Tennessee Rule 68 Offer of Judgment Cannot be Revoked Within Ten Day Period

The Tennessee Court of Appeals recently decided an issue of first impression in Tennessee involving an offer of judgment.  The case of Kaitlyn Alexis McGinnis v. Aubie L. Cox, No. M2014-00102-COA-R3-CV, 2014 WL 5512451 (Tenn. Ct. App. 2014), discussed a situation where a plaintiff provided a Rule 68 offer of judgment and then revoked it within the ten day time period found in Tennessee Rule of Civil Procedure 68.  After the attempted revocation of the offer, the defendants went ahead and accepted the offer within the ten day timeframe provided under Rule 68.  The plaintiffs refused to comply with the offer of judgment.  The defendants filed a motion to enforce the offer of judgment in the Trial Court.  The Trial Court had a hearing and granted the motion to enforce the offer of judgment.  This issue was appealed to the Tennessee Court of Appeals.

The Tennessee Court of Appeals noted that there are no Tennessee cases that have addressed this issue in the past.  In this case the Court framed the appeal as being the singular issue of “whether a Rule 68 offer of judgment may be revoked by the offeror within the ten-day time period for acceptance on the basis that the offeror changed his mind?”  McGinnis at 2.  The text of Rule 68 of the Tennessee Rules of Civil Procedure is as follows:

At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against the defending party for the money or property, or to the effect specified in the offer, with costs then accrued. Likewise a party prosecuting a claim may serve upon the adverse party an offer to allow judgment to be taken against that adverse party for the money or property or to the effect specified in the offer with costs then accrued. If within 10 days after service of the offer the adverse party serves writt...

In Tennessee How Long Does a Settlement Offer Remain Open When No Expiration Time Period is Provided?

Analysis:  The Tennessee Court of Appeals recently decided an interesting case that discussed how long a settlement offer stays open when the settlement offer does not have a specific expiration date or any reference to how long the offer will remain open.  In the Tennessee Court of Appeals decision of Tonita Reeves v. Pederson-Kronseder, LLC d/b/a Pederson’s Natural Farms, Inc., No. M2013-01651-COA-R3-CV, 2014 WL 1285702 (Tenn. Ct. App. 2014) the employee and employer were preparing to arbitrate an age discrimination case.  Prior to the time of the arbitration the parties entered into settlement negotiations.

On June 29, 2012, a specific settlement proposal was made by defense counsel to the plaintiff after multiple prior emails discussing the concept of settlement (this proposal did not have any expiration date).  Defense counsel followed up with additional emails inquiring about the status of settlement but plaintiff’s counsel provided no specific response.  In the following month the parties engaged in additional written discovery and took additional depositions.  The arbitration was set for August 15, 2012.  Without any further offer being made, the plaintiff emailed defense counsel August 12, 2012, three days before the arbitration, and accepted the June 29, 2012 offer of settlement.  Defense counsel responded by stating that the June 29, 2012 offer of settlement was no longer viable due to the passage of time and the expenses that had been incurred since it was made.

Ultimately, the arbitration went forward and the plaintiff did not receive a favorable outcome at the arbitration.  As a result, the plaintiff filed a lawsuit in Chancery Court alleging breach of contract for the settlement proposal that was “accepted” prior to the mediation.  The trial court found there was no enforceable settlement agreement in this circumstance.  This was appealed to the Tennessee Court of Appeals.

The Tennessee Court of Appeals considered whether there was a legitimate settlement.  The Court basically found that settlement offers only remain open for a reasonable period of time even when there is no expiration date.  Reeves at 4, 5.  The court cited the rule in the Tullahoma Concrete case where the Court stated:

Settlement Agreement - In Tennessee can a party revoke a settlement agreement that was announced in open court before the final settlement order is entered?

Analysis:  The recent Tennessee Court of Appeals decision of Thomas Grigsby v. W. Arlen Harris, Sr., No. M2012-00370-COA-R3-CV, 2012 WL 6449782 (Tenn.Ct.App. December 12, 2012) discussed whether a party can withdraw a settlement agreement after it has been announced in open court.  This case involved a boundary line dispute between two parties.  Grigsby at 1.  On the morning of the trial, the parties announced in open court that they reached a settlement agreement resolving the boundary line dispute. Grigsby at 1.  The parties agreed to swap two pieces of property and a rough non-scale drawing was presented to the court at the hearing showing the parties agreement to the land swap. Grigsby at 1.  An order of the court was not entered at that time but rather the parties represented they were going to determine the exact terms of the swap based on a new survey that was to be completed and then the parties would submit a final order. Grigsby at 1, 2. 

After the hearing one of the parties decided they no longer wanted to submit to the terms of the settlement agreement.  They informed the court that they “misunderstood the amount of land that they were giving away and that land swap deprives them of their only means of access; to wit, the driveway, to their property” Grigsby at 2.  The trial court ultimately enforced the settlement agreement that was announced on the day of trial and entered an order approving the land swap.  Grigsby at 2, 3.

On appeal the Tennessee Court of Appeals found that Tennessee courts "now uniformly hold that if the terms of a settlement are announced to the court or memorialized in a signed, enforceable contract, a judgment may be entered thereon, even if one party later repudiates."  Grigsby at 4 (citing

Settlement Agreement - What language in a settlement agreement is necessary to make sure all claims are settled?

Analysis:  The recent Tennessee Court of Appeals decision of Timothy Scott Marcum v. Haskel Ayers, No. E2012-00721-COA-R3-CV, 2012 WL 4859126 (Tenn.Ct.App. October 15, 2012) discussed a basic settlement agreement between two parties and the validity of the agreement.  The plaintiffs and defendants entered into a contract of sale for property in 2005.  Marcum at 1.  The real estate purchase contract consisted of an agreement that the property was sold by the defendants to the plaintiffs on an "as is" basis.  Marcum at 1.  After the purchase the plaintiffs began to experience problems with the house and raised concerns about these problems with the defendants.  Marcum at 1.  In June 2006, the parties executed a "settlement letter" which provided as follows: "The fifty-two hundred dollars ($5200) [sic] is accepted, in full, for damages to Mountain Ayers. This will be the final settlement paid on this property." 

Sometime after the execution of the settlement agreement the plaintiffs experienced further problems and therefore sued the defendants.  Marcum at 1.  The defendants asserted that the June 2006 settlement letter was a settlement of all claims.  Marcum at 1.  The trial court granted summary judgment for the defendants and found the settlement letter was “not ambiguous and constituted a full and complete release of any and all claims growing out of the sale of Defendants' residence to Plaintiffs, whether past, present or future.”  Marcum at 1.  The plaintiff’s appealed and the question on appeal was whether the basic broad language in the "settlement agreement" prevented the plaintiff from filing suit for later discovered damages. 

The Tennessee Court of Appeals found the language in this settlement agreement was a complete release of all claims including future undiscovered claims.  The court found that a settlement letter with a release is considered a contract and therefore standard rules of construction for interpreting a contract are used in construing a release. 

Settlement Agreement – Difficulty to overturn a settlement agreement

Brief Summary:  This new case shows how difficult it is to overturn a settlement agreement in Tennessee.  It is difficult even when the plaintiff misrepresents material facts that were in dispute in the settled lawsuit.  The Tennessee Court of Appeals found it is an important public policy to keep “circumstances by which a party may overturn a prior final judgment” very narrow.

Analysis:  The Tennessee Court of Appeals decision of Tia Gentry v. Dale Larkin, E2011-02402-COA-R3-CV, 389 S.W.3d 329 (filed July 13, 2012) decided a case involving the “slayer’s statute”.  This case has very interesting facts and deals with an important question of law in Tennessee pertaining to overturning a settlement agreement due to fraud. 

Tennessee has a “slayer’s statute” or “killing statute” found in T.C.A. § 31-1-106.  This statute provides: 

Any person who kills, or conspires with another to kill, or procures to be killed, any other person from whom the first named person would inherit the property, either real or personal, or any part of the property, belonging to the deceased person at the time of the deceased person's death, or who would take the property, or any part of the property, by will, deed, or otherwise, at the death of the deceased, shall forfeit all right in the property, and the property shall go as it would have gone under § 31-2-104, or by will, deed or other conveyance, as the case may be; provided, that this section shall not apply to any killing done by accident or in self-defense.

As a result, this statute basically forbids an individual from inheriting any property or recovering any life insurance proceeds from a deceased if that individual was responsible for killing that deceased.