What Happens if Someone Doesn’t Pay You Pursuant to a Settlement Agreement?
If you’re in a lawsuit and you’ve settled your case, that’s a good thing, usually. You’ve taken matters into your own hands, and avoided the extended time and cost of litigation and trial, not to mention the uncertainty of the outcome.
But just because you’ve agreed as to who will do or pay what, doesn’t mean the case is over. Any settlement must come with a written settlement agreement, and a poorly drafted settlement agreement can have you right back into court—exactly the opposite thing you were probably trying to avoid by settling.
If The Other Side Doesn’t Pay
So you’ve resolved the case for a dollar figure. But what is the penalty if the other side doesn’t pay (or if there are installment payments, if the other side doesn’t pay an installment on time)?
Are you going to sue them again, as if the settlement never happened? That would put you back at square one again, starting the case again from the beginning. Do you have to file a separate lawsuit to prove the other side didn’t pay? That’s a lot of time and work to enforce that settlement agreement.
Using a Default Provision
The solution is to dictate in the agreement now, what happens if the other side doesn’t pay the settlement agreement.
This can include an automatic application or default, for whatever amount remains unpaid at the time of the default.
The application for default allows a court to enter an immediate judgment against the other side, for the unpaid amount, without the necessity of a full blown trial. Sometimes, as a courtesy, you might agree to give the other side notice and opportunity to cure—that is, a last chance to pay any payment or amount that may have been missed.
The other side, the side paying the money, often will want some provision where they can challenge the default in certain circumstances (such as if money allegedly unpaid under the settlement agreement, was in fact paid), but that can be limited.
If you do have the right to file for a default in the event the settlement agreement was breached, you also want to include an attorneys fees provision. That’s because there is no automatic legal right to attorneys fees, to enforce a settlement agreement that has been breached.
If There’s No Default Provision
If you have no default provision, then you are left with the option of filing a motion to enforce the settlement agreement. Settlement agreements are just contracts, so all it is, is a breach of contract case.
The problem with that, is that now you are limited to obtaining a judgment for, and collecting whatever the amount was to be paid under the settlement agreement—that may have been a negotiated amount, far less than your actual damages sought in the originally filed lawsuit.
Your case isn’t over just because you settled. Let us help you from start to finish in your business law case. Call our Fort Lauderdale business litigation lawyers at Sweeney Law P.A. at 954-440-3993 for help.
