By: Daniel Hinds
In its recently released decision Kimberley v. Riggi, 2024 ONSC 4162, the Superior Court held that a settlement agreement between the plaintiff’s former lawyer and the insurer’s adjuster was valid and enforceable. What makes this case so interesting? The settlement agreement’s release was never signed by the plaintiff.
The Relevant Facts
This case arose out of a motor vehicle accident that occurred in December of 2017 in Plympton-Wyoming, Ontario. As part of their defense, the insured argued that prior to the issuance of the statement of claim, the plaintiff had already settled her claims arising from the December 2017 accident with the defendants’ insurer, Allstate, for $20,000 on an all-inclusive basis. As such, the defendants brought a motion for a declaration that this settlement was valid and enforceable, and sought summary judgement to dispose of the matter.
The settlement was negotiated by the plaintiff’s former counsel and the insurance adjuster from Allstate. Through a chain of emails, the plaintiff’s former counsel shared the adjuster’s offer of $20,000 with the plaintiff and urged her to accept based on the evidence surrounding the claim. The plaintiff agreed, granting permission to their former counsel to proceed with the offer if they thought it was best. As such, the plaintiff’s former counsel accepted the adjuster’s offer by email and requested that the adjuster provide the release for the plaintiff to sign. The adjuster provided former counsel with the full and final release. However, the plaintiff never signed the release proposed by the defendants. Instead, the plaintiff retained new counsel, and issued a statement of claim.
The Decision
In holding that the settlement agreement was binding on the plaintiff, the court applied the two-pronged test from Olivieri v. Sherman to determine whether the court should uphold the previously reached settlement agreement. As the court explains, this test requires that there was both a mutual intention between the parties to create a legally binding contract, and agreement between the parties as to all the essential terms of the settlement.
As part of its finding that the settlement agreement was binding, the court found that the plaintiff’s former counsel had been retained to represent the plaintiff. The retainer had been signed, and former counsel was the one to initiate settlement discussions with the insurer on behalf of the plaintiff. Further, former counsel was the one to provide the adjuster with the plaintiff’s relevant documentation to assess the claim, such as medical records. Thus, former counsel’s authority to settle on behalf of the plaintiff was not in issue and there was no reason for the adjuster to assume otherwise.
The plaintiff also argued that in failing to sign the release, there can be no binding settlement. However, the court disposed of this contention swiftly. As the court explains, caselaw consistently holds that “absent a contractual stipulation to the contrary, a settlement agreement implies a promise to furnish a release.” As such, while an executed release is not necessary to establish a binding settlement agreement, its execution at some time is implied in the absence of evidence that the parties intended otherwise. The court ultimately held that the settlement was valid and enforceable, and granted summary judgment in accordance with the settlement terms agreed upon by the parties.
Conclusion
Settlement agreements are a common result of the negotiation process of insurance claims. As more facts are revealed and the parties’ positions shift, it becomes increasingly likely that a settlement agreement will be reached. As such, it is crucial that you select knowledgeable counsel that can help you navigate these difficult negotiations and bring finality to your claims. This includes making sure that all loose ends are tied, and the terms of any release fully protect your interests. If you are dealing with an insurance claim that you’re hoping to settle, please contact us.
Daniel Hinds is a summer student at ZTGH and the author of this blog. If you have any questions about this blog, please contact Daniel by email at [email protected].
