News & Events

Word Games Aside … an agreement to settle is an agreement to settle

The Tennessee Court of Appeals refused to let a litigant weasel out of a negotiated and binding agreement to settle disputed claims.  Tim Grace v. Jeanna Grace d/b/a Grace Trucking, Case No. W2016-00650-COA-Re-CV (11/29/16).

The plaintiff in a breach of contract action sought an order from the trial court attempting to enforce an agreement reached in discussions between counsel:

  1. Counsel for the parties exchanged offers and counter-offers in attempts to settle the matters in litigation;
  2. Defendant, through counsel, agreed that there was an acceptance of the settlement proposal and asked plaintiff’s counsel to prepare an “Agreed Order of Dismissal” containing the terms of the agreement;
  3. The defendant’s counsel stated that he did not represent defendant, but was merely conveying the offer and acceptance and “that the Order should not have his signature …”
  4. Plaintiff’s counsel prepared the Agreed Order for defendant to sign and return with the settlement check;
  5. Defendant showed up with the check, but requested that the Agreed Order be revised to reflect that the case was dismissed “with prejudice;”
  6. Although the plaintiff’s counsel made the changes to the dismissal order to provide for prejudicial dismissal, defendant refused to sign.

The plaintiff moved to enforce the agreement and requested attorneys’ fees incurred in enforcement of the settlement agreement.  Defendant argued that the request for a prejudicial dismissal, as opposed to what was originally included in the dismissal order, constituted a counter-offer, not an acceptance, and that the counter-offer was withdrawn before acceptance.

The trial court rejected the defendant’s argument and enforced the settlement agreement, but denied the request for attorneys’ fees.  The Appellate Court, applying principles of contract law, determined that there was mutual assent as to the settlement, looking to “the situation, acts and the conduct of the parties, and the attendant circumstances.”  The Appellate Court rejected defendant’s “insistence that the order dismissing the [plaintiff’s] lawsuit contained language regarding dismissal with prejudice constituted a counter-offer, rather than an acceptance.”  The initial, proposed order would have effected a prejudicial dismissal per Rule 41.02 of the Tennessee Rules of Civil Procedure.  Thus, defendant’s request for surplusage and redundancy did not change the nature of the acceptance of the settlement offer.

Relying on the American Rule, the Appellate Court rejected the plaintiff’s request for attorneys’ fees.


by William R. O'Bryan, Jr.