Roseanna Monk and her husband, Kevin, filed a lawsuit against LaBelle last year.
The couple lives in a Manhattan building where the Grammy Award-winning singer stayed while appearing in the Broadway musical "Fela!"
The couple's lawyer, Sam Davis, tells the New York Post LaBelle settled the case even before being deposed. The Monks will donate the money to a children's cancer charity.
LaBelle's publicist declined to comment.
According to the lawsuit, LaBelle chastised Roseanna Monk, threw a bottle of water and launched into an obscenity-filled tirade during the Nov. 11, 2010 argument.