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Enforceability of a Verbal Release

Generally, settlement agreements quickly get reduced to writing; however, recently in Gilbert v. Fitz the Dallas Court of Appeals established that a verbal settlement release can also be legally enforceable.

In Gilbert the plaintiff, Gilbert, sought to recover for injuries suffered in a car accident from July 2014 involving defendant, Fitz, and GEICO, her insurer. A few days after the incident at issue, Gilbert received a call from Alvarez, the adjuster employed by GEICO. Alvarez recorded their telephone conversation, with the consent of Gilbert. Alvarez then offered to settle Gilbert's claim for the total amount of $500.00 and reasonable and related injury medical expenses incurred from the incident to which Gilbert accepted. Gilbert received a settlement check for $500. Subsequently, Gilbert retained an attorney asserting that GEICO changed the terms of the settlement and he had decided to pursue his claim.

Gilbert asserted that the settlement was not effective without a written agreement. Gilbert sued Fitz for negligence stemming from the accident, to which Fitz counterclaimed for breach of contract seeking specific performance of the contract and attorney fees. Both parties sought summary judgment. The trial court granted Fitz's motion for partial summary judgment, but did not rule on Fitz's request for attorney fees. Gilbert filed a motion for rehearing, but the trial court denied and signed a final judgment dismissing his claims and awarding Fitz $10,000 in attorney fees.

The Dallas Court of Appeals reviewed the trial court's denial. The court addressed (1) that the summary judgment evidence failed to conclusively establish that there was a meeting of the minds and (2) that there was a genuine issue of fact as to whether GEICO materially breached or repudiated the agreement. On the first issue, the Court ruled that there was no confusion about which claims were being settled. Gilbert agreed to release his claim in exchange for $500 and payment of his medical expenses, which GEICO would pay as soon as the bills were provided by Gilbert. On the second issue, GEICO's failure to pay the medical bills of Gilbert was not a material breach because Gilbert had not provided the bills. Further, the language GEICO provided on the check that Gilbert was to release his claim in full was not a repudiation or material breach because Gilbert failed to provide the medical bills and GEICO was unable to pay its obligation.

Thus, a verbal release or settlement of all claims can be as enforceable as a written agreement, and insureds and insurers alike should be aware of the significance of recorded statements and verbal releases.

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The Bassett Firm

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