The Washington Court of Appeals' decision, Zhi Feng v. Xiaoqiang Wu et al., addressed such a situation. In Feng, a real estate broker represented himself in a lawsuit and subsequent settlement negotiations following a failed real estate deal. Ultimately, the real broker ended up with some costly unintended consequences. Misunderstanding the language and terminology used in legal documents can result in costly consequences.
The Court of Appeals affirmed the enforcement of a settlement agreement under Washington Court Rule ("CR") 2A between real estate broker Z. Feng and defendants V. Veresko and T. Cowin. CR 2A governs the enforceability of settlement agreements. Generally speaking, CR 2A agreements are used by attorneys in situations where their clients have agreed on broad terms regarding their dispute but still need to iron out the finer points of their settlement agreement. Per CR 2A, Washington courts will only recognize such agreements if made in an open court on the record, entered into the minutes, or when the agreement is in writing.
Feng, representing himself as a pro se litigant, originally sued multiple parties following the collapse of a real estate transaction, Feng alleged several claims including civil conspiracy, breach of contract, breach of good faith and fair dealing, promissory estoppel, conversion, and unjust enrichment. Feng also sought the commission he would have received had the deal gone through.
Feng negotiated with Counsel for TEC Real Estate and its representatives (Veresko and Cowin) before eventually agreeing to release all claims. During the negotiations, Feng proposed a limited release for Veresko and Cowin only as to certain claims. Counsel for TEC Real Estate, Veresko, and Cowin refused, contending that the settlement only worked if his clients were dismissed from all claims. Feng proposed the following language regarding the scope of the release:
"Feng agrees to release and discharge TEC and its representatives from any and all claims, liabilities, demands, actions, or causes of action arising out of or related to this litigation. The settlement shall not impact, limit, or prejudice Plaintiff's position, rights, or claims against any other parties involved in the litigation, including their representatives, officers, agents, or employees."
The above language was agreed to, and a written settlement was reached. As part of the agreement, Veresko and Cowin agreed to send Feng a $500 check payable to the Humane Society. The settlement agreement further included a provision providing for an award of attorney's fees should any party to the agreement need to initiate legal proceedings to enforce the same.
However, despite the signed settlement agreement, when presented with a stipulation for dismissal of the lawsuit, Feng refused to sign. Feng disagreed with the language of the stipulation and reiterated his desire to pursue claims against Veresko and Cowin in their association with the seller. TEC Real Estate successfully moved for enforcement of the settlement agreement, dismissal with prejudice of the claims against Veresko and Cowin, and for attorney's fees incurred to enforce the settlement. Feng appealed.
The Court affirmed the trial court, holding that the settlement agreement was enforceable under CR 2A because it was clear, written, and signed, and there was no genuine dispute over its material terms. The Court emphasized that contractual intent is interpreted from outward expressions, not subjective beliefs, and that it was Feng himself, who proposed the release language. Since the agreement expressly released Cowin and Veresko and did not restrict claims against others, including the seller, the trial court correctly dismissed the claims against the respondents with prejudice. The Appellate Court also awarded Veresko and Cowin, as the prevailing party, their attorney fees incurred on appeal.
Despite Feng's subjective belief that he was preserving claims against Veresko and Cowin in association with the seller, the language Feng proposed and agreed to in the settlement unambiguously released Veresko and Cowin from all liability. The court noted that mutual assent is determined from outward expressions, not internal intent, and found the agreement released the respondents entirely. A non-attorney may think that a right or claim has been preserved, as Feng did here. However, there can be little doubt that the counsel for Veresko and Cowin fully understood the effect of the language proposed by Feng. This case serves as a harsh lesson for any pro se litigant that misunderstanding the legal effect of terminology is not a defense to an unintended surrender of rights.
This case highlights the significant risks of initiating legal proceedings or engaging in settlement negotiations without legal representation. For anyone contemplating or facing anticipated litigation, it is essential to understand the legal effect of language used in agreements. Neither ignorance nor inexperience will be accepted by a Washington court to excuse unfortunate results. Hiring an experienced attorney to assist you with your case can ensure that your intent matches your actions and helps you avoid costly errors.
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