Does a Settlement Agreement That is Silent on a Fee Claim Waive a Judicially-Reserved Claim for Attorneys’ Fees Based on a Discovery Violation?

Farace v. Cross, 2025 WL 484543 (Appl. Ct. Md. Feb. 13, 2025)(unreported), arose out of a tragedy – – the death of both parents of a two-year-old child in an auto accident.  Both sets of grandparents then sought custody.

In this unreported decision, the Court addressed a novel[1] Maryland issue where out-of-State decisions were mixed.  The issue was whether a subsequent family law settlement agreement that did not expressly reserve a claim to attorneys’ fees for discovery violations waived that claim when the trial court had reserved ruling on it.

The Appellate Court held that the trial court’s reservation of the attorneys’ fee issue superseded any waiver by failing to expressly reserve the claim in the agreement settling the custody dispute.

One takeaway is that, if a trial court has reserved ruling on a request for monetary discovery sanctions, parties drafting a subsequent settlement agreement may want to negotiate whether the fee claim is being waived as part of the settlement.  Absent express waiver of the judicially-reserved claim, a general settlement agreement may not discharge the liability for fees.

The Appellate Court wrote that there were “two orders at issue,” and they “appear to expressly reserve the possibility of a fee award.”  Id. at *6.  In one order, the trial court declined discovery sanctions, but reserved on attorneys’ fees.  In another, the trial court ordered the maternal grandparents to respond to discovery and pay attorneys’ fees in an amount to be determined.  Id. at *2.

A week before trial, the paternal grandparents wrote to the court stating that they were finalizing a custody agreement; however, they stated that they were still pursuing attorneys’ fees.

The trial court held a conference and stated that, having been advised of a “global settlement” the case was removed from the trial docket.  It wrote: “As I advised you in our teleconference, please be cognizant of the fact that the [c]ourt has discretion regarding an award of attorney’s fees in a family law matter. Counsel should have serious discussions with their clients as to whether they wish to put the entire resolution of this very important matter at risk.”

The trial court also directed mediation, stating that, if mediation did not resolve the issue, it would reschedule the matter.

After mediation, the parties signed a custody agreement: “The agreement made no mention of attorney’s fees.”  [Emphasis added].  At some point, the custody agreement was placed on the record.

However, after the mediation, the paternal grandparents told the court that they were at an impasse on reservation of attorneys’ fees.

The trial court spoke with the mediator and wrote: “Based on [the mediator’s] recollection and the transcript [of the settlement that was put on the record], we are both satisfied that the matter was concluded in its entirety during the mediation. As such, the [c]ourt will decline to hear the parties on the issue of attorney’s fees, as that issue is not reserved and, therefore, all parties will be responsible for their own fees.”

The paternal grandparents subsequently filed a motion requesting fees of $27,692.00.  The court entered an order incorporating the custody agreement and denied the fee request without explanation.

The Appellate Court ruled:

Express reservation by the court on an issue regarding an award of fees as a sanction for discovery violations supersedes any effect of the absence of an express reservation of a claim for fees in the parties’ settlement agreement. [Emphasis added].

The Court began its analysis stating: “The legal effect of the absence, in a settlement agreement, of an express reservation of the right to attorneys’ fees is a question that has divided courts around the country.”  The “lone Maryland case” “does not resolve the issue before us.”  Id. at *6.

Nevertheless, in an unreported decision, the Court then wrote:

In our view, reservation of a fee issue in a court order must necessarily supersede the absence of an express reservation of the right to seek fees in the parties’ settlement agreement. In this case, the reservation in the September 28, 2020 order only promises a determination by the court as to whether any fee should be awarded. The October 3, 2022 order contemplates a determination of the amount of the fee to be awarded. In our opinion, the case must be remanded for the circuit court to address the issues contemplated by these “judicial reservations.” [Emphasis added].

One issue not decided on appeal was the propriety of ex parte communications between the Judge and the mediator.  The Court also held that the grandparents were not entitled to attorneys’ fees under the Family Law article and the decision was based on fees arising from the discovery disputes.[2]

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[1] 2025 WL 484543, at *6.

[2] Farace is an unreported opinion. It may not be cited as precedent within the rule of stare decisis. It may be cited for its persuasive value only if the citation conforms to Rule 1-104(a)(2)(B).  That Rule permits citation of Farace “only if no reported authority adequately addresses an issue before the court.”  Farace would appear to meet that standard.  Id.