It just became more difficult for plaintiffs to scream ‘Counter-Offer’


By: Matthew S. Jones

The California Court of Appeal for the Sixth Appellate District recently analyzed the issue of an agreed upon amount of a settlement and memorializing the settlement terms. In the case CSAA Ins. Exchange v. Hodroj (2021) Cal.App.LEXIS 1009 (ordered published on December 1, 2021), Plaintiff’s counsel wrote to the insurer stating Plaintiff would settle for the policy limits as long as certain conditions were fulfilled, including providing proof of insurance and stating the policy limits, accepting the offer within 21 days, and delivering a check within 21 days of acceptance of the offer.

The offer also stated the insurer could condition its acceptance on Plaintiff signing a written release. Fifteen days later, the insurer sent a written acceptance of the offer, including proof of insurance and the policy limits, as well as a proposed written release of all claims for the Plaintiff to sign. The check was sent separately. In response, Plaintiff’s counsel reneged on the settlement, stating the terms of the release included new and different terms beyond the settlement offer. Plaintiff then filed a lawsuit arising out of his bodily injury claim, and the insurer filed its own for breach of contract. The insurer moved for summary judgment, which was granted by the trial court. On appeal, the court affirmed the summary judgment ruling in the insurer’s favor, stating that the failure to complete a formal writing does not negate the existence of the initial contract to settle between the parties.

If the parties do not agree to the terms of the formal writing, it does not constitute a counter-offer. Instead, the Court stated the initial agreement is still binding and the writing is a nullity.

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