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May v. Anderson9/22/2005
f the release need to be absolutely decided so long as the parties agree upon the essential terms; in that case, the indemnification language constituted an essential term.
Likewise, in Bontigao v. Villanova University, the court determined that a settlement agreement was not enforceable, even though the parties had agreed upon the settlement amount and negotiated over many of its terms, because the scope of the release remained an unresolved material term.
We agree with the Nichols and Bontigao courts that an enforceable settlement agreement cannot exist when the parties have not agreed to the essential terms of the release because these provisions constitute a material term of the settlement contract. Release terms are not a mere formality. They are an important reason why a party enters into a settlement agreement. If the prevention of future litigation is one of the primary goals of a settlement, the essential terms of the release needed to achieve that goal are material to the settlement agreement.
Although some courts have stated that the terms of a release are inconsequential in determining whether the parties have reached an agreement, these cases are either distinguishable from the instant case or treat a release as a mere formality. For example, in Earnest & Stewart, Inc. v. Codina, a case involving offers of judgment, the court held that "the dismissal and releases referred to in the offer [of judgment] were not 'conditions' of the settlement, but rather mechanical and legally inconsequential means of effecting it. They thus should be regarded as mere surplusage, the existence of which should not affect substantial rights." Earnest is not analogous to this case. Unlike the effect of the pre-litigation settlement agreement here, once a case has been filed in court, the bar to relitigating that case after an offer of judgment has been accepted does not depend on the terms of a release but rather on the claim preclusion effect of res judicata.
Here, the parties agreed upon the essential terms of the release. The district court found that CCIE made an offer to pay the full policy proceeds in exchange for a general release of all claims and a covenant not to sue. Schwartz had authority to negotiate on behalf of the Mays and accepted the offer in writing. The finalized release document prohibiting the Mays from pursuing any action, not just against the Andersons, but also against Curtis and all other parties who could be liable for the tragic accident, merely reiterates the release terms of the accepted settlement agreement. Regardless of the release document's language, however, since the parties agreed upon the essential terms of the release, i.e., all claims, an enforceable settlement agreement exists. The fact that the Mays refused to sign the proposed draft release document is inconsequential to the enforcement of the documented settlement agreement. The district court was able to determine what was required of the respective parties under the release terms of the settlement agreement and properly compelled compliance by dismissing the Mays' action. Accordingly, we affirm the district court's judgment.
ROSE and GIBBONS, JJ., concur.
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