The Court of Appeals for the 14th District of Texas has ruled that a settlement agreement is not valid, even if the other party effectively accepted the settlement offer, if the accepting party does not accept all material terms of the offer.
Amedisys Inc. (“Amedisys”) sued Kingwood Home Health Care, LLC (“KHHC”) for several causes of action allegedly arising from two former employees’ acceptance of employment with KHHC. KHHC made a written offer to settle its claims. Amedisys sent a letter back to KHHC accepting the terms of the offer. Thereafter, KHHC refused to pay and filed a withdrawal of consent to settle. Amedisys amended their petition to add a claim for breach of the settlement agreement. The Court then granted Amedisys’s motion for summary judgment on this claim and ordered KHHC to pay pursuant to the settlement agreement and awarded attorney’s fees. KHHC appealed.
The Court’s analysis
The language in KHHC’s original offer of settlement letter stated:
…to settle all claims asserted or which could have been asserted by Amedisys against KHHC in the above referenced case. This full and final offer is for all monetary damages claimed – including attorney’s fees, costs and interest that were recoverable as of the date of this offer by KHHC.
In response to this offer of settlement, KHHC sent a letter containing the following language:
…Amedisys hereby accepts KHHC’s offer to settle all monetary claims asserted against KHHC…
KHHC argued that Amedisys failed to accept a material term of KHHC’s offer – that the settlement would include all claims which could have been asserted against KHHC. Amedisys argues that its statement all monetary claims asserted was sufficient to accept the offer. The Court ruled that because Amedisys’s acceptance letter did not address all claims which could have been asserted against KHHC, they did not accept all material terms of the offer, it was not a valid acceptance of the offer, and the parties did not have a binding settlement agreement. They reversed and remanded.
It is important to take a look at the exact language of any settlement offer that you receive. Although you may have the intent to accept the offer, if you don’t address all material terms of the offer, you may not have a binding settlement agreement.