CHARLES E. MOYLAN, JR. (Retired, Specially Assigned), J.

From 1985 through 2008, the appellant, Falls Garden Condominium Association, Inc. ("Falls Garden"), believed, erroneously, that it held title to sixty-five parking spaces adjacent to one of the buildings in its complex on Clearwind Court in the Summit Ridge area of Baltimore County. Falls Garden used and maintained thirty-nine of those parking spaces exclusively for that period. The parking spaces were actually owned by a neighboring residential community, the appellee, The Falls Homeowners Association, Inc. ("The Falls"). After The Falls asserted its ownership rights over the parking spaces in 2009 by installing signs threatening to tow unauthorized users and by painting curb markers, Falls Garden filed a declaratory judgment action in the Circuit Court for Baltimore County on December 9, 2010, claiming it had obtained ownership of the parking spaces by adverse possession or, alternatively, that it had obtained an easement over the parking spaces by prescription or by necessity. The Falls filed a counterclaim for trespass.

As the trial date approached, the parties attempted to negotiate a settlement. On August 17, 2011, attorneys for both parties executed a letter of intent that stated it was "meant to memorialize certain aspects of a formal Settlement Agreement and separate Lease to be entered into between [Falls Garden] and [The Falls]." The Falls drafted a proposed lease but Falls Garden refused to execute it. On December 20, 2011, The Falls filed a motion to enforce the terms of the letter of intent as a settlement agreement. Falls Garden opposed the motion. On April 18, 2012, Judge Mickey J. Norman held a hearing and granted The Falls's motion.

Falls Garden has appealed Judge Norman's order. Falls Garden contends that Judge Norman erred in interpreting the letter of intent as a binding settlement agreement and in failing to hold a full evidentiary hearing before granting The Falls's motion. We find no error and we shall affirm Judge Norman's decision.

Facts and Proceedings

The factual dispute giving rise to this litigation is not material to the issues presented on appeal. Instead, we are concerned with the litigation itself. As we have noted, Falls Garden filed its complaint seeking a declaratory judgment on December 9, 2010. The Falls filed an answer and counterclaim on February 14, 2011. The original trial date was May 27, 2011. At a settlement conference on May 12, 2011, the parties made progress toward a settlement but attorneys for The Falls did not have the requisite authority to settle the case on that day. The parties filed a joint motion for a continuance, which was granted. Trial was rescheduled for August 17, 2011. The parties made further progress at a second settlement conference on August 11, 2011. On August 15, 2011, the parties filed a second joint motion for a continuance, noting that they had reached an agreement in principle but needed "more time to memorialize the terms of the agreement which includes the preparation of a lease for a term of 99 years." The motion also predicted that such agreement would be drafted and executed within ninety days, at which point the parties would file a motion to dismiss the complaint and counterclaim with prejudice.

Between August 11 and August 18, 2011, attorneys for both parties continued to negotiate via e-mail. These negotiations resulted in a "Letter of Intent" dated August 17, 2011.1 We reproduce here the text of the Letter of Intent, in full:

The document was signed by P. Michael Nagle, as attorney for Falls Garden, and Michael H. Mannes, as attorney for The Falls.

The Falls obtained the approval of two thirds of its membership to lease the parking spaces. Counsel for The Falls drafted a proposed lease and submitted it to counsel for Falls Garden on November 3, 2011 "for review and approval." According to The Falls, Falls Garden then ceased communication. On November 21, 2011, The Falls learned that Falls Garden had obtained new counsel. On November 22, 2011, The Falls contacted Falls Garden's new counsel, who inquired about "returning to pre-litigation status." On December 20, 2011, The Falls moved to enforce the August 17 Letter of Intent as a settlement agreement. Falls Garden opposed the motion, arguing that the parties did not intend to be bound until a lease and settlement agreement had been drafted and executed, and stating that Falls Garden objected to numerous terms in the proposed lease.

Judge Norman held a hearing on The Falls's motion on April 18, 2012. After hearing argument of counsel and reviewing the documents the parties had submitted, Judge Norman made the following oral findings:

Judge Norman issued a written order on April 26, 2012. This order directed The Falls to prepare a settlement agreement and release of all claims, consistent with the Letter of Intent, and directed Falls Garden to execute the settlement agreement and the lease that had already been drafted within five days of receipt. The order also provided that the complaint and counter-complaint would be dismissed with prejudice within ten days of the lease and settlement agreement being executed. By order of July 24, 2012, the matter was stayed pending the resolution of this appeal.

Discussion

Falls Garden contends that the August 17, 2011 Letter of Intent was not a valid and enforceable settlement agreement because it did not represent the parties' final agreement. Falls Garden argues that the Letter of Intent was a "framework" that set forth only some material terms on which the parties agreed. Falls Garden maintains that the parties intended not to be bound until a subsequent writing was executed, specifically the lease and settlement agreement mentioned in the Letter of Intent. To show this intent not to be bound, Falls Garden relies on the fact that the parties had said in their August 15, 2011 joint motion for a continuance that they needed more time to memorialize the terms of their agreement and a motion to dismiss would be filed "once the agreement is properly executed," but neither party sought to dismiss the case after the Letter of Intent was executed on August 17.

Falls Garden also reiterates its objection to numerous terms of the proposed lease, including: forfeiture of the lease upon the occurrence of certain events; limitation of The Falls's tort liability; Falls Garden's responsibility for taxes other than real estate taxes; Falls Garden's responsibility for maintenance other than surface repairs; The Falls's demand that Falls Garden procure $1 million in insurance coverage, which could be increased; waiver of the right to bring counterclaims; waiver of the right to a jury trial; a fee-shifting provision; and the omission of other terms which Falls Garden would have liked to have been a part of the lease, such as a provision regarding the responsibility for towing unauthorized vehicles.

The Falls contends that Judge Norman properly enforced the Letter of Intent as an executory accord. In The Falls's view, the Letter of Intent was itself the parties' agreement to conclude the litigation, and the lease and settlement agreement referenced in the Letter of Intent were merely ancillary documents that were necessary to carry out that agreement. The Falls argues that the fact that the memorialized agreement was styled a "letter of intent" is not controlling, and points out that the document does not state that the parties intended not to be bound by it. The Falls maintains that, in the Letter of Intent, the parties formed an enforceable agreement by exchanging mutual promises for consideration. Specifically, The Falls agreed to lease twenty-four parking spaces to Falls Garden in exchange for $20.00 per space per month for a term of ninety-nine years. Upon performance of that agreement — i.e., execution of the lease — the parties would dismiss the action and release all claims against each other. According to The Falls, it performed its obligations by obtaining the approval of two thirds of its membership, drafting a lease, and submitting it to Falls Garden. In asking Judge Norman to specifically enforce the Letter of Intent, The Falls was merely seeking the benefit of its bargain.

Our resolution of this appeal turns on whether the August 17 Letter of Intent is an enforceable agreement. It is an accepted principle that settlement agreements are treated no differently than other contracts.

Erie Ins. Exchange v. Estate of Reeside, 200 Md.App. 453, 460-61, 28 A.3d 54, 58 (2011) (citations and quotations omitted). Thus, settlement agreements are subject to the familiar requirements of contract formation. As the Court of Appeals explained in Cochran v. Norkunas:

398 Md. 1, 14, 919 A.2d 700, 708 (2007) (citations omitted). Maryland courts adhere to the objective theory of contract interpretation.

Myers v. Kayhoe, 391 Md. 188, 198, 892 A.2d 520, 526 (2006).

The fact that the August 17 document was styled a "letter of intent" instead of some other title suggesting more finality does not necessarily mean that it is an unenforceable "agreement to agree." See Horsey v. Horsey, 329 Md. 392, 420, 620 A.2d 305, 319 (1993) (discussing unenforceability of agreements to agree). The controlling inquiry is whether or not the parties objectively intended to be bound by the terms of the Letter of Intent. The parties' subjective intent is irrelevant. See, e.g., Ocean Petroleum Co., Inc. v. Yanek, 416 Md. 74, 86-87, 5 A.3d 683, 690 (2010) ("Rather than acquiescing to the parties' subjective intent, we consider the contract from the perspective of a reasonable person standing in the parties' shoes at the time of the contract's formation. Thus, `the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.'").

In Cochran, the Court noted that "[l]etters of intent have led to `much misunderstanding, litigation and commercial chaos,'" but explained that they can be classified into four categories. 398 Md. at 12-13, 919 A.2d at 707. The Court quoted with approval from 1 CORBIN ON CONTRACTS § 2.9, pp. 157-58 (Joseph M. Perillo ed., Rev. ed.1993):

398 Md. at 13, 919 A.2d at 707-08. "A valid contract generally has been made if a letter of intent properly falls within either the third or the fourth category." Id. at 14, 919 A.2d at 708. In Cochran, the Court held that parties to a real estate transaction did not intend to be bound by a letter of intent that stated that a "standard form Maryland Realtors contract will be delivered ... within 48 hours" and that "describe[d] how certain terms of that contract will be construed." Id. at 20, 919 A.2d at 712. The Court relied on the following language from Peoples Drug Stores, Inc. v. Fenton Realty Corp.:

191 Md. 489, 494, 62 A.2d 273, 275-76 (1948). On the other hand, the Peoples Drug Stores Court also said:

Id. at 493-94, 62 A.2d at 275.

In this case, there was no statement in the Letter of Intent regarding whether the parties did or did not intend to be bound by the document, ruling out Corbin's categories one and four. The Letter of Intent did not point out any specific matters requiring further agreement, ruling out category two. That leaves category three, where "the parties express definite agreement on all necessary terms," but perhaps "say nothing as to other relevant matters that are not essential, but that other people often include in similar contracts." See 398 Md. at 13, 919 A.2d at 707-08. The Letter of Intent in this case falls into Corbin's third category and is, therefore, enforceable.

In the Letter of Intent, the parties agreed that The Falls would lease twenty-four of the disputed parking spaces to Falls Garden — specifically, the twenty-four spaces on the east side of Clearwind Court starting "at the island closest to Falls Garden Condominium Building # 1 (6927-6933 Clearwind Court) on the northerly end of Clearwind Court and run[ning] continuously southerly toward Ten Timbers Lane" — for a term of ninety-nine years at a rate of $20.00 per space per month. Falls Garden would be responsible for maintenance and real estate taxes. Falls Garden would carry insurance "in amounts reasonably requested by The Falls for liability and property damage" and would "indemnify The Falls with respect to any claims occurring on the 24 parking spaces." Falls Garden would have the right to place signs on its property or on the leased parking spaces indicating "that they are exclusively for the use of the Unit Owners of Falls Garden and that Falls Garden shall have the right to tow any unauthorized vehicles from those parking spaces." The parties agreed that, in the event that Baltimore County altered "the current manner of head-in parking," the lease would continue to encompass the land area currently occupied by the twenty-four spaces. The then un-drafted lease would also contain "the usual and customary provisions regarding dates and methods of payment, provisions for default and breach, severability, signs, quiet enjoyment, waiver, and the like." The agreement was contingent only on The Falls obtaining the consent of two thirds of its membership.

Judge Norman correctly found that the Letter of Intent contained all necessary terms of the parties' basic agreement to lease twenty-four specific parking spaces for a term of ninety-nine years at a rate of $20.00 per space per month. Judge Norman also correctly found that the Letter of Intent did not suggest, on its face, that the parties intended not to be bound by it. Accordingly, Judge Norman properly found that the Letter of Intent was an enforceable agreement. Any contemplated subsequent writing would serve merely as evidence of that agreement.

As the Letter of Intent was an enforceable agreement, it operated as an executory accord.

13 CORBIN ON CONTRACTS § 69.1 p. 273 (Joseph M. Perillo ed., Rev. ed.2003). In Clark v. Elza, 286 Md. 208, 219, 406 A.2d 922, 928 (1979), the Court of Appeals adopted the "modern view" that executory accords are enforceable bilateral agreements, assuming they meet the ordinary requirements of contract formation. The Court explained the effect of an executory accord as follows:

286 Md. at 217, 406 A.2d at 927. In Clark, a personal injury suit, the parties orally agreed to settle the case for $9,500. The plaintiff subsequently demanded more money, and the defendant moved unsuccessfully to enforce the settlement. The Court of Appeals held that the oral agreement was an enforceable executory accord that suspended the underlying tort claim and, therefore, the defendant's motion to enforce should have been granted.

Applying that framework to this case, Falls Garden agreed to discharge its claim against The Falls in exchange for a leasehold interest in twenty-four of the disputed parking spaces. The parties memorialized the essential terms of this agreement in the Letter of Intent, which, as we have explained, was an enforceable agreement. The Letter of Intent suspended Falls Garden's claim until such time as The Falls breached the agreement or provided a reasonable basis for concluding that it would not perform. The Falls performed its obligations by obtaining the consent of two thirds of its membership and drafting a proposed lease. The lease was consistent with the terms specified in the Letter of Intent. It was more detailed than the Letter of Intent in some respects — for example, it spelled out the provisions for default and specified the amount of necessary insurance coverage, both of which the Letter of Intent had specifically left open — and it set forth a few new terms, such as a fee-shifting provision and waiver of the right to a jury trial. Nevertheless, these additional details and terms, though relevant, were not essential to the parties' basic agreement to lease twenty-four parking spaces for a term of ninety-nine years at a rate of $20.00 per month per space. Falls Garden was obligated to return The Falls's performance by executing the proposed lease. When Falls Garden refused to do so, The Falls was entitled to seek specific performance. Conversely, as The Falls had performed, Falls Garden could not enforce its underlying claim — i.e., Falls Garden could not pursue its complaint for adverse possession.

The fact that the Letter of Intent contemplated the drafting of a settlement agreement subsequent to the execution of the lease is consistent with the notion that the Letter of Intent operated as an executory accord. Upon performance of the accord — i.e., execution of the lease — the parties' claims against each other would be discharged. Although this would occur as a matter of law, it would be natural for the parties to memorialize this in a subsequent writing and to file a stipulation of dismissal with the court as required by Rule 2-506. In the same vein, Falls Garden's reliance on the fact that neither party sought to dismiss the case immediately after the Letter of Intent was executed, as evidence of the parties' intent not to be bound, is inconsistent with the mechanics of an executory accord. There would have been no reason to dismiss the case immediately after the Letter of Intent was executed, because the underlying claims were merely suspended, not discharged, pending execution of the lease.

Falls Garden also contends, relying on David v. Warwell, 86 Md.App. 306, 586 A.2d 775 (1991), that Judge Norman erred in granting The Falls's motion without a plenary hearing when the existence of the agreement was contested. Falls Garden claims that Judge Norman improperly accepted The Falls's proffer over its own in terms of whether the parties intended to be bound by the Letter of Intent. In Falls Garden's view, Judge Norman was required to take testimony to resolve the parties' contradictory assertions, without which there was insufficient evidence to support the existence of an agreement.

The Falls contends that a plenary hearing was not required in this case. The Falls takes the position that the court did not need to take testimony regarding the parties' intent because the Letter of Intent was unambiguous. Unlike in David, which concerned an oral settlement agreement, Judge Norman had before him a written agreement signed by the parties' attorneys. The Falls maintains that this was sufficient evidence to support Judge Norman's decision. The Falls also asserts that Falls Garden could not have been erroneously denied a plenary hearing because it never actually requested one.2

Our review of the transcript of the hearing before Judge Norman confirms that Falls Garden did not request a full evidentiary hearing. At best, counsel for Falls Garden proffered that he could produce testimony that would support his client's position.

(Emphasis supplied). Ordinarily, a trial court does not err in failing to take testimony when the parties have not requested that it do so.

In any event, whether requested or not, an evidentiary hearing was not necessary in this case because there was sufficient evidence to support Judge Norman's decision. The Letter of Intent unambiguously set forth all the essential terms of the parties' agreement and would lead a reasonable observer to conclude that the parties intended to be bound by it. Witness testimony to the effect that one party subjectively intended not to be bound by the Letter of Intent would have been unnecessary and, as the Letter of Intent was unambiguous, irrelevant. Unlike in David, 86 Md.App. at 320-21, 586 A.2d at 782-83, where we held that a court may not find the existence of an oral settlement agreement in the total absence of any evidence at all, Judge Norman had before him a written document signed by attorneys for both parties, the authenticity of which was not contested. That itself was sufficient.

JUDGMENT AFFIRMED; COSTS TO BE PAID BY THE APPELLANT.