Background
SRM suffered significant injuries when Michael Lester’s vehicle struck him as he walked his bicycle across a road. Because SRM lacked no-fault coverage, his claim was assigned through the Michigan Assigned Claims Plan to Allstate Insurance Company. After earlier payments, $199,145 remained under the applicable $250,000 statutory limit on benefits payable by an assigned insurer.
SRM and Allstate exchanged emails and draft releases concerning payment of the remaining amount. SRM’s counsel characterized the contemplated settlement as “contingent/tentative” because of a substantial Medicare lien and continued proposing revisions to the release. Allstate sent a revised release and dismissal order on June 29, 2023, but SRM’s counsel did not respond or sign either document. After Medicare demanded payment from Allstate, Allstate revoked its previous settlement offers on July 25, 2023. The circuit court denied SRM’s ensuing motion to enforce the alleged settlement and his motion for reconsideration.
The Court’s Holding
The Court of Appeals affirmed, holding that the parties never formed an enforceable settlement agreement. SRM’s stated acceptance was conditional on Medicare approving a lien reduction and therefore was not the absolute and unconditional acceptance required to form a contract. At most, it was an acceptance that would become effective upon a future contingency, leaving either party free to withdraw before that contingency occurred.
The record showed that Allstate withdrew its offer on July 25, while SRM’s documentation supporting Medicare’s approval was dated August 10. The parties’ continuing revisions to the release, SRM’s failure to respond to Allstate’s final proposed documents, and the absence of signatures also meant there was no writing indisputably reflecting a final agreement as required by MCR 2.507(G).
Key Takeaways
- A conditional response to a settlement offer is not an unconditional acceptance and does not create a binding contract before the stated contingency occurs.
- Either party may withdraw from a tentative settlement before an unsatisfied condition precedent is fulfilled.
- Negotiation emails do not satisfy MCR 2.507(G) unless they indisputably reflect a final agreement and are subscribed by the party against whom enforcement is sought or that party’s attorney.
Why It Matters
The decision underscores that settlement emails must establish clear assent to final, material terms. Describing an agreement as tentative or contingent, continuing to revise release language, and leaving proposed closing documents unanswered can prevent enforcement.
When Medicare liens or other third-party approvals affect a settlement, counsel should specify whether approval is a condition to contract formation and obtain a subscribed writing confirming the final agreement once that condition is satisfied.