Cully v. Smith
| Decision Date | 09 July 2019 |
| Docket Number | Case No. CL-2017-9142 |
| Court | Circuit Court of Virginia |
| Parties | Re: David M. Cully v. Todd Smith |
BRUCE D. WHITE, CHIEF JUDGE RANDY I. BELLOWS ROBERT J. SMITH BRETT A. KASSABIAN MICHAEL F. DEVINE JOHN M. TRAN GRACE BURKE CARROLL DANIEL E. ORTIZ PENNEY S. AZCARATE STEPHEN C. SHANNON THOMAS P. MANN RICHARD E. GARDINER DAVID BERNHARD DAVID A. OBLON DONTAÈ L. BUGG JUDGES
THOMAS A. FORTKORT J. HOWE BROWN F. BRUCE BACH M. LANGHORNE KEITH ARTHUR B. VIEREGG KATHLEEN H. MACKAY ROBERT W. WOOLDRIDGE, JR. MICHAEL P. McWEENY GAYLORD L. FINCH, JR. STANLEY P. KLEIN LESLIE M. ALDEN MARCUS D. WILLIAMS JONATHAN C. THACHER CHARLES J. MAXFIELD DENNIS J. SMITH LORRAINE NORDLUND DAVID S. SCHELL JAN L. BRODIE RETIRED JUDGES
OPINION LETTER
Douglas B. Wessel, Esquire
WESSEL LAW OFFICES
Two Fountain Square
11921 Freedom Drive, Suite 550
Reston, Virginia 20190
dougwessel@aol.com
Counsel for Plaintiff
Scott E. Snyder, Esquire
SCHOENBERG & ASSOCIATES
Suite 310N
Chantilly, Virginia 20151
sesnyder@travelers.com
Brendan J. Mullarkey, Esquire
SHIREEN JAYATILAKA & ASSOCIATES
5285 Shawnee Road
Suite 110
Alexandria, Virginia 22312
Co-Counsel for Defendant
Dear Counsel:
This matter is before the Court to determine the enforceability of a purported settlement agreement in this personal injury negligence litigation. The pivotal issue is whether the term "settlement," as used in an email exchange reflecting the purported settlement agreement, is ambiguous. The Court holds that "settlement" is unambiguous within the context of the email exchange. The email exchange reflects a legally binding settlement agreement that unambiguously provides for Defendant's insurers to pay Plaintiff $610,000 in exchange for dismissal of this lawsuit. Accordingly, the Court avouches the rationale of its order dated June 14, 2019 enforcing the settlement agreement pursuant to these terms.1
David Cully filed a complaint seeking judgment against Todd Smith for damages arising from a December 3, 2014 automobile collision. Prior to trial, counsel for Cully and counsel for Smith's insurers, Travelers Property Casualty Company of America ("Travelers") and State Farm Insurance Company ("State Farm") (collectively, the "Insurers"), engaged in settlement negotiations. On May 6, 2019, at 6:09 pm, Scott Snyder, counsel for Travelers, sent the following email:
On May 7, 2019, at 11:36 am, Douglas Wessel, counsel for Cully, replied:
Thereafter, counsel failed to finalize a settlement. Snyder informed Wessel that he had received a settlement check for $510,000 from Travelers and would forward it upon receipt of a release form executed by Cully. Execution of the release would discharge Smith, Salesforce.com,2 State Farm, and Travelers from liability in relation to any claims against themby Cully arising out of the December 3, 2014 automobile collision. Independently, Brendan J. Mullarkey, counsel for State Farm, sent Wessel a letter enclosing a $100,000 check. Mullarkey's letter instructed Cully to execute the release prior to depositing the check.
In response, Wessel emailed Snyder and Mullarkey, wherein he opined that "[t]his settlement [] consisted of only the following two terms: [(1)] payment of $610,000 in exchange for [(2)] settlement of this case" and that "[t]he parties did not discuss or agree to the signing or embracing of any Release, or any terms in any Release, as a part or condition of the settlement." Wessel also expressed that his understanding of the parties' settlement agreement did not include a settlement as against Salesforce.com.3
At a stalemate, the parties filed cross-motions to enforce the settlement, seeking to enforce the email exchange as a settlement agreement pursuant to each's respective understanding of the terms. Cully argued that the email exchange created a "clear and unambiguous" contract—Smith's payment of $610,000 in exchange for settlement of this case. Therefore, he advanced, this Court's analysis should be limited to the "four corners" of the email exchange without reference to any extrinsic or parol evidence to ascertain the parties' intent.
Smith argued that the email exchange merely reflected an "agreement in principle," but concluded that "it is clear that the parties entered into the customary [agreement of] payment of the settlement amount upon the exchange of an endorsed release and dismissal order." Smith represented that the customary practice in the area of personal injury law is for execution of a release by the plaintiff and execution of a dismissal order by both parties prior to the disbursement of the settlement funds. In the alternative, Smith asked the Court to set aside the agreement for lack of mutual assent.
A settlement agreement is a contract. See Bangor-Punta Ops., Inc. v. Atl. Leasing, Ltd., 215 Va. 180, 183 (1974) (). Generally speaking, there are two predicates to the formation of a legally binding contract: (1) consideration and (2) mutual assent. See Dean v. Morris, 287 Va. 531, 536 (2014) (citation omitted). Consideration is "the price bargained for and paid for a promise[;] . . . a benefit to the party promising or a detriment to the party to whom the promise is made." Smith v. Mountjoy, 280 Va. 46, 53 (2010) (citations omitted).
Mutual assent is a distinct intention common to the parties to a contract to create enforceable, reciprocal obligations governing their relationship as determined from theinteraction between, and manifested intention of, the parties. See CGI Fed. Inc. v. FCi Fed., Inc., 295 Va. 506, 520 (2018); Spectra-4, LLP v. Uniwest Commercial Realty, Inc., 290 Va. 36, 46 (2015); Moorman v. Blackstock Inc., 276 Va. 64, 75 (2008). Mutual assent is determined from the reasonable meaning of a party's expressions—his words and acts—actually communicated to the other party to the purported contract. Moorman, 276 Va. at 75 (citation omitted). "[I]t is immaterial what may be the real but unexpressed state of his mind." Lucy v. Zehmer, 196 Va. 493, 503 (1954) (citations omitted). As with all contracts, "[u]ltimale resolution of the question whether there has been a binding settlement involves a determination of the parties' intention, as objectively manifested." Snyder-Falkinham v. Stockburger, 249 Va. 376, 381 (1995) (emphasis added) (citations omitted).
"Until the parties have a distinct intention common to both . . . there is a lack of mutual assent and, therefore, no contract." Moorman, 276 Va. at 75 (citation omitted). Typically, for an express contract, mutuality of assent is demonstrated by proof of an offer and an acceptance. See Spectra-4, 290 Va. at 46. "It is crucial . . . that the minds of the parties have met on every material phase of the alleged agreement." Chittum v. Potter, 216 Va. 463, 467 (1975). "The most basic principle of contract law is that when one party makes an offer that is clear, definite, and explicit, and leaves nothing open for negotiation, acceptance of that offer by the other party will complete the contract." Judicial Inquiry & Review Comm'n of Va. v. Elliott, 272 Va. 97, 119 (2006) (citation omitted). Where parties are engaged in settlement negotiations, the question is "whether negotiations upon a disputed claim have culminated in an agreement so final that no action may be brought on the antecedent claim, but only upon the later agreement." Montagna v. Holiday Inns, Inc., 221 Va. 336, 346 (1980).
The parties in this case do not dispute the facts surrounding the email exchange. Therefore, the question of whether the email exchange created a legally binding contract between the parties occasions a question of law. Valjar, Inc. v. Mar. Terminals, Inc., 220 Va. 1015, 1019 (1980) (citation omitted).4 An exchange of emails is a form of correspondence, cf. Beck v. Shelton, 267 Va. 482, 491-92 (2004), and may result in a binding contract if the emails "fairly construed, correctly express all of the terms to which the parties agree." Chittum, 216 Va. at 467 (citation omitted).
Snyder's email constituted an offer—he manifested Smith's willingness to bargain with Cully to settle this lawsuit, thereby creating a power of acceptance. Cf. Chang v. First Colonial Sav. Bank, 242 Va. 388, 392 (1991) (defining "offer"). The terms of Snyder's offer were "clear, definite, and explicit, and le[ft] nothing open for negotiation." Elliott, 272 Va. at 119 (citation omitted).
Wessel's email in response, that "accepted [Snyder's] below offer," constituted an acceptance. Cf. Marefield Meadows, Inc. v. Lorenz, 245 Va. 255, 258, 260 (1993) (). Upon Wessel's acceptance of Snyder's offer email, "the minds of the parties [] met on every material phase of the alleged agreement." Chittum, 216 Va. at 467. Put differently, the parties "reached a mutual agreement on every essential element of the proposed settlement" as objectively manifested by the parties. Montagna, 221 Va. at 347; see also Snyder-Falkinham, 249 Va. at 381.
"Once a competent party makes a settlement and acts affirmatively to enter into such settlement, [his] second thoughts at a later time upon the wisdom of the settlement do not constitute good cause...
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