No takebacks? Settlement offer missing a zero can be withdrawn, appeals court says
Image from Shutterstock.com.
A settlement offer for one-tenth of the intended amount can be rescinded after it was mistakenly sent to an insurer by a lawyer’s paralegal, a Florida appeals court has ruled.
The paralegal for auto crash plaintiff Kyle Dale had offered to settle for $10,000, rather than the $100,000 policy limit. Dale’s lawyer realized that a mistake had been made when State Farm Automobile Insurance Co. quickly sent a $10,000 check the next day.
First, the error was “due to a unilateral mistake.” Second, the plaintiff had not authorized an offer to settle for the lower amount.
The paralegal was supposed to send a $10,000 offer to the plaintiff’s own carrier for uninsured/underinsured coverage. A $100,000 offer was supposed to be sent to State Farm, the defendant’s insurance company. The paralegal transposed the offers.
In a motion to withdraw the offer, Dale’s lawyer said the error was obvious because the defendant had already made offers to settle in excess of $10,000, and the plaintiff already had more than $58,000 in medical bills. The lawyer attached his email instructions to the paralegal.
State Farm argued that the contract could not be rescinded because there had been an offer, acceptance and valid consideration.
The appeals court cited a 1965 Florida Supreme Court case that held that a contract may be rescinded based on a unilateral mistake if the mistake is not due to an inexcusable lack of due care and rescission would not be inequitable.
In the instant case, the error “is simply the result of miscommunication between the paralegal and the attorney, not inexcusable negligence,” the appeals court said. “The record is clear that this [settlement offer] was never authorized by plaintiff, and that it was the result of a simple mistake.”