Unambiguous Negotiations Between Parties Leads to Binding Settlement Agreement
Case Summary: Laltitude, LLC v. Dreambuilder Toy, LLC
Edited by Anthony Berlenbach, Cara Regan, and Brian Kacedon
Abstract: Industry competitors negotiated to settle a patent infringement suit. The defendant believed the settlement was agreed; the plaintiff did not. Based on the parties’ discussion and conduct, the district court found that although no fully executed written agreement existed, a valid and enforceable contract had been formed because there was an unambiguous settlement offer made by the plaintiff and accepted by the defendant.
Background
Laltitude, LLC filed a patent infringement suit against Dreambuilder Toy, LLC for allegedly infringing its patents for magnetic bricks used as toy building tiles. The parties engaged in settlement negotiations via counsel. As part of those discussions, Laltitude’s counsel sent Dreambuilder’s counsel proposed revisions to the draft agreement. Dreambuilder’s counsel responded that the revisions were acceptable to their client and returned a signed version of the agreement to Laltitude in 2023. Shortly after, Dreambuilder informed the court (through the assigned mediator) that the parties had settled. Laltitude did not object.
But Laltitude later argued that the agreement was not final because the parties’ executives engaged in additional discussions after the latest draft agreement was sent but before Dreambuilder signed the agreement.
Dreambuilder accordingly filed a motion to enforce the settlement agreement between the parties, claiming Laltitude was in breach of the agreement. It also sought attorneys’ fees related to the dispute over the settlement agreement. In response to the motion, in 2025, Laltitude countersigned the agreement signed by Dreambuilder and filed its own motion to dismiss the case with prejudice.
The Laltitude Decision
Existence of an Enforceable Settlement Agreement
Laltitude argued that the settlement agreement was not enforceable in 2023 for three main reasons. The court disagreed with each.
First, Laltitude argued that the settlement agreement did not represent a meeting of the minds because the negotiations were through counsel rather than directly between the parties. The court found this argument unpersuasive. According to the court, the record undisputedly demonstrated that the parties themselves engaged in an offer and acceptance of the terms of the settlement agreement. The parties merely communicated through, and were assisted by, their respective counsel to reach the terms of the agreement. The court found that the email exchanges between counsel for the parties reflected the negotiations and will of each counsel’s client and represented a meeting of the minds between the parties on the essential terms of the agreement.
Second, Laltitude argued that the settlement agreement was unenforceable because the subsequent negotiations between the parties indicated the agreement was not final. The court found that any subsequent discussions between the parties that occurred after Laltitude’s proposal did not affect the enforceability of the signed agreement. Laltitude did not revoke its offer before Dreambuilder executed the agreement. Further, the settlement agreement included provisions that the agreement “contains the entire understanding and agreement by and between” the parties and that it was “reached through negotiations between, and has been jointly drafted by” the parties. These provisions indicated that any additional negotiations would not affect the validity and enforceability of the settlement agreement itself.
Third, Laltitude argued the agreement was not valid in 2023 because it did not sign the agreement until 2025. The court found that a fully signed written agreement was not required to prove the existence of a contract because (1) there was no evidence that the parties intended to only make it binding upon full, written execution, and (2) the email exchanges between the parties demonstrated a clear understanding of the settlement terms and formed a definite contract despite the lack of formal signatures and execution by Laltitude.
Breach of the Settlement Agreement and Dreambuilder’s Motion for Sanctions
Having determined that an enforceable contract was formed in 2023, the court further determined that Laltitude had breached the agreement by failing to comply with terms requiring action within ten days of the effective date of the settlement agreement. And despite Laltitude’s arguments that there was a legitimate and genuine misunderstanding of the terms of the settlement agreement, the court granted Dreambuilder’s motion for attorneys’ fees, determining that Laltitude’s efforts to disavow the settlement agreement led to additional litigation costs for Dreambuilder.
Strategy and Conclusion
When an offer has been made and accepted, a valid agreement may exist, even absent full execution and even if the terms of the agreement were subsequently discussed by the parties. Involving legal counsel in all stages of negotiations and communications can help avoid misunderstandings and ensure thorough and transparent negotiations.
Further Information
The Laltitude decision can be found here.
Editors and Authors
The editors and authors are attorneys at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP.
This article is for informational purposes and does not constitute legal advice.
The views expressed do not necessarily reflect the views of LES or Finnegan.
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