Executive Summary: Key Legal and Evidentiary Issues

• Central issue was whether a binding settlement agreement existed resolving a prior default judgment.

• The court held that all essential terms of the settlement were agreed upon and enforceable.

• Timing for registering the collateral mortgage was not treated as an essential term.

• Acorn’s conduct, including accepting payments, confirmed the existence of a concluded agreement.

• The defendants had not breached or resiled from the settlement despite delays in implementation.

• Mr. Sabounchi’s affidavit was admitted despite procedural objections, given the overall fairness and context.

Background and procedural history

The plaintiff, The Acorn Development Corporation, sued the defendants, Fariborz Sabounchi and Farangis Tajbakhsh, after they failed to complete the purchase of a newly constructed home. Although the defendants had paid a deposit in 2017, the deal did not close due to their inability to secure financing. Acorn initiated legal proceedings and obtained a default judgment in October 2020 for $489,890.62 after the defendants failed to respond.

Mr. Sabounchi was served with the claim and judgment but deliberately chose not to inform his wife, who was suffering from serious health issues. Unable to secure legal counsel, he sought help from a friend and his daughter to negotiate a settlement with Acorn. These efforts spanned over a year and culminated in a settlement agreement finalized on September 1, 2023.

Terms of the settlement agreement

The agreed terms required Mr. Sabounchi to make structured payments totaling $195,000 and to arrange for a collateral mortgage to be registered on the couple’s home. Since Ms. Tajbakhsh was the sole registered owner of the property, her consent was required for the mortgage registration. She remained unaware of the settlement at the time due to her health, a fact known and accepted by Acorn during negotiations. Two payments of $15,000 were made under the agreement in early 2024.

Later that year, Acorn reversed its position, claiming the defendants had failed to meet the terms, specifically the mortgage registration. It resumed enforcement of the original judgment, including initiating a sheriff’s sale of the defendants’ home. The defendants responded by bringing a motion to enforce the settlement and halt the sale.

Court’s analysis of the settlement

The court found there was a clear, binding agreement on all essential terms by September 1, 2023, later modified by mutual consent in December 2023. It rejected Acorn’s argument that the defendants had repudiated or failed to meet the agreement. Communications from Acorn’s former counsel confirmed mutual intention and agreement. The court found Acorn continued negotiations and accepted payments despite knowing Ms. Tajbakhsh had not yet been involved, undermining its position that no final agreement had been reached.

Regarding the mortgage, the court held that while it was an essential term, its timing was not. Delays were mutually agreed upon, and Acorn’s flexibility supported the conclusion that registration by a specific date was not mandatory. The court also ruled that Mr. Sabounchi’s affidavit, although not strictly compliant with procedural rules due to language issues, was admissible and reliable in context.

Resolution of breach allegations

The court addressed conflicting evidence on whether Mr. Sabounchi had withdrawn from the agreement or could no longer perform its terms. It ultimately preferred Acorn counsel’s version of certain conversations but found that even under that version, no clear repudiation had occurred. Mr. Sabounchi was still willing to fulfill the agreement, and the court accepted his representation that the mortgage could be registered by fall 2025.

Court orders and outcome

The court granted the defendants’ motion and ordered that the sheriff’s sale of the home be cancelled. To enforce the settlement, the court directed that a collateral mortgage and forbearance agreement be finalized by October 31, 2025. The outstanding balance of $165,000 was to be paid by December 15, 2025. Failure to meet these deadlines would entitle Acorn to resume enforcing the original judgment.

On costs, the court awarded the defendants $15,000, significantly less than the $41,486.41 claimed. The judge reasoned that while the motion was successful, Mr. Sabounchi’s concealment of the legal matter from his wife contributed to the dispute and necessitated the motion.

The court reaffirmed that settlements are to be encouraged and enforced unless tainted by fraud, unconscionability, or incapacity, none of which were present in this case.