Burrus v. American Cas. Co.
| Decision Date | 18 July 1975 |
| Docket Number | No. 74-1222,74-1222 |
| Citation | 518 F.2d 1267 |
| Parties | Homer BURRUS, Plaintiff-Appellant, v. AMERICAN CASUALTY COMPANY et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Lowell E. Enslen and William T. Enslen, Hammond, Ind., for plaintiff-appellant.
John E. Hughes and Winfield L. Houran, Valparaiso, Ind., for defendants-appellees.
Before PELL and TONE, Circuit Judges, and PERRY, Senior District Judge. *
The plaintiff Homer Burrus brought this action for breach of a compromise agreement, which he alleges had been intended to settle a tort action. The district court granted summary judgment for the defendants on the ground that since, upon breach of the compromise agreement, Burrus had prosecuted the original tort action to a final judgment, he was precluded from now bringing a suit based on breach of the compromise agreement. The plaintiff appeals.
According to the pleadings, Burrus was injured when struck by an automobile and, as a result, brought a tort action against Joseph Silhavy, Jr. and Raymond Silhavy in May 1966 in the Porter Superior Court in Indiana. One or more of the defendants, it is alleged, had written a policy of liability insurance on the Silhavys.
In October 1966, according to the plaintiff's complaint, an agent of the defendants entered into an oral contract with the plaintiff. Burrus alleges that the terms of this contract were that the defendants would pay $7,000 to Burrus immediately, that the defendants would admit liability, that the balance of the plaintiff's claim would be paid when the medical treatment had reached a point where Burrus' damages could be determined with more certainty, and that in the event no agreement as to medical damages was reached, the parties would try the matter on the question of damages alone. In return, the plaintiff alleges, he agreed to allow the tort action to remain dormant. The defendants admitted, in their answer, that they had paid Burrus $7,000 but denied the existence of any contract.
Burrus further alleged in his complaint that his medical condition was established with reasonable certainty in October 1968, and that he thereafter attempted to contact the defendants. However, according to the complaint "said defendants did not respond to any such attempts and breached the aforesaid contract and that in approximately November of 1968 plaintiff . . . was required, because of said breach, to reactivate the cause of action." The complaint further alleges that when the tort action was reactivated, the defendants again breached the contract by failing to admit liability.
On June 16, 1970, the jury in the reactivated tort action returned a verdict in favor of Burrus in the amount of $5,000. The plaintiff then filed a motion in the trial court to correct errors and, as a result, the trial judge granted Burrus a new trial. In the second trial the jury returned a verdict for the defendants. Burrus' motion to correct errors was denied by the trial court and, on appeal, the judgment of the trial court was affirmed by the Court of Appeals of Indiana. Burrus v. Silhavy, Ind.App., 293 N.E.2d 794 (1973).
Burrus then brought this action in the district court for breach of the compromise agreement. 1 The district court, in granting summary judgment for the defendants, held that even assuming arguendo the existence, terms, and breach of the contract, as alleged in the plaintiff's complaint, Burrus could not maintain the present action since he had previously pursued the original tort action to final judgment.
The law is clear in Indiana 2 that where a party has two coexisting but inconsistent remedies and elects to prosecute one such remedy to a conclusion, he may not thereafter sue on the other remedy. American Furniture Co. v. Town of Batesville, 139 Ind. 77, 38 N.E. 408 (1894); Banta v. Banta, 118 Ind.App. 117, 76 N.E.2d 698 (1948). Where an agreement has been entered into to compromise and settle a tort claim, moreover, "an action on the original tort is inconsistent with an action on the contract." Ludlow v. Free, 222 Ind. 568, 55 N.E.2d 318, 323 (1944). Thus, when a settlement contract is breached, the plaintiff has two coexistent but inconsistent remedies available: he may treat the compromise agreement as rescinded and sue on the original tort, or he may sue on the contract. Indiana Farmers Mutual Ins. Co. v. Walters, 221 Ind. 642, 50 N.E.2d 868, 871 (1943). The plaintiff may not, however, prosecute one of these remedies to judgment and then sue on the other.
In Ludlow, supra, upon breach of a compromise agreement, the plaintiffs filed a suit on the original tort action but then amended the complaint to include a count for breach of the settlement contract. The Indiana Supreme Court held that "the filing of the original complaint did not constitute an election of remedies which would preclude the (plaintiffs) from amending the complaint to include an action on the contract." 55 N.E.2d at 323. The Court in Ludlow stated, however, that "a party would not be permitted to choose one inconsistent remedy and prosecute an action thereon to a conclusion and then contend that he did not intend thereby to abandon or waive another inconsistent remedial right." Id. (Emphasis added.) See Cohoon v. Fisher, 146 Ind. 583, 44 N.E. 664, 665 (1896); Nysewander v. Lowman, 124 Ind. 584, 24 N.E. 355, 356 (1890).
In the present case, we agree with the district court that, even assuming the facts as presented in the plaintiff's complaint with respect to the existence, terms, and time of breach of the contract, Burrus' suit on the contract cannot be maintained. 3 As the lower court noted, the contract alleged in Burrus' complaint was an attempt to settle the plaintiff's tort claim and can reasonably be characterized as a settlement agreement. According to the plaintiff's complaint, the defendants breached this contract by failing to negotiate with Burrus concerning the amount to be paid to Burrus after his medical damages had reached a point of reasonable certainty, and thereafter the plaintiff "was required, because of said breach, to reactivate the cause of action (in tort). 4 At the time of that breach, the plaintiff had two remedies: he could treat the contract as rescinded and sue in tort, or he...
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