Appellate Case Law Update – Is a Request for a Release a Counteroffer?

March 27, 2018 by on News

Tovar v. Russell, 2018 Fla. App. LEXIS 2940 (Fla. 4th DCA 2018) concerned a pre-suit settlement offer and acceptance in an auto accident case.  Plaintiff’s counsel offered to settle the matter if State Farm (1) tendered its policy limits of $50,000; (2) reimbursed the plaintiff an additional $10,044 for his property loss; (3) provided an affidavit from the tortfeasor stating she had no other insurance coverage; and (4) provided a certified copy of the tortfeasor’s policy.  State Farm accepted by complying with the entirety of the offer.  But, in addition, State Farm enclosed a proposed release with the following instruction: “Execution of the proposed release is not a condition of settlement.  Furthermore, the proposed release is not intended to constitute a counter-offer to your settlement offer, or to add any new terms or conditions to your proposed settlement agreement . . . If the proposed release is not acceptable to you, please contact me so that we can attempt to reach an agreement as to the release language that is mutually acceptable and consistent with your settlement offer.”

The plaintiff and State Farm exchanged several additional letters concerning the terms of the release, but the settlement eventually fell through. The issue on appeal was whether State Farm’s initial response constituted an acceptance of the offer. The Fourth District Court of Appeal answered in the affirmative.  “Generally, an insurance company that accepts an offer can request the plaintiff to sign the usual settlement documents. But, where the release contains objectionable and unusual terms there is no acceptance of the offer.  The Court gave several examples:

In doing so, we acknowledge other cases where we and other courts have held the language of releases and other conditions required by insurance companies varied from the original offer preventing the requisite meeting of the minds. See, e.g., Grant, 17 So. 3d at 709 (requiring all settlement documents executed and all liens satisfied prior to disbursement of proceeds, and requiring the plaintiff to  warrant that all hospital bills were fully paid); Cheverie, 783 So. 2d at 1118 (reversing where an insurance company sent a letter with a check for the policy limits, but did not respond to objections concerning indemnification); Trout v. Apicella, 78 So. 3d 681, 683 (Fla. 5th DCA 2012) (holding an insurer did not accept where the offer demanded a single bodily injury release without indemnification language, and the insurer responded with a release titled "release of all claims"); Peraza, 983 So. 2d at 1190 (requiring the check to be held in escrow until the insurance company received an "unaltered release executed . . . along with a copy of the U/M Carrier Authorization of Settlement and Waiver of Subrogation Rights.").

The trial and appellate courts both found critical that State Farm’s response expressly stated that execution of the proposed release was not a condition of the settlement and was not intended to constitute a counter offer.  Furthermore, “any discussion concerning the language of the release occurred after the settlement agreement had been made.” As such, the appellate court affirmed the enforcement of the settlement agreement.

Two important lessons can be taken from Tovar:  (1) it is perfectly acceptable to request that the plaintiff execute a normal release to consummate a settlement agreement; and (2) when doing so, it is advisable to indicate that the proposed release is not a condition of settlement, is not intended to constitute a counter-offer, and that the language of the proposal release can be changed so that it is mutually acceptable. 

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Kansas R. Gooden
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Kevin D. Franz
Senior Associate
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