LAW NOTES from the Law Offices of
Kay & Andersen, LLC
April, 2011
What Every Insurer Should Know . . . . . . . . . . . . . . .
ABOUT THE ENFORCEABILITY OF INFORMAL AGREEMENTS TO SETTLE
Kay & Andersen, LLC
April, 2011
What Every Insurer Should Know . . . . . . . . . . . . . . .
ABOUT THE ENFORCEABILITY OF INFORMAL AGREEMENTS TO SETTLE
Disclaimer: The information contained on this page is not legal advice. The information provided on this website is for general informational purposes and is not necessarily updated to account for changes in the law. You should consult with an attorney for legal advice regarding your individual circumstances.
Issues sometimes arise as to the enforceability of informal written agreements to settle, and the Wisconsin Court of Appeals recently ruled on one such instance. In Sands v. MH Private Equity Fund, LLC, Appeal No. 2010AP1175 (March 22, 2011) found at: http://www.wicourts.gov/ca/opinion/DisplayDocument.html?co ntent=html&seqNo=61469, the plaintiff Sands filed a complaint against her ex-fiancé and 15 of his business interests seeking to recover a portion of the assets accumulated during their cohabitation. Shortly thereafter, one of the finance’s business interests (“Managing Member”) filed a complaint against Sands in Indiana. Managing Member’s counsel proposed dismissing Sands’ Wisconsin claims in exchange for dismissal of the Indiana claim against Sands. Sands’ counsel responded with an e-mail stating that the offer was accepted, which led to the attorneys preparing draft stipulations and mutual releases for the cases. While the releases were being drafted, Managing Member’s attorney claimed that the settlement was now impossible because counsel for other defendants in Sands’ Wisconsin lawsuit would not consent to the dismissal of his client from the Wisconsin action. Sands refused to accept this assertion and filed a motion to enforce the settlement agreement in court. The circuit court entered an order finding that the parties had entered into a binding settlement agreement.
On review the Court of Appeals affirmed the circuit court’s holding. The Court of Appeals rejected the argument that the original agreement to settle was contingent on reaching agreement in the form of subsequent execution of mutual releases. Id, ¶ 10. The court noted that the communications between counsel showed that even if the original settlement offer did not contemplate execution of mutual releases, that term was agreed to after Sands’ counsel proposed it. Id, ¶ 11. The Court of Appeals also rejected the argument that the e-mails between counsel reflected an unenforceable “agreement to agree” rather than a binding settlement agreement. The parties clearly agreed on the only provisions truly material to their agreement: releases and cross-dismissals with prejudice in the Wisconsin and Indiana cases. Id, ¶ 13. Although there may have been minor items to be worked out by counsel in their exchange of drafts, this did not convert the valid settlement agreement into an unenforceable agreement to agree. The e-mails demonstrated an agreement on the material terms. It was not established that the parties understood the releases would contain additional material provisions. Id, ¶ 14. The e-mails created a binding settlement agreement which the circuit court properly enforced. Id.
This decision makes clear that when entering into informal settlement agreements in Wisconsin, the parties should specify at the outset whether they contemplate additional material terms in order to consummate the settlement. If not, informal settlement agreements will likely be enforced by a reviewing court if necessary.
Law Offices of Kay & Andersen, LLC is recognized for securing favorable verdicts and settlements for insurance companies and their insureds and has received an AV rating from MartindaleHubbell. We are also proud to be listed in Best’s Directory of Recommended Insurance Attorneys and Adjusters. Feel free to contact us with any of your insurance defense needs.
On review the Court of Appeals affirmed the circuit court’s holding. The Court of Appeals rejected the argument that the original agreement to settle was contingent on reaching agreement in the form of subsequent execution of mutual releases. Id, ¶ 10. The court noted that the communications between counsel showed that even if the original settlement offer did not contemplate execution of mutual releases, that term was agreed to after Sands’ counsel proposed it. Id, ¶ 11. The Court of Appeals also rejected the argument that the e-mails between counsel reflected an unenforceable “agreement to agree” rather than a binding settlement agreement. The parties clearly agreed on the only provisions truly material to their agreement: releases and cross-dismissals with prejudice in the Wisconsin and Indiana cases. Id, ¶ 13. Although there may have been minor items to be worked out by counsel in their exchange of drafts, this did not convert the valid settlement agreement into an unenforceable agreement to agree. The e-mails demonstrated an agreement on the material terms. It was not established that the parties understood the releases would contain additional material provisions. Id, ¶ 14. The e-mails created a binding settlement agreement which the circuit court properly enforced. Id.
This decision makes clear that when entering into informal settlement agreements in Wisconsin, the parties should specify at the outset whether they contemplate additional material terms in order to consummate the settlement. If not, informal settlement agreements will likely be enforced by a reviewing court if necessary.
Law Offices of Kay & Andersen, LLC is recognized for securing favorable verdicts and settlements for insurance companies and their insureds and has received an AV rating from MartindaleHubbell. We are also proud to be listed in Best’s Directory of Recommended Insurance Attorneys and Adjusters. Feel free to contact us with any of your insurance defense needs.