Executive Summary: Key Legal and Evidentiary Issues

• Summary judgment was sought to enforce an alleged settlement agreement after employment termination.

• Dispute centered on whether email exchanges between counsel formed a binding agreement.

• Plaintiff requested tax-effective payment and mutually acceptable release, which defendants claimed altered essential terms.

• Defendants argued that the response constituted a counter-offer, not acceptance.

• The court assessed whether these were terms of performance or fundamental to contract formation.

• Application was dismissed as no binding settlement agreement was found due to unresolved tax treatment issues.

Facts of the Case

Kim Brink was formerly employed as Chief Revenue Officer by Xos Services (Canada), Inc., EMV Automotive USA Inc., and Xos, Inc. (collectively referred to as “EMV”) under an executive employment agreement dated December 24, 2021. Her employment ended on April 24, 2024. Following her departure, she entered into settlement negotiations with the defendants seeking compensation under the terms of her employment contract.

On August 26, 2024, the defendants’ legal counsel offered a settlement package including a lump sum of $441,667.00 USD, an additional $10,768.00 USD in lieu of benefits, and a release agreement with confidentiality and non-disparagement clauses. The plaintiff responded on September 3, 2024, agreeing to the offer provided the release form was mutually acceptable and the payment was made in a tax-effective manner—specifically, with a portion paid as legal fees and the rest under a U.S. 1099 form to avoid tax withholdings.

Defendants acknowledged receipt of this response, indicated they were confirming payment details, and promised to provide a draft release. No objections were raised at that time. The plaintiff later applied for summary judgment, claiming that a binding settlement had been reached.

Legal Arguments and Analysis

The core issue was whether the exchange of emails between the parties created a legally binding settlement agreement. The plaintiff argued that the main terms had been accepted and that matters such as the form of release and tax treatment pertained to performance, not contract formation. She relied on precedents where courts upheld settlement agreements despite incomplete formal documentation, emphasizing the intent to settle.

Conversely, the defendants contended that the plaintiff’s conditions regarding tax treatment and the release were new terms, thus converting the acceptance into a counter-offer. They stressed that the issue of tax deductions was not minor, as it had significant financial implications and potential legal risks for misclassification.

The court referred to established jurisprudence, including Fieguth v. Acklands Ltd. and Graham Construction and Engineering Inc. v. Great Sandhills Terminal Marketing Centre Ltd., to distinguish between essential contract terms and post-agreement performance elements. It found that while the release form could be treated as a performance matter, the tax treatment of payments was a fundamental issue that went to the heart of the settlement. Because both parties had differing expectations on this point, and it had not been resolved, no binding agreement had been formed.

Outcome

The court concluded that there was no enforceable settlement agreement due to a lack of consensus on a key term—tax treatment of the settlement funds. It ruled that the plaintiff had not met the burden of proving the existence of a binding contract and therefore dismissed the application for summary judgment. Costs were awarded to the defendants.