Settlement Agreement May be Enforced When Accepted After Deadline

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Civil Procedure - Enforcement of Settlement Agreement

Perry v. Ronan, 585 Ariz. Adv. Rep. 56 (App., Div. I, June 22, 2010) (J. Orozco)

ACCEPTANCE OF SETTLEMENT OFFER AFTER DEADLINE CAN BE ENFORCED

Plaintiff and defendant attended mediation where the defendant agreed to pay the plaintiff $400,000. The Plaintiff did not accept the offer at the mediation but later told his attorney to accept the offer. The plaintiff's attorney then wrote an e-mail to the mediator saying he would accept the $400K provided it was acknowledged by the defendant before October 27, 2008 that he would pay it. The mediator, unaware of the deadline conveyed the offer to the defendant on October 28, he accepted but then the plaintiff refused to agree claiming the deadline had run and it was no longer represented by the attorney who made the offer. The defendant sought to enforce the "settlement" but the trial court found there was no agreement and set the matter for trial. Defendant brought this Special Action.Here the Court of Appeals reversed the trial court finding that this settlement agreement could be enforced pursuant to Restatement (2d) of Contracts sec. 49 which states that an offer can be accepted after an acceptance deadline has passed if: (1) there is a delay in the delivery of the offer due to the fault of the offeror or the means of transmission adopted by the offeror; (2) the offeree neither knows nor has reason to know of the delay; and (e) the offeree accepts within the same period of time that would have been permissible if there had been no delay.Here it was clear the offeror choose to deliver the offer via the mediator, the offeree did not know about the deadline and did respond within the same period of time had there been no delay. Therefore, in this case of first impression there was a binding settlement agreement.Further rule 80(d) is not violated by enforcing this agreement in that the offer and acceptance were in writing and the only issue was whether the agreement was enforceable not what its terms were. Finally, the underlying action was in tort and not contract and therefore although the special action dealt solely with the enforceability of a settlement agreement, because the underlying action did not "arise out of contract" the defendant was not entitled to attorneys' fees under ARS sec. 12-341.01.

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