Can expressing a desire for different terms constitute a counteroffer in Utah settlement agreements? LD III, LLC v. BBRD, LC Explained

The Utah Court of Appeals addressed an important distinction in contract formation in LD III, LLC v. BBRD, LC, clarifying when the expression of preferences during settlement negotiations constitutes a counteroffer versus a mere inquiry about alternative terms.

Background and Facts

LDIII sued to remove a lien that Davis had recorded against real property after a failed purchase transaction. During settlement negotiations, the parties reached an agreement via telephone conference whereby LDIII would sell the property to Davis “or his designee” for $1.2 million. Davis’s counsel subsequently sent closing documents listing five separate entities as the purchasers. LDIII claimed this constituted a material change to the settlement terms and refused to close, arguing the parties never had a meeting of minds on the purchaser’s identity.

Key Legal Issues

The court examined whether the parties had reached a binding settlement agreement, focusing on: (1) whether there was a meeting of minds on integral terms; (2) whether expressing a desire for different purchaser entities constituted a counteroffer; and (3) whether LDIII had waived its statute of frauds defense.

Court’s Analysis and Holding

The court affirmed the trial court’s enforcement of the settlement agreement. It found that the parties had reached a meeting of minds when they agreed the property would be conveyed to “Davis or his designee.” Critically, the court distinguished between a counteroffer and a mere expression of preference, noting that Davis’s counsel merely stated that Davis “desired” to have the five entities as purchasers without insisting on this arrangement. When LDIII objected, Davis readily agreed to take title in his own name, demonstrating the non-material nature of his preference.

Practice Implications

This decision provides important guidance for practitioners drafting settlement agreements and handling contract modifications. The court’s analysis reinforces that parties should carefully distinguish between requests or preferences and material modifications that could constitute counteroffers. Additionally, the court found LDIII had waived its statute of frauds defense by repeatedly admitting the existence of the settlement agreement in emails, pleadings, and oral argument.