Monday, April 24, 2017

The Court of Special Appeals Holds Settlement via E-Mail Enforceable in Ward v. Lassiter

On January 13, 2017, the Maryland Court of Special Appeals filed an unreported decision in Julie Ward v. Marjorie L. Lassiter upholding the Circuit Court for Anne Arundel County’s grant of Defendant’s Motion to Enforce Settlement Agreement against Plaintiff.

This case arises from a settlement agreement reached via e-mail stemming from a June 21, 2010 auto accident.  A three-day jury trial was set to begin on March 12, 2015 but as trial approached, and after some settlement negotiations, Plaintiff’s Counsel sent an e-mail confirming that his client would accept $7,000, if offered.  Defense Counsel responded simply with “[w]e are settled at $ 7,000.00.”  The case was removed from the trial docket but issues arose when Plaintiff’s Counsel e-mailed a proposed settlement agreement which Defense Counsel declined in favor of her own settlement agreement.  Ultimately, Plaintiff refused to sign any release or settlement agreement sent by Defense Counsel due to language that indemnified the Defendant from claims any third party could bring against her in connection with the injuries the Plaintiff suffered in the accident at issue.

In response, Defendant filed a Motion to Enforce Settlement which the circuit court granted after a hearing.  Plaintiff appealed the decision.  The dispute before the appellate court was whether the e-mails exchanged between the parties formed an enforceable settlement agreement and what exact terms did the agreement encompass.  Or as the Court of Special Appeals puts it “[t]he question, then, is what an agreement to settle an auto accident case involves, and thus, what terms the parties can be understood to have agreed to when they agreed to settle for $7,000.”

A settlement agreement is a contract which the parties enter into “for the settlement of a previously existing claim by a substituted performance,” Consol. Constr. Servs., Inc. v. Simpson, 372 Md. 434, 465 (2002) (citation omitted), and “settlement agreements are governed by ordinary principles of contract law.” Nationwide Mut. Ins. Co. v. Voland, 103 Md. App. 225, 231 (1995).  The Court found that the e-mails between the two attorneys demonstrated a “classic offer-and-acceptance exchange.”  The court further found that, even though there was no mention of releases, a release is typically needed to settle pending litigation.  The Plaintiff did not dispute that a release was needed but rather, the dispute was over the indemnification of the Defendant against third party claims that could be asserted against her.  Counsel for Plaintiff had included indemnification language in his release drafts.

The Court simply states “[t]he point of a settlement is to end the litigation and the uncertainty about the outcome.”  The Circuit Court’s grant of the Motion to Enforce the Settlement was upheld since the dispute over indemnification was a matter of math, not principle.  Additionally, the Plaintiff’s agreement to settle the case in exchange for a payment of $7,000 necessarily included agreement to release the Defendant and to indemnify the Defendant from claims any third party could bring against her in connection with the injuries the Plaintiff suffered in the accident at issue

The reliance of e-mails by attorneys and adjusters has become all too common.  Before you send out that quick “we’re settled” e-mail, it might be a good idea to know what you’re agreeing to when you click send.