Enforcing Tennessee Settlement Agreements in Injury Cases

In Goan v. Mills, No. E2016-01206-COA-R3-CV (Tenn. Ct. App. Mar. 24, 2017), the Court of Appeals affirmed the trial court’s decision to enforce a settlement agreement in a car accident case.

Plaintiff was rear-ended by defendant while plaintiff was delivering mail. Plaintiff brought this action, and settlement negotiations between the parties’ attorneys ensued. Plaintiff’s counsel sent a letter in April 2013 stating that plaintiff “had an agreement with comp that we can settle this case now…If there is only $100,000 in insurance, I would demand the policy limits primarily because of workers comp.” In August, plaintiff’s lawyer again wrote: “I go back to demanding the limits which I believe is $100,000 but as we discussed I need a firm number from you to figure out compromising the comp claim.” Plaintiff’s counsel wrote two more times demanding the policy limit of $100,000, and in December 2013, defense counsel wrote a letter accepting the settlement demand.

Seven months later, in July 2014, plaintiffs’ counsel wrote to defendant again, stating that “you and I have your case settled,” and mentioning for the first time an uninsured motorist claim on behalf of plaintiff. More than 18 months later, defendant filed a motion to enforce the settlement agreement, and plaintiff responded, alleging that “[a]lthough the plaintiffs’ counsel requested that [defense counsel] provide proof of the limits of the policy, [counsel] failed to do so,” and that “given the extent of plaintiff[‘s]…injuries, the sum of $100,000.00 does not adequately compensate the plaintiffs.”

The trial court granted the motion to enforce the settlement agreement, finding that “an enforceable contract was entered into among the parties to settle the plaintiffs’ claims[.]” The Court of Appeals affirmed.

On appeal, plaintiff asserted that “there was no meeting of the minds, and therefore no valid contract, because Defendant did not provide a copy of the declarations page of his liability insurance policy.” Defendants, on the other hand, argued that “plaintiffs’ counsel never requested this document before settling the case[.]” Plaintiff wanted to rely on Tenn. Code Ann. § 56-7-1206 to assert an uninsured motorist claim for the portion of his damages not covered by defendant’s $100,000 insurance policy. Subsection (g)(2) of that statute requires the insurance company of a party being released to “give written notice of offer to the insured’s uninsured motorist insurance carrier” and provide certain verifications to the same. Plaintiff argued that because defendant did not comply with this statutory requirement, the settlement was unenforceable.

The Court of Appeals rejected this argument, reasoning:

[T]here is no documented reference to a potential claim by Plaintiffs under their uninsured/underinsured motorist policy until after the settlement agreement was reached. The first reference in the record to such a potential claim is the letter written by Plaintiffs’ counsel on July 24, 2014, long after the agreement on December 4, 2013. …Thus, there is no indication that the parties were ‘proposing to accomplish a settlement pursuant to this section’ of Tenn. Code Ann. § 56-7-1206, and it is inapplicable under the circumstances of this case.

The Court also noted in its analysis that defense counsel wrote a letter accepting the settlement agreement in December 2013, and that “[m]ore than seven months passed with no objection from Plaintiffs[.]” Further, the Court of Appeals quoted language from the trial court, stating: “And then here’s the crystal clearest language you could ever have. ‘You and I have your case settled.’ I can’t interpret it any other way.” The enforcement of the settlement agreement was thus affirmed.

It is important to know that the defense lawyer represented that he did not know of a possible UM claim or the UM limits before writing his letter confirming that a settlement had been reached.

Sad for all concerned – except Tennessee Farmers.