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Missouri Court Holds Settlement Communications Governed by Contract Case Law

On Behalf of | Jul 7, 2021 | Firm News

Missouri’s Eastern District Court of Appeals recently held the plain and ordinary meaning of Mo. Rev. Stat. §§ 408.040 and 537.058 did not evidence legislative intent that settlement offers made pursuant to these statutes be irrevocable or non-rejectable as a matter of law. Respondent argued a settlement offer made pursuant to Mo. Rev. Stat. §§ 408.040, and 537.058 remained open for 90-days despite the Appellant’s counteroffer. The court concluded the counteroffer was a rejection of the offer under black letter contract law and nothing in the language of the statutes demonstrated legislative intent to alter that. Mo. Rev. Stat. § 408.040, which addresses prejudgment interest, requires a settlement offer remain open for ninety days in order for a claimant to recover under the statute. However, where a claimant rejects the offer before the end of that 90-day period, the claimant is still entitled to interest. In the same way, Mo. Rev. Stat. § 537.058 addresses time-limited demands to settle in torts cases, and one of the requirements states a demand must remain open for at least ninety days. If a demand does not remain open for such time, the demand is inadmissible in any subsequent litigation against the insurer. This decision further confirms that insurance agreements, and, subsequently, insurers, are bound by contract law in many respects, including in settlement communications. As such, insurers should carefully consider settlement offers, as a counteroffer operates as a rejection and any protections afforded the insurer in keeping the option open will be lost. See Jameson v. Still, No. ED109161, 2021 Mo. App. LEXIS 628 (Mo. Ct. App. June 22, 2021).