Confirming Settlement of a Lemon Law Claim
It is no secret that customers who believe they purchased a defective vehicle may turn to a Lemon Law lawyer to help them pursue lemon law and breach of warranty claims. Knowing how to respond to customer complaints and resolve them prior to their hiring an attorney are valuable skills that can save time and money. If compromise discussions and negotiation are successful write down the specific terms and conditions of the settlement and have the customer(s) sign and date the agreement to acknowledge the terms of the settlement.
A recent case from the Louisiana First Circuit Court of Appeal illustrates why this is important. In Cutrer v. Open Range RV Company, decided on August 13, 2013, the Louisiana First Circuit Court of Appeal reversed a ruling in favor of a seller of a recreation vehicle trailer (“RV”) regarding the enforceability of a settlement.
A. Background
Plaintiff, Larry Cutrer, bought a RV from Open Range RV Company (“Open Range”) that contained numerous defects. He sued to rescind the sale and recover the purchase price, all costs of the sale, reimbursement for any note payments, attorney’s fees and damages for aggravation and inconvenience.
To resolve the dispute, plaintiff’s counsel sent a letter to counsel for Open Range proposing a settlement which included itemization of alleged damages (7 items), a blank line for attorney’s fees, and a blank line for loss of recreation. The total settlement without attorney’s fees and loss of recreation was $48,920.38. The letter was not signed by Mr. Cutrer.
Weeks later, a representative of Open Range faxed the same letter to plaintiff’s counsel with added content. Specifically, the figure “$5,000” was inserted in the blank for attorney’s fees, a zero was entered in the blank for loss of recreation, and a new total of “53,817.39” was inserted at the bottom. The fax signed by the VP of Operations for Open Range also provided “We accept this offer on the terms stated in your letter.”
Open Range filed a Motion To Enforce Settlement Agreement claiming the case was settled. Plaintiff opposed the motion maintaining he did not agree to the amount of attorney’s fees or damages. The trial court found there was a valid compromise and signed a judgment dismissing the case. Plaintiff appealed.
B. Discussion
Like any contract, a compromise is formed by the consent of the parties through offer and acceptance. A compromise is valid only if there is a meeting of the minds between the parties.
The Court of Appeal determined that the letter from plaintiff’s counsel to counsel for Open Range included seven items plaintiff was willing to settle and an invitation to negotiate the claims for attorney’s fees and loss of recreation. Open Range’s purported acceptance of the offer was qualified by the condition that plaintiff accept $5,000 in attorney’s fees and nothing for loss of recreation. Open Range’s fax was a new offer to settle which required plaintiff’s acceptance since additional terms were added.
The evidence failed to establish plaintiff’s consent to the purported settlement because Open Range’s fax was not signed by plaintiff. The Court of Appeal reversed the judgment of the trial court and remanded the case.
C. Why is this important?
- Without a plaintiff’s signature confirming the terms of a purported settlement the settlement may not be enforceable.
- When confirming a settlement, identify the specific terms to which the parties agree in writing and have it signed by the plaintiff.
- Acceptance of a settlement offer signed by a plaintiff’s attorney, but not the plaintiff, may not be binding unless plaintiff expressly authorized his attorney to enter into the compromise.
- Modifying the terms of a proposed settlement will likely result in a counter offer which is not binding unless the other party consents to the proposed modifications.
