Daniels decided not to marry Williams but didn't return the ring, which prompted him to file a civil suit against her June 30.
A hearing was supposed to take place Friday in Odessa, Texas, where the suit was filed, but it's been canceled because the case has been settled.
Williams and his Dallas-based attorney, Craig Gant, didn't return messages seeking comment.
In February, Daniels, whom Williams dated for nearly a year, received $5,000 for school and dental bills, a baseball for her brother and a taped marriage proposal from Williams.
According to court documents obtained by ESPNDallas.com, Daniels refused to return the ring after turning down the proposal. When Williams asked for the ring to be returned six weeks later, he was told that she lost it.
"He said to [Brooke], 'I'm not like a lot of people, I don't want the ring back. You'll eventually come back to me,' and she didn't," Michael Daniels told the Odessa American.
He added: "I want to wash my hands of it. It's just a hassle. I'll take care of my daughter. I don't need him."
Williams filed an insurance claim on the ring. A subsequent investigation revealed that it was not lost but rather in the possession of Michael Daniels, who was also named in the suit.
Calvin Watkins covers the Cowboys for ESPNDallas.com.