Wright v. Scott

Decision Date19 August 1987
Docket NumberNo. 86-807,86-807
Citation410 N.W.2d 247
PartiesSheila K. WRIGHT and Lewis R. Wright, Appellees, v. Charles A. SCOTT, Appellant.
CourtIowa Supreme Court

Robert R. Rush, Susan E. Harman and John C. Monroe of Lynch, Dallas, Smith & Harman, Cedar Rapids, for appellant.

Benjamin W. Blackstock and James W. Affeldt of Eells, Blackstock, Affeldt & Harms, Cedar Rapids, for appellees.

Considered en banc.

PER CURIAM.

An automobile collision on Interstate 80 north of Iowa City on July 10, 1983, gave rise to this personal injury action brought by the occupant of one vehicle, Sheila Wright, and her husband Lewis R. Wright. The defendants in the action were the appellant Charles A. Scott, driver of his vehicle, and two other defendants, the owner and operator of a third vehicle. Although Scott and the other two defendants separately negotiated settlements with the Wrights before trial, the district court allowed the Wrights to proceed to trial against Scott alone after determining the Wrights were entitled to abort their settlement agreement with Scott. Scott's appeal presents several issues, but we address only the question whether Scott established as a matter of law that the case was settled before trial. We conclude that Scott established a valid and enforceable settlement agreement. We reverse the judgment entered in the district court and remand for entry of judgment in accordance with the settlement agreement.

We need only briefly describe the three-vehicle incident which led to this litigation. Sheila K. Wright was driving behind Scott on Interstate 80 when his vehicle struck a bridge abutment. Sheila stopped her vehicle in the right lane to avoid striking the Scott vehicle and to render aid if necessary. While she was still in her vehicle Sheila was struck from behind and injured by a converted school bus owned and driven by the other defendants, Gary D. Kilmartin and Terry Luttrel.

The Wrights initially sued only Kilmartin and Luttrel, but they later added Scott as a defendant on the theory that his negligence in colliding with the bridge abutment was a proximate cause of the two-vehicle collision that injured Sheila. About ten days before trial Scott filed an offer to confess judgment pursuant to Iowa Code chapter 677 (1983), proposing to settle for $4000 and court costs while leaving open the Wrights' claims against Kilmartin and Luttrel. The offer to confess was served on the Wrights on February 6, 1986, and filed the next day. On Friday, February 14 both attorneys for the Wrights telephoned the Scott's attorney, indicated that was the last day for accepting the offer, and stated that the settlement agreement was accepted. The attorneys for each side at that time discussed limitations on the agreement that would preserve the Wrights' claims against the remaining defendants, and they also agreed on the manner of payment. The Wrights had authorized their attorneys to accept Scott's settlement proposal, and on the evening of February 14 the Wrights were told the proposal had been accepted.

The Wrights later that evening phoned their attorneys and raised questions concerning how the settlement would affect their claims against Kilmartin and Luttrel, the remaining defendants. Lewis Wright testified:

Q. Had you and Mrs. Wright discussed the offer to confess judgment and what effect it would have upon any other judgment that you would have? A. We had talked about it, but we didn't have any idea what effect it would have. Our understanding was that it was just releasing Mr. Scott and our other judgment would still stand.

The Wrights arranged to meet with the attorneys on the following Monday, February 17, and at that meeting their attorneys told the Wrights their understanding was not correct. Later on that Monday, February 17, the Wrights' attorneys phoned Scott's attorney, said the Wrights did not fully understand the effect the settlement agreement would have on their remaining claims, and said the Wrights no longer considered the settlement satisfactory and acceptable. They followed with a letter advising Scott the Wrights would not accept the settlement offer.

Scott immediately filed a motion to enforce the settlement agreement. An evidentiary hearing on the resisted motion was held before Judge Thomas L. Koehler, who overruled the motion following the hearing. It is noteworthy that the parties presented the issue whether the case had been settled to the district court without suggesting that the issue was appropriately presented in a separate action or through the filing of additional pleadings to frame the issue. We therefore do not decide whether the procedure used in this case to present the issue to the district court was correct.

In its ruling the district court found that the Wrights' attorney had "indicated" to Scott's attorney that the offer was to be accepted based upon what Wrights' attorneys had been told by their clients, but the court also found that "the plaintiffs were confused and did not understand the law of comparative negligence at the time (due to the fact that the plaintiffs thought that the acceptance of the offer would not affect potential judgments against the other defendants)." The court held the agreement unenforceable on the ground that "[t]here was no informed and voluntary consent to" Scott's offer due to "misunderstanding of the law." The trial court held in the alternative that Scott had not shown compliance with time constraints set forth in Iowa Code chapter 677, providing that an offer to confess judgment must be accepted within five days of when it is made.

With the motion to enforce settlement agreement overruled, the case proceeded to trial, and based upon a jury verdict judgment was entered in favor of Wrights and against Scott for actual and punitive damages.

I. The law favors settlement of controversies. A settlement agreement is essentially contractual in nature. Wong v. Bailey, 752 F.2d 619, 621 (11th Cir.1985); Linn County v. Kindred, 373 N.W.2d 147, 149-50 (Iowa App.1985); Jallen v. Agre, 264 Minn. 369, 373, 119 N.W.2d 739, 743 (1963); 15A C.J.S. Compromise and Settlement § 1, at 170 (1967). The typical settlement resolves uncertain claims and defenses, and the settlement obviates the necessity of further legal proceedings between the settling parties. We have long held that voluntary settlements of legal disputes should be encouraged, with the terms of settlements not inordinately scrutinized. See, e.g., Bakke v. Bakke, 242 Iowa 612, 618-19, 47 N.W.2d 813, 817 (1951); Messer v. Washington Nat'l Ins. Co., 233 Iowa 1372, 1380, 11 N.W.2d 727, 731-32 (1943).

Without question Scott made a valid offer of settlement to the Wrights, and the offer was supported by...

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    ...of legal disputes should be encouraged, with the terms of settlement not inordinately scrutinized.'") (quoting Wright v. Scott, 410 N.W.2d 247, 249 (Iowa 1987)).3 From a review of relevant case law, it is clear that the Eighth Circuit Court of Appeals has considered whether releases were "k......
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    ...finding the settlement agreement void insofar as it allegedly ran afoul of the Iowa Code of Professional Responsibility for Lawyers. In Wright v. Scott, we expounded upon the wisdom, nature, and guiding principles of settlement The law favors settlement of controversies. A settlement agreem......
  • Phipps v. Winneshiek County
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    ...claim for damages. We agree with the Phipps that settlement agreements are essentially contractual in nature. Wright v. Scott, 410 N.W.2d 247, 249 (Iowa 1987); Thornton v. Hubill, Inc., 571 N.W.2d 30, 32 (Iowa App.1997). In fact, we utilize contract principles when interpreting settlement a......
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