CSAA Insurance Exchange V. Raed Hodroj

• Published date: 03 January 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Trials & Appeals & Compensation
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Author: Mr Michael Velladao

Acceptance of Settlement Offer Constituted a Binding Contract, Notwithstanding Failure to Reduce the Parties' Settlement to a Formal Agreement

(December 2021) - In CSAA Ins. Exch. V. Hodroj, 72 Cal.App.5th 272 (December 1, 2021), the California Sixth District Court of Appeal affirmed the trial court's entry of summary judgment in favor of CSAA in connection with a dispute arising out the settlement of a bodily injury claim made by Raed Hodroj ('Hodroj') against CSAA Insurance Exchange's ('CSAA') insured. The claim arose out of an automobile accident. Hodroj's attorney offered to settle his claim for bodily injury for policy limits, conditioned on receipt of the policy face page, a declaration confirming policy limits and delivery of a check within 21 days of acceptance of the offer. The offer also noted CSAA could condition its acceptance on Hodroj signing a written release of all bodily injury claims against CSAA's insured.

Fifteen days later, CSAA send a written acceptance of the offer. The letter accepting the offer included the policy face page and a signed declaration confirming policy limits. In addition, CSAA sent a formal release for signature by Hodroj. A $100,000 check was sent separately with the proviso that it should not be cashed until the release was signed.

The next day, Hodroj advised that there was no settlement as the release sent by CSAA included Hodroj's claim for property damage. Hodroj contended that the release constituted a counteroffer, abrogating the parties' settlement. Hodroj than filed a lawsuit against CSAA's insured alleging bodily injury and property damage claims. In response, CSAA file a separate lawsuit for breach of contract contenting that Hodroj's settlement offer and CSAA's acceptance constituted a binding agreement.

Subsequently, CSAA filed a motion for summary judgment arguing that Hodroj breached the contract by filing a lawsuit alleging bodily injury damages. Thereafter, the trial court granted CSAA's motion, finding that the parties entered into a binding contract, notwithstanding the absence of a formal agreement.

In affirming the trial court's entry of summary judgment, the Court of Appeal reasoned as follows:

A well-established principle of contract law dictates the result here: when parties agree on the material terms of a contract with the intention to later reduce it to a formal writing, failure to...