Assume we have a personal injury plaintiff who is claiming both past and future damages because of personal injuries due to the defendant’s conduct. Assume further that settlement negotiations commence unbeknownst to the defendant or defendant’s attorney, and before a settlement is reached, the plaintiff dies unrelated to the underlying event giving rise to the lawsuit. Disclosure of the plaintiff’s death during settlement negotiations is not disclosed, but ultimately opposing counsel “settles” the case with the defendant for an agreed-upon amount. Thereafter, a suggestion of death is filed with the court after the “settlement,” and a personal representative of the estate is appointed in the probate court. The release is returned with the personal representative’s signature affixed to it. This is the first notice of the plaintiff’s death provided to the defendant or the defendant’s counsel. Is there a valid and enforceable settlement?
The death of any party during the negotiations calls into question the enforceability of the settlement, including the execution of a release by a personal representative who was not a party when the “settlement” was reached. The question then is whether a meeting of the minds occurred between the parties, given the death of the plaintiff was not disclosed until after the “settlement” was reached.
“Contract law governs the question of whether the parties entered into an enforceable settlement agreement.” Sansone Law, LLC v. J&M Sec., LLC 589 S.W. 3d 74 (Mo App. E.D. 2019). “To establish a legal, valid settlement agreement, one must prove the essential elements of a contract: offer, acceptance, and consideration.” Id. The creation of a valid settlement agreement requires a meeting of the minds and mutual assent to the essential terms of the agreement. Missouri has a public policy that favors settlement of the litigation, and because of this fact, courts will generally enforce settlement agreements when warranted.
A valid contract requires bargained for consideration. EM Med., LLC v. Stimwave, LLC, 626 S.W. 3d, 899 (Mo App. E.D. 2021). The elements of an offer and acceptance require a mutual agreement – a meeting of the minds – between the contracting parties. The parties must assent to the same thing, in the same sense and at the same time. In our hypothetical, a party who was unaware of the death of a party plaintiff has a compelling argument that no meeting of the minds occurred because the parties to the settlement agreement were not aware of a material term. In addition, the fact that the injured party did not execute the release, only his/her representative, calls into question the issue of acceptance. An acceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. When the personal representative executed the release, it was not done so in a manner invited or required by the release. Instead, the parties bargained for a release by the deceased party, which was made impossible by his/her death.
As a tenet of contract law, there must be mirror-image acceptance. A contract does not exist without a definite offer and mirror-image acceptance. Young v. Conley, 505 S.W. 3d 305 (Mo. App. W.D. 2016). When the release was returned without the deceased party’s signature, the modified release contemplated an additional term and otherwise negated the original offer, which required the deceased party to execute the release form.
Most jurisdictions follow the general rule finding the relationship between an attorney and client in a lawsuit as one of agency. Upon the death of the attorney’s client, that relationship terminates, with all authority incidental thereto. The attorney has no further authority to take any steps whatsoever on behalf of the deceased party unless and until authorized by the personal representatives of the deceased. State ex rel. White v. Terte, 293 S.W. 2d 6 (Mo Court App. 1956).
All previous authority extended to the attorney as part of an earlier attorney-client relationship terminated upon the death of the client. The attorney has no further authority to take any further steps unless or until authorized by a duly qualified personal representative. Because the personal representative was appointed after the “settlement” was reached, the personal representative cannot retroactively ratify an earlier settlement. In sum, neither the deceased’s attorney nor the personal representative can establish an enforceable settlement. This is the rule even if the injured party allegedly manifested an intent to settle the case for the sum provided before his/her death.
Article written by Co-Founder and Principal Attorney Don O’Keefe | Gausnell, O’Keefe & Thomas