Proposal For Settlement With Wrong Amount Not EnforcedCar Accidents
In the case of Kyle Dale v. Viktoria Schaub and State Farm Automobile Insurance Company, Case Number 4D19-900 (Fla. 4th DCA August 19, 2020), Florida’s Fourth DCA held that a mistake in the amount of a proposal for settlement with a number not consented to by the client was not enforceable.
In this case, the plaintiff’s attorney mistakenly sent a proposal for settlement to the defense for $10,000 even though the policy limits were $100,000. The plaintiff’s attorney did not realize the mistake until the defense sent a check for $10,000 accepting the proposal. The plaintiff never consented to an offer of $10,000 and said so in an affidavit.
Thereafter, the plaintiff filed a motion to withdraw the proposal to which the trial judge denied and this appeal ensued.
In hindsight, there was $100,000 in bodily injury liability coverage and $10,000 in uninsured motorist coverage on this case (total of $110,000). The paralegal for the plaintiff’s attorney was directed to send proposals for settlement to each insurance company for their policy limits. These instructions were misconstrued by the paralegal and the $10,000 offer was sent to the defense by mistake.
Generally speaking, proposals for settlement under Florida law require strict compliance with the statute and rule. Failure to strictly follow the procedures in the rule results in an unenforceable proposal.
However, acceptance of a proposal for settlement forms a contract. As such, one of the essential elements of contracts is mutual consent, or a meeting of the minds.
“[A] contract [can] be set aside on the basis of unilateral mistake unless (a) the mistake is the result of an inexcusable lack of due care or (b) the other party has so changed its position in reliance on the contract that rescission would be unconscionable.” BMW of N. Am., Inc. v. Krathen, 471 So. 2d 585, 588 (Fla. 4th DCA 1985) (citing Maryland Cas. Co. v. Krasnek, 174 So. 2d 541 (Fla. 1965)).
While Schaub (defense) was probably jumping for joy when a $10,000 offer as received, the rest of the evidence in the case is clearly to the contrary. Prior to the $10,000 offer, the plaintiff had been offered and rejected sums of money greater than $10,000. This was clear evidence, in light of all circumstances, that the $10,000 offer was in fact a mistake and was too good to be true.
The Fourth DCA also pointed out that the party seeking to enforce a compromise (aka a contract) bears the burden of proving all of the elements. The principles were set out in Nehleber v. Anzalone, 345 So. 2d 822 (Fla. 4th DCA 1977):
- A party seeking judgment on the basis of compromise and settlement has the burden of establishing assent by the opposing party[.]
- The mere employment of an attorney does not of itself give the attorney the implied or apparent authority to compromise his client’s cause of action[.]
- An exception to the general rule is a situation in which the attorney is confronted with an emergency which requires prompt action to protect his client’s interest and consultation with the client is impossible[.]
- A client may give his attorney special or express authority to compromise or settle his cause of action, but such authority must be clear and unequivocal[.]
- An unauthorized compromise, executed by an attorney, unless subsequently ratified by his client, is of no effect and may be repudiated or ignored and treated as a nullity by the client[.]
However, despite this case and these principles, the courts may not save a party from every error. I can easily foresee situations without a record of evidence to the contrary where a mistakenly low offer will be enforced if accepted. Likewise, the same mistake made by a defendant to pay a certain amount beyond lower offers made previously in the case may very well be enforced.
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