settlement agreement that contains all the

necessary elements of an agreement into the court record, no further

fact-finding is required.” Est. of Snow, 2014 ME 105, ¶ 19, 99 A.3d 278

(summarizing cases); see, e.g., Muther v. Broad Cove Shore Ass’n, 2009 ME 37,

¶¶ 2, 8, 968 A.2d 539 (explaining that the transcript of the judicially assisted

settlement conference “conclusively establishes the existence of a binding

settlement agreement . . . and subsequent disputes that arose while attempting

to reduce the settlement to a stipulated judgment did not affect” the court’s

authority to enforce the agreement). Further, in Estate of Snow, we affirmed a

court’s determination that no evidentiary hearing was necessary where the

parties read the details of a settlement agreement into the record at a
10

deposition. 2014 ME 105, ¶¶ 5-7, 21-22, 99 A.3d 278. Although the parties

later failed to agree on written language reflecting the agreement, they did not

dispute the accuracy or authenticity of the deposition transcript submitted to

the court, which the court properly found reflected an unambiguous binding

settlement agreement. Id. ¶¶ 7, 21; see also 2301 Cong. Realty, LLC, 2014 ME

147, ¶ 10, 106 A.3d 1131.

[¶15] If, however, the parties dispute the existence of an enforceable

settlement reached outside the court’s presence, “findings of fact regarding the

terms of the agreement and the parties’ intent may be required.” Muther, 2009

ME 37, ¶ 6, 968 A.2d 539. For example, in Marie v. Renner we held that an

evidentiary hearing was necessary to determine whether the parties reached a

binding settlement agreement. 2008 ME 73, ¶ 10, 946 A.2d 418. The plaintiff

had sued in that case alleging that the renovation work to the defendant’s

building had caused her to have an allergic reaction and incur medical bills. Id.

¶ 2. Prior to trial, the court was notified that the parties had settled the case,

and the plaintiff filed a motion to enforce, arguing that a binding contract

existed, “namely, in exchange for a release of all claims, [defendant] would

prepare and tender a check,” and that a hearing was unnecessary because the

filings with the court disclosed this agreement. Id. ¶¶ 3, 6.
11

[¶16] The defendant contended that his agreement to settle was

conditioned on the proceeds “being used to pay [plaintiff’s] outstanding

medical bills” and, because the medical provider had written off those bills, the

settlement agreement’s terms were not met. Id. ¶ 3. We determined that the

parties’ filings, including documents signed by only one party and

correspondence between counsel, did not reflect a binding settlement

agreement but instead revealed an ambiguity that went “to the substance of the

agreement” regarding whether “there was a condition precedent to the

agreement as to the use of the proceeds of the check.” Id. ¶¶ 8-9. We therefore

vacated the court’s judgment and remanded the matter for an evidentiary

hearing. Id. ¶ 10; see also White v. Fleet Bank of Me., 2005 ME 72, ¶¶ 3 & n.2, 5,

12-13, 875 A.2d 680 (affirming the enforcement of a settlement agreement

reached during mediation, where the mediation was not recorded due to a tape

recorder malfunction and the court held an evidentiary hearing).

[¶17] While the above cases are instructive, here the parties’ dispute

regarding the settlement agreement is not limited to whether an agreement

was reached outside of the court and what the material terms of that agreement

are. The parties both signed the settlement agreement and Doe filed it with the

court. The agreement on its face appears fully integrated. Under principles of
12

contract law and the parol evidence rule, extrinsic evidence is not admissible to

explain or alter an unambiguous integrated contract. See Handy Boat Serv.,

Inc. v. Pro. Servs., Inc., 1998 ME 134, ¶ 11, 711 A.2d 1306.

[¶18] In this case, however, Lozano contended and argues on appeal that

the agreement is invalid because of the circumstances leading up to the

agreement’s signing. Specifically, he claims that he was under duress due to

Doe’s pending action for protection from abuse and was mentally incapacitated

at the time of signing,8 and that Doe fraudulently induced him to enter the

agreement. These arguments go to the validity of the agreement’s formation,

not to the terms of the agreement.

[¶19] A party asserting the defense of fraudulent inducement may use

parol evidence to show that the other party engaged in fraudulent

representations to induce the party to enter a settlement agreement. See Ferrell

v. Cox, 617 A.2d 1003, 1006 (Me. 1992); Harriman v. Maddocks, 518 A.2d 1027,

1029 (Me. 1986). Such evidence may show that the signed settlement

agreement does not reflect the intent of the parties, Ferrell, 617 A.2d at 1006,

and may vitiate the contract, Harriman, 518 A.2d at 1029.

8Lozano notes that Doe herself asserted in her complaint for protection from abuse that Lozano was
mentally ill and delusional.
13

[¶20] In addition, a contract is voidable if a contracting party does not

have the requisite mental capacity to contract. See Est. of Marquis, 2003 ME 71,

¶ 14, 822 A.2d 1153. The determination of a party’s contractual capacity is

necessarily a question of fact. See id. ¶ 16. Similarly, duress founded upon

wrongful conduct of the other party is a factual question that may also

invalidate a contract. See City of Portland v. Gemini Concerts, Inc., 481 A.2d 180,

182-83 (Me. 1984).

[¶21] As we have previously explained, see Est. of Snow, 2014 ME 105,

¶ 20, 99 A.3d 278, the First Circuit has determined that courts “may not

summarily enforce a purported settlement agreement if there is a genuinely

disputed question of material fact regarding the existence or terms of that

agreement” and must instead “take evidence to resolve the contested issues of

fact,” Malave v. Carney Hosp., 170 F.3d 217, 220, 222 (1st Cir. 1999) (“Summary

enforcement of arm’s-length settlements is a useful device to hold litigants to

their word, but the procedure ought to be reserved for situations in which a

struck bargain is admitted or proved, and the basis for nonperformance is

insubstantial.”). In Malave, the First Circuit held that an evidentiary hearing

was necessary when a party disputed whether its attorney had authorization

to settle the case. Id. at 219, 221-22; see also Lane v. Maine Cent. R.R., 572 A.2d
14

1084, 1084-85 (Me. 1990). An evidentiary hearing can similarly be necessary

to determine whether a party had the mental capacity to enter into an

agreement. See Marston v. United States, No. 10-10437-GAO, 2012 U.S. Dist.

LEXIS 29140, at *10-12 (D. Mass. Mar. 6, 2012). The same is true as to improper

coercion. See Bandera v. City of Quincy, 344 F.3d 47, 52 (1st Cir. 2003) (stating

that it was unlikely that the matter could be resolved absent an evidentiary

hearing where there were issues of fact, including whether the plaintiff was

“improperly coerced into signing the [settlement] agreement”).

[¶22] We now make clear that if a party raises a factual issue that goes

to the validity of a settlement agreement’s formation, an evidentiary hearing

will ordinarily be necessary on a motion to enforce the settlement, even if the

written agreement otherwise appears to be a fully integrated contract.9

Because issues of fact regarding the formation of the settlement agreement

exist here and no such hearing was held, we must vacate the judgment.

9 We do not suggest that these factual issues, as with any factual issues, cannot be resolved upon a
properly supported motion for summary judgment. Such a motion was filed in this case but then
withdrawn. Summary judgment remains available when there are no genuine issues of material fact.
M.R. Civ. P. 56(c). Similarly, as the First Circuit has noted, “[p]arties are perfectly free to submit issues
for resolution on whatever limited evidence they choose to present.” F.A.C., Inc. v. Cooperativa de
Seguros de Vida de P.R., 449 F.3d 185, 188, 194 (1st Cir. 2006) (determining that the lack of an
evidentiary hearing was not problematic where a party did not properly raise that a hearing was
requested and did not argue “that the failure to hold an evidentiary hearing was error,” and where
the court was familiar with the issues because it had participated in the settlement negotiations).
15

B. Enforcement Remedy

[¶23] In her motion to enforce, Doe sought not only a declaration that

the settlement agreement was valid and entry of judgment thereon, but she also

sought remedies for breach of the substance of the agreement. In response, in

addition to claiming that the contract was void or voidable, Lozano raised other

issues that may be defenses, in whole or in part, to an action for breach of

contract. In this regard, the court again erred by determining factual issues

regarding performance, breach, and remedies without receiving any evidence.

[¶24] On a motion to enforce a settlement agreement, the court may

determine that an agreement is enforceable as a full and final agreement. A

court will ordinarily enforce a settlement agreement by entering a judgment in

accordance with the agreement, whether by dismissing the action or

incorporating the agreement’s terms into a judgment. See, e.g., Muther, 2009

ME 37, ¶ 7, 968 A.2d 539 (stating that a valid settlement agreement is

enforceable “and, upon acceptance by the court, is incorporated as a judgment

of the court”); Toffling v. Toffling, 2008 ME 90, ¶¶ 8-9, 953 A.2d 375 (“[A]n oral

stipulation entered on the record at trial is adequate to support the entry of a

judgment finally disposing of the litigation.” (quotation marks omitted)); White,

2005 ME 72, ¶ 8, 875 A.2d 680 (explaining that once the court determined that
16

the parties had a binding settlement, the court issued an order adopting and

enforcing the settlement’s terms); Page v. Page, 671 A.2d 956, 958 (Me. 1996)

(stating that a “settlement agreement can be summarily enforced by the entry

of a judgment”); Transamerica Com. Fin. Corp. v. Birt, 599 A.2d 65, 65 (Me.

1991).

[¶25] The determination that a settlement agreement was validly

formed with sufficiently definite terms and is entitled to enforcement as a

judgment, however, is separate from a determination of whether a party is in

breach of the settlement agreement and the remedies therefor. In this case, the

court’s judgment was not limited to entry of a judgment based on the

settlement agreement. After determining there was a valid agreement, the

court went on to determine that Doe had “performed significant partial

performance” of the agreement; that Doe had “upheld her obligations under the

contract”; that Lozano had remained silent and did not indicate he would

challenge the agreement; that Lozano had “defaulted” under the agreement;

that Lozano had waived his defenses; that Doe was entitled to a judgment of
17

$80,002; and that Doe was entitled to request attorney’s fees—all without

relying on any competent evidence or other factual record.10

[¶26] As stated above, Doe originally moved for summary judgment

regarding the settlement but then withdrew her motion. She was given

permission to amend her complaint to add a claim for breach of contract but

never did so. She filed a separate Superior Court complaint against Lozano for

breach of contract and promissory estoppel, but that case was stayed pending

further proceedings in the District Court. Any of those procedural mechanisms

would be acceptable ways to resolve her allegations of breach of the settlement

agreement. What could not be done, however, was entry of a judgment against

Lozano on a motion to enforce without any hearing or other factual record.

The entry is:

Judgment vacated. Remanded for further
proceedings consistent with this opinion.

10To be clear, Doe’s motion to enforce was not under oath and did not include or rely on any affidavits
or other filings that might arguably provide a factual basis for the court’s findings.
18

Daniel D. Feldman, Esq. (orally), Law Office of Daniel Feldman, Yarmouth, for
appellant Rudy A. Lozano

Fred W. Bopp III, Esq. (orally), Bopp & Guecia, Yarmouth, for appellee Pat Doe

Biddeford District Court docket number CV-2018-290
FOR CLERK REFERENCE ONLY