Background
SRM suffered significant injuries when Michael Stuart Lester’s vehicle struck him as he walked his bicycle across a road. SRM required multiple surgeries and continuous care and was later declared legally incapacitated. Because he 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.
During settlement negotiations, SRM’s counsel described a proposed settlement for the remaining amount as “contingent/tentative” because of a substantial Medicare lien. The parties exchanged several proposed revisions to a release, but neither the release nor a proposed dismissal order was signed. After Medicare demanded payment from Allstate, Allstate revoked its prior settlement offers on July 25, 2023. SRM moved to enforce the purported settlement, but the trial court denied the motion and later denied reconsideration.
The Court’s Holding
The Michigan Court of Appeals affirmed, holding that the parties did not form an enforceable settlement agreement. SRM’s stated acceptance was conditioned on Medicare approving a lien reduction and therefore was not an absolute and unconditional acceptance. Because the evidence of Medicare’s approval was dated after Allstate withdrew its offer, Allstate remained free to revoke the offer before the contingency occurred.
The court also held that the parties’ communications did not satisfy MCR 2.507(G), which requires a settlement to be memorialized in a writing that indisputably reflects a final agreement. The continuing exchange of proposed release language showed that negotiations remained ongoing, and SRM’s counsel never responded to Allstate’s final June 29 email requesting confirmation and a signature.
Key Takeaways
- A conditional acceptance of a settlement offer does not create a binding contract when the condition remains unsatisfied and the offer is withdrawn first.
- Negotiation emails can satisfy MCR 2.507(G), but only if they establish a meeting of the minds and indisputably reflect a final agreement.
- Unsigned releases and continued revisions to material language may demonstrate that the parties have not completed settlement negotiations.
Why It Matters
The decision underscores that parties negotiating litigation settlements must clearly document unconditional acceptance and final terms. Describing an agreement as tentative or contingent—and continuing to revise the release—can leave either side free to withdraw before the stated condition is satisfied.
For no-fault cases involving Medicare liens, counsel should obtain and document any required lien approval before treating a conditional settlement as binding.