Helpful reminders for churches, businesses, organizations or insurers when drafting settlement agreements
In the Dr. Suess classic Horton Hatches the Egg, Horton famously quips “I meant what I said, and I said what I meant. An elephant’s faithful one-hundred percent.” The same should be true for churches, businesses, organizations, insurers, or anyone entering a settlement agreement. That’s especially clear in light of a recent holding from the South Carolina Court of Appeals.
The published opinion in Dan Abel & Mary Abel, Appellants, v. S.C. Department of Health & Environmental Control & Pawleys Island Community Church, Respondents centered around a single sentence in a settlement agreement between a church and two individuals. In 2000, Pawleys Island Baptist Church obtained a coastal zone consistency certification, permitting it to fill in certain wetlands in order to build a new sanctuary and other improvements. Dan and Mary Abel opposed the certification. The Church and Abels ultimately agreed to settle their differences, and the settlement was memorialized in a Consent Order in 2001.
Clause 3 of the Consent Order stated: “The Church agrees that the wetland preserved by this Consent Order shall remain in its natural state.”
Eleven years later, the Church applied for a new certification to fill in additional wetlands. The Abels objected, arguing Clause 3 of the 2001 Consent Order prohibited DHEC from issuing the certification because the Church was bound in perpetuity to preserve the wetland in its natural state.
The administrative law court (ALC) dismissed the Abels challenge, finding that although Clause 3 was ambiguous as to time, “in the context of the entire agreement . . . the intention of the parties in executing the Consent Order is clear and unambiguous, and the Consent Order’s applicability is limited to the 2001 construction project.” In other words, the Consent Order was executed to address specific applications related to specific construction projects undertaken at a specific time (the 2001 project), and was not intended to be binding as to future projects (notwithstanding the broad language of Clause 3).
The Court of Appeals reversed, finding the ALC “improperly rewrote the unambiguous language in the consent order to apply a temporal aspect to the third clause of the contract.”
The Court recited well-established South Carolina law that the “parties’ intention must be gathered from the contents of the entire agreement and not from any particular clause thereof,” yet ultimately concluded the use of “‘shall remain’ in Clause 3—without a specific temporal limitation—evidences an intent that the Church will not seek to modify the remaining wetlands in future building plans.”
Thus, the “plain language [of Clause 3] protects the wetlands going forward; the question then becomes whether the remaining language of the contract limits the temporal scope of that clause.” The Court specifically rejected the Church’s argument that the preamble of the Consent Order—which explained the agreement was settling the 2000 permit dispute—provided a blanket temporal limitation on the rest of the agreement.
The Court’s analysis in Abel v. Pawleys Island Cmty. Church et al. provides a good reminder to clients and counsel of the importance of a well-drafted settlement agreement. Words matter, but sometimes the absence of words matters even more. Legal writing is often needlessly verbose, but sometimes explanation or qualification is necessary; legal drafters must be cautious not to sacrifice clarity for concision.
Clients need to make their intentions clear to their attorneys, and counsel need to draft carefully agreements that accurately memorialize those intentions. Context is not always king. If you want a settlement agreement that makes your intentions enforceable, make sure the words communicate the wishes. Otherwise, rather than ending the litigation, you may be just getting started.