Settlement Agreements Can Be Tricky

The recent Superior Court decision in Amyotte v. Wawanesa Mutual Insurance Company is a helpful reminder to lawyers and their accident victim clients, and litigants generally of the importance of being meticulous in making and responding to settlement offers.

In this case, Wawanesa brought a motion to enforce a settlement which it claimed to have entered into with the Plaintiff, Mrs. Amyotte.  Mrs. Amyotte had been involved in a car accident which gave rise to an entitlement to damages and statutory accident benefits. 

Shortly before trial, Wawanesa’s lawyer made an offer of settlement of a specific amount of money inclusive of interest “in full and final settlement of all accident claims and all claims against Wawanesa in the within action” and costs.  Mrs. Amyotte’s lawyer responded with the words “we accept the offer and the action is settled”. 

When Wawanesa’s lawyer asked Mrs. Amyotte’s lawyer about what costs were being claimed, Mrs. Amyotte’s lawyer e-mailed “$15k all in”.  The next day, Wawanesa’s lawyer e-mailed with the question “How would you like the settlement broken down for release purposes?  $10,000 past and future rehab and $5,000 for costs and disbursements?”  The reply was affirmative. 

Several days later, Wawanesa’s lawyer sent Mrs. Amyotte’s lawyer a draft release which included a release of all claims in the action including all statutory benefits that Wawanesa might owe at any future date.  Mrs. Amyotte’s lawyer objected, arguing that the only matter settled involved the claims outstanding in the existing action and that the settlement did not include remaining or future benefits which were not the subject of the action.  When Wawanesa’s lawyer objected to this characterization of the deal, Mrs. Amyotte’s lawyer took the position that no settlement agreement had been entered into because the parties were not on the same page.  He did so notwithstanding the fact that he had responded affirmatively when asked, in connection with the release, whether or not funds should be attributed to both past and future rehabilitation costs. 

Wawanesa then moved for judgment to enforce the settlement.

The judge determined that at best, Mrs. Amyotte’s lawyer had misapprehended the scope of the Defendant’s offer.  In his view, that did not serve as a basis upon which to avoid a settlement.  Mrs. Amyotte’s lawyer argued that this was a situation of a lack of consensus regarding the meaning of the offer.  The judge did not accept that argument and seems to have concluded that what really happened is that Mrs. Amyotte’s lawyer was simply not careful enough in considering the precise language in the offer before accepting it. 

In the result, the judge granted judgment to Wawanesa to enforce the settlement.

What is not made clear in the judgment is that Mrs. Amyotte would probably be at liberty to sue her own lawyer for an amount equivalent to whatever future benefits may have been lost to her through the settlement.  Presumably that is why Mrs. Amyotte’s lawyer had his or her own counsel argue the motion on Mrs. Amyotte’s behalf.  So while Mrs. Amyotte probably thought that her ordeal was over, she now faces the prospect of having to sue all over again.  Given the relatively small amounts likely at stake, this may not be an attractive option.  Worse yet, in theory at least, the judge hearing the trial in her case against her lawyer won’t be bound by the result in this case and may find that her lawyer did nothing wrong.  While this may be an unfortunate by-product of the result in this case, it is nevertheless a helpful reminder of the importance of being cautious in making and accepting settlement offers in all circumstances.

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