diff --git a/apps/server/src/orchestration-v2/ThreadSettlementService.test.ts b/apps/server/src/orchestration-v2/ThreadSettlementService.test.ts
index cbca5b3066d8..aa1032642091 100644
--- a/apps/server/src/orchestration-v2/ThreadSettlementService.test.ts
+++ b/apps/server/src/orchestration-v2/ThreadSettlementService.test.ts
@@ -130,13 +130,36 @@ describe("isAutoSettlementCandidate", () => {
       snoozedAt: at(-60 * 60 * 1_000),
     });
     expect(isAutoSettlementCandidate(snoozed, NOW_MS)).toBe(false);
-    expect(isAutoSettlementCandidate(shell({ ...snoozed, status: "failed" }), NOW_MS)).toBe(true);
+    expect(
+      isAutoSettlementCandidate(
+        shell({ ...snoozed, status: "failed", latestRunCompletedAt: at(-30 * 60 * 1_000) }),
+        NOW_MS,
+      ),
+    ).toBe(true);
     expect(
       isAutoSettlementCandidate(
         shell({ ...snoozed, latestRunCompletedAt: at(-30 * 60 * 1_000) }),
         NOW_MS,
       ),
     ).toBe(true);
+    expect(
+      isAutoSettlementCandidate(
+        shell({ ...snoozed, status: "failed", latestRunCompletedAt: at(-2 * 60 * 60 * 1_000) }),
+        NOW_MS,
+      ),
+    ).toBe(false);
+    expect(
+      isAutoSettlementCandidate(
+        shell({ ...snoozed, status: "failed", latestRunCompletedAt: snoozed.snoozedAt }),
+        NOW_MS,
+      ),
+    ).toBe(false);
+    expect(
+      isAutoSettlementCandidate(
+        shell({ ...snoozed, status: "failed", latestRunCompletedAt: null }),
+        NOW_MS,
+      ),
+    ).toBe(false);
     // Expired snooze is no longer a park.
     expect(isAutoSettlementCandidate(shell({ ...snoozed, snoozedUntil: at(-1) }), NOW_MS)).toBe(
       true,
diff --git a/apps/server/src/orchestration-v2/ThreadSettlementService.ts b/apps/server/src/orchestration-v2/ThreadSettlementService.ts
index ebe13f0d2b5f..5222fd2a72aa 100644
--- a/apps/server/src/orchestration-v2/ThreadSettlementService.ts
+++ b/apps/server/src/orchestration-v2/ThreadSettlementService.ts
@@ -112,7 +112,9 @@ export function isAutoSettlementCandidate(
   // one still parked on its wake time keeps its stronger statement.
   const snoozedAtMs = toMillis(thread.snoozedAt);
   const completedAtMs = toMillis(thread.latestRunCompletedAt);
-  const wokeOnError = thread.status === "failed";
+  const wokeOnError =
+    thread.status === "failed" &&
+    (snoozedAtMs === null || (completedAtMs !== null && completedAtMs > snoozedAtMs));
   const wokeOnCompletion =
     snoozedAtMs !== null && completedAtMs !== null && completedAtMs > snoozedAtMs;
   return wokeOnError || wokeOnCompletion;