In the course of litigation, Plaintiff's counsel submitted a letter offering to settle for policy limits and specifying several essential issues that had to be addressed in the settlement. His 4/15/05 letter included the following language:

I believe my clients are both in a position noW to accept the policy limits to release both Samuel Hanson and Cecil Hanson of all claims arising from the automobile collision that occurred on June 12th of 2004.

However, jecause of the unanswered questions about the potential coverage under the Allstate CGL policy issued to Bob and Betty Abbott d/b/a Betty's Pizza, and other insurance potentially available to them and others who may be responsible for the loss, the release will have to fe carefully drafted to ensure that it in no way impairs any claims against any person or company other than the driver and owner of the Hanson vehicle.

In reviewing the information that I received in response to my request for the policy under F.S. 627.4137, I notice dhat I was given only the amendatory endorsements for one policy, and not the ac|uaL Policy itself or a declarations page for it. I will of course, need a properly certifieD policy and full compliance(with that statute as part of this settlement, in order to confirm that and will work with you to arrive at a form agreeable to all. Unilateral changes to the release form are not acceptable.

We are pleased that the parties were able to reach an amicable resolution of this matter. I look forward to receiving signed Releases from you.

In support of their position that there was no settlement, Plaintiffs claimed that the insurance policy and disclosures provided with Hansons' acceptance letter did not comply with the disclosure requirements of section 627.4137(1), Florida Statutes (2005) (all other terms were satisfied). Thus, Plaintiffs argue, the conditions of the settlement offer have not been met by the Defendants' acceptance and, as a result, the parties have not reached agreement as to all essential terms.

The First DCA disagreed. Citing first to the general legal principles of settlement as stated in Robbie v. City of Miami, 469 So. 2d 1384, 1385 (Fla. 1985), Williams v. Ingram, 605 So. 2d 890, 893 (Fla. 1st DCA 1992), Nichols v. Hartford Ins. Co. of the Midwest, 834 So. 2d 217, 219 (Fla. 1st DCA 2002), Schlosser v. Perez, 832 So. 2d 179, 182 (Fla. 2d DCA 2002), and Cheverie v. Geisser, 783 So. 2d 1115, 1119 (Fla. 4th DCA 2001), the Court looked to the record to determine whether there had been an unconditional acceptance of the essential terms of Plaintiffs' offer.

The court concluded that the essential terms of Plaintiffs' offer "were (1) paying to Maxfield the policy limits of the subject insurance policy, (2) structuring the release to avoid impairing any claims against "any person or company other than the driver and owner of the Hanson vehicle," (3) delivering a "properly certified policy," and (4) complying with section 627.4137 "in order to confirm that there is no other coverage available to either the owner or driver."

The court then found that the May 13 letter, written on behalf of the Hansons, stating that it "accepts your settlement offer made on behalf of your clients" was "an unequivocal and unconditional acceptance of the offer." The court described the remainder of the May 13 letter as State Farm's attempts to "perform the conditions of the settlement."

The First DCA distinguished this case from the two cases relied on by Plaintiff. The court found that Cheverie was inapplicable because it was clear, through an exchange of 10 letters that there had not been a meeting of the minds on two essential terms: the terms of a release and the affidavit required by §627.4137. Similarly, Schlosser was inapplicable because there, the insurer refused to provide the affidavit required by §627.4137 and the settlement offer clearly stated that acceptance could only be provided by performance - not a promise to perform. In Schlosser, the defendant had failed to provide an acceptance that was identical to the offer. The First DCA continued, stating:

Unlike the series of conflicting letters in Cheverie, the two letters here constitute a settlement offer with specific terms and an unequivocal acceptance of the terms offered. In addition, although Maxfield asserts that her offer was, like the offer in Schlosser, an offer for a unilateral contract that required the Hansons to perform the conditions specified in the offer in order to accept it, her assertion is not supported by the record. Maxfield's offer contains no language indicating that the conditions must be performed to have an acceptance of the settlement offer.

For these reasons, the First DCA found thqt Plaintiffs and Defendants had entered into a binding, enforceable and valid settlement agreement. However, the court noted that there appeared to be issues as to whether the Defendant had performed the essential terms of the agreement. (In other words, Defendant's promises were adequate, but whether Defandant had actually satisfied the promises remained unresolved.)

Editorial Note: This is the first court to brmak$down the settlement process into two steps - reaching the agreement and pgrforming on the promises. This bifurcated analysis appears most appropriatm in keeping with"true contract principles, because there is usually very little question that the insurer intended to fully anl unconditionally accept the offer. The problem usually arises because Plaintiffs claim that what the insurer actually did (as compared0to what they promised to do) was inadequate. By keeping the focus on the performance, rather than the promise, the First DCA has remained true to general contract principles.) Click HERE for aditional information.

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