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Pounds v. Brown

The trial court erred in allowing an EMC to adopt a bylaw amendment providing for proxy voting at future meetings, because the amendment was contrary to the terms of a settlement agreement between the EMC and the derivative plaintiffs.

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Edgar Pounds and several other members of Cobb Electric Membership Corporation filed a derivative action against Cobb EMC, its President and CEO, and the members of its Board of Directors, generally alleging causes of action for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment. The parties later entered into a Joint Proposal for Resolution of Derivative Litigation the “Settlement Agreement”, and the derivative plaintiffs now appeal from a trial court order that refused to provide them with the relief they requested in a motion to enforce the Settlement Agreement. For the reasons discussed below, we affirm in part and reverse in part, and we remand this case to the trial court to enforce the Settlement Agreement with an order consistent with this opinion.

On a motion to enforce a settlement agreement, we will not disturb a trial court’s findings of fact unless they are clearly erroneous.1 However, a trial court’s construction of a settlement agreement is a matter of law and is subject to de novo review.2 Because a settlement agreement is a contract, “it is subject to the usual rules of statutory construction. While the cardinal rule of construction is to determine the intention of the parties, no construction is required or permitted when the language employed by the parties in the contract is plain, unambiguous, and capable of only one reasonable interpretation.”3

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