MERCURY INSURANCE COMPANY OF FLORIDA, APPELLANT,
v.
MIGUEL A. FONSECA, APPELLEE
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Mercury Insurance Company appealed from a trial court's determination that no binding settlement was formed between it and Miguel Fonseca over a car accident claim. The Third District Court of Appeal reversed, holding that Mercury's tender of policy limits with a settlement check and proposed release constituted acceptance of Fonseca's demand letter offer, forming a binding settlement contract.
A binding settlement contract was formed. Fonseca's demand letter constituted an offer to settle, and Mercury's tender of the full policy limits with a check and proposed release constituted acceptance. The proposed release was an implicit and customary part of any settlement agreement and did not transform Mercury's acceptance into a counteroffer.
[1] A demand letter for policy limits constitutes an offer to settle.
[2] A settlement agreement is governed by the law of contracts, requiring offer and acceptance.
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Join FLexlaw to unlock all legal intelligence“To form a binding contract there must be an offer and acceptance.”
Establishes the foundational contract law principle governing settlement agreements.
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Join FLexlaw to unlock all legal intelligenceFonseca was injured in a car accident allegedly caused by a Mercury Insurance policyholder. Fonseca's counsel sent Mercury a demand letter requesting …
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Appellee, Miguel Fonseca, was injured in a car accident allegedly caused by a policyholder of Appellant, Mercury Insurance Company of Florida. Fonseca sued the policyholder, who raised the existence of a settlement as an affirmative defense. In a separate action, Mercury sought a declaratory judgment recognizing the validity of the same settlement. The trial court consolidated the two cases. The single issue on appeal is whether correspondence between Fonseca and Mercury was sufficient to form a settlement. The trial court held that it was not. We disagree and reverse.
After the accident, counsel for Fonseca sent Mercury a letter stating that:
This letter shall serve as a formal demand for a tendering of any and all available policy limits including umbrella coverages.
Two days later, Mercury responded:
As requested, this carrier is tendering it’s [sic] bodily injury policy limits. Accordingly, enclosed is this carrier’s settlement check in the amount of $10,000.00.
Also enclosed is a proposed settlement release which is not intended to be a final instrument until you have approved. If you should require any changes or additions, please advise. Otherwise, please see that [Fonseca] executes the release.... ”
*417We review de novo the legal question of whether a contract was formed. Munroe v. U.S. Food Serv., 985 So.2d 654, 655 (Fla. 1st DCA 2008). The law of contracts governs settlements. Robbie v. City of Miami, 469 So.2d 1384, 1385 (Fla.1985). To form a binding contract there must be an offer and acceptance. See Etheredge v. Barkley, 25 Fla. 814, 6 So. 861 (1889).
The demand letter sent by Fonseca’s counsel is not unique and the question of whether it constitutes an offer has already been answered by this Court. Peraza v. Robles, 983 So.2d 1189, 1190 (Fla. 3d DCA 2008); see Nichols v. Martell, 612 So.2d 657, 658 (Fla. 3d DCA 1993) (finding that a similar demand letter was more than a mere invitation to settle). The demand letter in Peraza stated “Please tender the policy limits within fifteen (15) days or we will consider [the insurance company] is acting in bad faith.”1 Here, as was the case in Peraza, the demand letter constituted an offer to settle.
Once Fonseca offered to settle, all that was required to form a binding contract was acceptance by Mercury. In Erhardt v. Duff, 729 So.2d 529 (Fla. 4th DCA 1999), Erhardt was injured when he and Duff were in a car accident. Erhardt sent to Duffs insurance company a demand for tender of the policy limits. See id. Like Mercury, the insurance company in Er-hardt agreed to settle only if the injured party signed a release. Id. at 530. The court determined that the requested release did not transform the insurance company’s acceptance into a counteroffer, holding that “the execution of the release was implicit as part of the tender, and not an additional element of the agreement.” Id.; Nichols, 612 So.2d at 658 (accepting an offer to settle an auto insurance claim does not become a counteroffer merely because the tender of policy limits includes a release). A document releasing an insurance company from liability for claims arising from the same incident for which the full policy limits were tendered, particularly where the injured party is permitted to modify such a release, is the kind of usual settlement document implicit in any settlement agreement.2 See Peraza, 983 So.2d at 1190; Nichols, 612 So.2d at 658; Erhardt, 729 So.2d at 530. Here, Fonseca offered to settle, Mercury accepted, and a contract was formed.
Reversed and remanded.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Grant v. Lyons, 17 So. 3d 708 (Fla. 4th DCA 2009)…incident for which the full policy limits were tendered, particularly where the injured party is permitted to modify such a release, is the kind of usual settlement document implicit in any settlement agreement.” Mercury Ins. Co. of Fla. v. Fonseca, 3 So. 3d 415, 417 (Fla. 3d DCA 2009). Where the release contains objectionable, not “usual” terms, no acceptance of the offer occurs. In Peraza v. Robles, 983 So. 2d 1189 (Fla. 3d DCA 2008), after the plaintiff made a policy limits demand, the insurance company…
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Gonzalez v. Claywell, 24 So. 3d 1260 (Fla. 1st DCA 2009)…counteroffer, not an acceptance of the original offer. Because the plaintiff immediately rejected the counteroffer by sending the check back and declining to sign the proposed release, there was no agreement. See Mercury Ins. Co. of Fla. v. Fonseca, 3 So. 3d 415, 417 n. 2 (Fla. 3d DCA 2009) (an insured’s immediate rejection of the insurer’s release provides evidence that a contract was not formed). The question here is not whether the plaintiff should have accepted the check. All we need to know to conclude…1 / 2
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Wallen v. Tyson, 174 So. 3d 1058 (Fla. 5th DCA 2015)…to the form of the release in Exhibit “A”, then a general release to effectuate a settlement as contemplated by Erhardt v. Duff, 729 So. 2d 529 (Fla. 4th DCA 1999). 112 So. 3d at 627 (emphasis added). In Mercury Insurance Co. of Florida v. Fonseca, 3 So. 3d 415, 416 (Fla. 3d DCA 2009), the third district found an enforceable proposal where the proposal stated: “Also enclosed is a proposed settlement release which is not intended to be a final instrument until you have approved. If you should require any ch…
Previewing 3 of 5 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Robbie v. City OF Miami, 469 So. 2d 1384 (Fla. 1985)
- Etheredge v. Bolyn B. Barkley, 25 Fla. 814 (Fla. 1889)
- Erhardt v. Duff, 729 So. 2d 529 (Fla. 4th DCA 1999)
- Nichols v. Martell, 612 So. 2d 657 (Fla. 3d DCA 1993)
- Ainsley Munroe v. U.S. Food Serv. & Ace Am. Ins., 985 So. 2d 654 (Fla. 1st DCA 2008)
- Peraza v. Robles, 983 So. 2d 1189 (Fla. 3d DCA 2008)