• July 28, 2010

    Settlement Agreement Though Not Executed by Parties, Enforced and Held to Be a Valid Contract

    By Kenneth Skroumbelos, Esq.

    A decision issued earlier this year may cause school boards to think twice about offering to settle employment disputes. The Commissioner of Education upheld an Administrative Law decision enforcing a settlement though is was never formally executed by the parties. See Renee Pollack v. The Board of Educaton of the South Orange/Maplewook School District, Essex County, Agency DKT. NO. 354-11/07.

    Ms. Pollack, was the principal of Columbia High School from 2002 until she was placed on administrative leave in April 2006 because of episodes of racial tensions and discord. On August 18, 2006, Ms. Pollack through her counsel sent the South Orange School Board a letter offering her resignation in exchange for which, among other things, she would receive compensation until July 2007 in the event that she could not obtain new employment. On August 29, 2006, the South Orange School Board, through counsel, contacted Ms. Pollack’s attorney indicating that the proposed resolution was acceptable “subject to our ability to execute a mutually satisfactory settlement agreement…” and requested some minor clarifications regarding minor details of Ms. Pollack’s offer. Two weeks later Ms. Pollack through counsel attempted to retract the August 18 offer.

    Ms. Pollack argued that South Orange’s August 29, 2006, letter was a counteroffer and therefore a rejection to her August 18 offer. The formal settlement agreement that was sent to Ms. Pollack was never executed.

    Nonetheless, the Administrative Law Judge (ALJ) held that the August 29 letter was an acceptance seeking “clarification for what ultimately were minor aspects of the agreement.” Relying on Kupper v. Barger, 33 N.J. 491 (App. Div. 1955) the ALJ held that “Although a settlement agreement should not be enforced in the absence of a mutuality of accord between the parties or their attorney, if the disagreement involves matters not material to the more substantial issues that could be resolved, the agreement should be enforced.”

    Following this decision, both employees and management should think very carefully before offering to resolve matters by way of settlement lest they be trapped by unwanted obligations.

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