Michigan Court of Appeals; Docket No. 333541
Judges Riordan, Boonstra, and Gadola; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Release and Settlements
CASE SUMMARY:
In this unanimous per curiam opinion assessing the validity of a facilitation agreement, the Michigan Court of Appeals held that plaintiff had settled her case and objectively manifested her assent to the agreement when she signed the document using “fake initials.” In affirming the trial court, the Court found that the signatures of plaintiff and of the parties’ attorneys satisfied the requirements of MCR 2.507(G), in spite of plaintiff’s subjective belief the agreement was not binding.
Plaintiff in this case, Karen Krake, was injured in an automobile accident. She and defendant, Auto Club Insurance Association, agreed to settle the case for $20,000. The parties and their respective attorneys each signed the agreement. According to plaintiff, she “penned” a signature using “fake initials” because she did not believe the agreement to be binding or final. She subsequently refused to sign a release or other documents pertaining to the agreement. After defendant refused to disburse the funds, plaintiff’s attorney filed a motion to enforce the agreement and to authorize her to sign in place of plaintiff. The trial court then ordered plaintiff and her attorney to have an additional meeting to resolve their differences. Sometime thereafter, plaintiff’s attorney moved to withdraw as counsel.
At a hearing on the outstanding motions, plaintiff initially denied signing the agreement. She later admitted to signing with “fake initials” because she did not understand the agreement at that time, and her attorney purportedly told her the document was not legally binding. Plaintiff further added that $20,000 was too low and that her case was worth at least $300,000. The trial court did not find plaintiff credible and reinstated the settlement agreement. Plaintiff, proceeding in propria person, appealed the Order of the trial court.
The issue before the Court was whether plaintiff had agreed to settle the suit. The Court concluded that the trial court had not erred when it enforced the agreement. It rejected plaintiff’s contention that there was no meeting of the minds because mutual assent is an objective manifestation.
In applying this standard, the Court relied on the “express words” and “visible acts” of each party, rather than their subjective beliefs. “An agreement to settle a pending lawsuit is a contract, and it must therefore meet all the legal requirements for contract formation, including offer, acceptance, and mutual assent or a meeting of the minds on all essential terms.” Defendant’s agreement to pay $20,000 constituted valuable consideration. All elements of contract formation coalesced at the time the plaintiff “penned” fake initials at the settlement meeting
“[E]ven if plaintiff did not subjectively believe that the agreement was final, her subjective belief cannot overcome her objectively clear and unequivocal act of signing the agreement. The agreement contained absolutely no indication that it was a draft, template, or otherwise not what it purported on its face to be—a memorandum of the terms of the parties’ agreement.”
Although plaintiff, “a college-educated woman” was “dissatisfied with the amount of the settlement,” she could not “disavow it merely because she had . . . a change of heart or made a bad bargain.” She and the attorneys for both sides agreed to settle her claim for $20,000 and she “subscrib[ed]” her initials.
The Court affirmed the Order and enforced the agreement since the parties had reached a legally binding settlement. Plaintiff was not permitted to recover medical or PIP benefits.
“The requirements of MCR 2.507(G), were . . . independently satisfied both by plaintiff’s signature and by the signature of her counsel. . . . Plaintiff’s objective act of signing the facilitation agreement clearly manifested her intent to assent to the facilitation agreement.”
