When is a Settlement a Settlement?


I was involved in a jury trial a few years ago in Philadelphia where I represented one of the defendants. The case involved a construction dispute stemming from the installation of a new roofing system. The plaintiffs had sued their contractor for damages alleged to their home. The case was near the conclusion of a several-day jury trial. All testimony had been concluded, and the case was about to be sent to the jury. During a break, the parties had discussed settlement and had even agreed upon a dollar amount ($60,000.00). However, the terms of the “release” of all claims were being discussed, which was needed to finalize the settlement.

When the judge returned to the courtroom after the break, one of the attorneys informed the judge that: “Your Honor, we may have a settlement.” The judge, who was a bit of a character, responded that: “You either do or you don’t (have a settlement), it’s like being pregnant.” As the jury was waiting to be sent to deliberate, the judge, after some discussion, decided to move forward, and to instruct the jury to proceed with deliberations. The judge felt that there was no clear settlement. After the jury was sent to deliberate, the sides continued to discuss the terms of the release. However, the jury quickly advised the courtroom staff that a verdict had been reached. The jury was seated and issued a verdict fully in favor of the defendants. Therefore, the plaintiffs, who had thought they had a $60,000.00 settlement, were left with nothing.

The issue as to whether a settlement had been achieved was appealed by the plaintiffs. The plaintiffs were successful on appeal, as the trial judge’s ruling that there had not been a settlement was overturned. The Superior Court, which heard the appeal, ruled as follows: “The undisputed evidence of record clearly establishes an expression of mutual assent between the parties sufficient to create a binding settlement agreement. Moreover, there is no evidence of record that any controversy arose about the inclusion of a particular provision in the subsequently proffered formal release. Defense counsel does not assert that Appellants’ counsel ever rejected the proffered written draft of the release or that Appellants’ counsel had made any proposal for a more limited release than was already agreed upon shortly after the lunch recess. The record simply does not support the trial court’s conclusion that it was the parties’ intention not to be bound until a draft of the release was at least approved if not executed. Accordingly, we find that the trial court’s conclusion that there was no orally enforceable contract was clearly erroneous.

The transcript of the appellate decision is available to read here.

So- What constitutes a legal settlement?

A “settlement” is a binding resolution of all material terms. As you can see from this case, however, the parties need not necessarily “dot every I and cross every t” in order for a valid settlement to be found. Moreover, as you can see from this case, a settlement may be achieved at any time, before or after court proceedings begin. Many times settlement terms are offered and agreed upon even before a lawsuit is filed.

The outcome of a case before a judge and/or jury can be risky.

The Likelihood of a Settlement in Civil Disputes

The vast majority of civil disputes are settled out of court. With courts bogged down with cases, most legal matters, whether it is a divorce proceeding, a personal injury matter or a contract quarrel, are settled out of court. Few wish to take a chance with the unpredictability of leaving the outcome of a case to a judge and/or jury.

The Advantages of a Settlement

1.     Privacy- If you and another party reach an agreement to resolving your issue, the terms of your settlement can include confidentiality. The public won’t know your business, and both parties will be forbidden to discuss the terms of the resolution.

2.     Cost- The costs of trying a case are extremely expensive. For cases such as medical malpractice matters, expert witness fees, extensive depositions during the discovery process, and travel costs are common. By settling the case, many of these expenses can be avoided.

3.     Stress- If you find yourself entangled in a legal matter, your stress level may be through the roof. Stress from a legal case may take a toll on one’s mental health, due to the uncertainty of the outcome, and preparation and anticipation of telling one’s story on the witness stand and being subjected to cross examination.

4.     Finality – Should your case go to trial, no matter who “wins” there’s always the chance for an appeal, thereby drawing out the dispute even longer. Settlement agreements are rarely appealed.

Scott Bonebrake practices personal injury law in Media, PA, and has been a licensed attorney for 27 years. Please feel free to contact Scott if you have any legal questions, including those regarding settling your legal dispute. You can reach Scott at 610-892-7700, or at sbonebrake@noelandbonebrake.com.