No Right to Change After Agreeing to a Settlement
INSURER'S INSTIGATION OF SETTLEMENT IS EVIDENCE OF GOOD FAITH
After parties to a suit resolved the suit by settlement one or more of
the parties tried to renege on the agreement and appealed the trial
court's order to enforce the parties' settlement agreement. The parties'
settlement agreement required them to dismiss all claims,
counterclaims, and crossclaims with prejudice. In Shorewood Forest
Utilities, Inc. v. Rex Properties, LLC and Don Blum, No. 22A-PL-2345,
Court of Appeals of Indiana (August 11, 2023) the Court of Appeals
resolved the claims concerning the Settlement Agreement.
FACTS AND PROCEDURAL HISTORY
Shorewood is a nonprofit corporation that provides sewer service to more
than 1000 residents in Porter County. Rex Properties is a property
developer, and Blum is the sole managing member of Rex Properties. In
2017, Shorewood and Rex Properties entered into an agreement for
Shorewood to expand into a new Rex Properties development and service
the homes there according to certain terms, rates, and fees. Not long
thereafter, Shorewood concluded that its agreement with Rex Properties
was not enforceable, and Shorewood declined to participate in the
project.
By mid-2019, the only claim remaining in the instant cause was Rex
Properties' approximately sixteen-million-dollar counterclaim against
Shorewood for breach of contract. Shorewood sought to amend its
complaint to allege claims of fraud, fraud in the inducement, unjust
enrichment, and criminal deception against Rex Properties. In March
2020, the trial court permitted Shorewood's requested amendment.
In the spring and summer of 2020, the parties attempted to settle out of
court. On June 8, counsel for Shorewood sent counsel for Rex Properties
an email stating that Shorewood's insurance carrier, Stratford
Insurance, had agreed to pay Rex Properties $950,000 for Shorewood and
Rex Properties to settle and dismiss all claims, counterclaims, and
crossclaims in this cause.
Mr. Blum approved the settlement with the terms set forth in the offer
email.
Over the next several weeks, the parties' attorneys worked on drafting a
Settlement Agreement. Counsel drafted an agreement but Shorewood
refused to sign it.
THE ISSUES
The central issue in this appeal is whether the email exchange between
the parties on June 8 represented the offer and acceptance of an
enforceable settlement agreement. The trial court concluded that the
parties' June 8 email exchange created an enforceable settlement
agreement.
Shorewood had made an offer, Rex Properties accepted the offer, there
was more than ample consideration between them and Stratford Insurance, and all parties had a meeting of the minds over definite and certain essential terms.
The trial court's denial of Rex Properties' motion for judgment on the
pleadings and its motion for summary judgment resulted in a settlement
agreement between Shorewood and Rex Properties, and their settlement
rendered the trial court's prior judgments moot.
The trial court’s judgment was affirmed.
ZALMA OPINION
Courts invariably prefer settlement agreements. Insurers, like
Stratford, prefer settlements. In this case Stratford put up almost $1
million to settle, the parties agreed by e-mail and an agreement to
memorialize the agreement with a formalized agreement. The contract was
made by the e-mail exchange of offer, acceptance and consideration. The
formalized agreement was not necessary and the good work of the insurer
resulted in a solution to an extensive case and protected its insured.
(c) 2023 Barry Zalma & ClaimSchool, Inc.