Bridge City Family Medical Clinic v. Kent & Johnson LLP

Oregon Court of Appeals · Contracts

ContractsContract formationSettlement agreementsofferacceptancecounteroffermeeting of the mindsobjective manifestations of intent

Facts

After an unfavorable arbitration result, plaintiff's president, Bunker, contacted defendants' malpractice insurer about a possible settlement. Schafer, the insurer's adjuster, invited a specific proposal, and the parties then exchanged a series of emails and letters negotiating dollar amounts while Schafer consistently included a mutual release as part of the settlement terms. Bunker moved from $40,000 to $20,000 to $19,000, and on September 7 Schafer stated that the PLF and defendants accepted her $19,000 offer and enclosed a mutual release for signature. Plaintiff later refused to sign and instead filed this malpractice action.

Issue

Whether the parties' correspondence objectively manifested a binding settlement agreement, despite plaintiff's argument that Bunker's statements were only expressions of willingness to settle and that plaintiff never expressly accepted the mutual-release term. Also, whether the trial court properly awarded fees and costs under ORCP 46 C after plaintiff denied a request to admit that a settlement had been reached.

Rule

Contract formation turns on objective manifestations of intent. A valid contract may be created by an offer and its unqualified acceptance even without a formal writing, so long as the communications show a meeting of the minds on material terms and no material terms remain for future negotiation; a purported acceptance that adds a new term is a counteroffer. A term may become part of the agreement by implication from the parties' communications and conduct if a reasonable person would understand that it was accepted. When parties agree on the bargain and on the fact that a release will be executed, later signing of the release may be a condition precedent to performance rather than a condition to formation.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Portland, Nina Patel emailed a liability adjuster for Alder Basin Insurance saying she wanted to "talk about the possibility of resolving this." The adjuster replied that if she wanted to resolve the matter, she should send a specific proposal. Nina then emailed, "I will settle this immediately for $28,000," and the adjuster later replied, "We accept your $28,000 offer."

Was a binding settlement most likely formed?

Explanation. Contract formation turns on objective manifestations of intent. An initial message proposing to discuss settlement is not itself an offer, but after the other side requests a specific proposal, a statement such as "I will settle this immediately for $28,000" is a definite offer. An unqualified acceptance forms a contract even without a formal signed writing. The rule is objective, so Nina's undisclosed subjective intent would not control. (Derived from Bridge City Family Medical Clinic v. Kent & Johnson LLP (n.d.).)