Background
SRM suffered significant injuries when Michael Stuart Lester’s vehicle struck him as he walked his bicycle across a road. SRM became legally incapacitated and required continuous care. 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 cap on assigned-claim benefits.
During settlement negotiations, SRM’s counsel described a proposed resolution for the remaining funds as “contingent/tentative” because of a substantial Medicare lien. The parties exchanged multiple proposed revisions to a release, but neither the release nor the proposed dismissal order was signed. Before Medicare approved any lien reduction shown in the record, Allstate revoked its prior offers after receiving notice that Medicare sought more than $257,000. The circuit court denied SRM’s motion to enforce the alleged settlement 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, unconditional acceptance. At most, it was an acceptance that would become effective upon a future contingency. Until that contingency occurred, neither party was bound and Allstate remained free to withdraw its offer. The documents offered to establish Medicare’s approval were dated August 10, 2023, after Allstate withdrew its offers on July 25.
The court also held that the parties’ emails did not satisfy MCR 2.507(G). Under that rule, a litigation settlement is binding if made in open court or if evidence of the agreement is in writing and subscribed by the party against whom enforcement is sought or that party’s attorney. No agreement was made in open court here, and the continuing revisions, unsigned documents, and SRM’s counsel’s failure to respond to Allstate’s final June 29 email did not indisputably reflect a final written agreement.
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.
- Under MCR 2.507(G), a litigation settlement may be enforceable if made in open court or if evidenced by a subscribed writing; the negotiation emails here did not establish a final agreement through either route.
- Because Allstate revoked its offers before the record showed Medicare’s approval of the lien reduction, the trial court properly refused to enforce the proposed settlement.
Why It Matters
The decision underscores that parties negotiating around Medicare liens or other contingencies should clearly identify when acceptance becomes effective and obtain an unambiguous final agreement. Ongoing revisions and unsigned settlement documents may show negotiations rather than assent to settled terms.
For Michigan litigators, the opinion also emphasizes the two distinct methods recognized by MCR 2.507(G): placing the agreement on the record in open court or creating written evidence of the final agreement subscribed by the party to be bound or that party’s attorney.