David Charles Arch v. Jared Michael White

IN THE COURT OF APPEALS OF IOWA

No. 18-0827
Filed February 20, 2019

DAVID CHARLES ARCH,
Plaintiff-Appellant,

vs.

JARED MICHAEL WHITE,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Johnson County, Kevin McKeever,

Judge.

David Arch appeals the order granting Jared White’s motion to enforce

settlement agreement. AFFIRMED.

L. Craig Nierman of Phelan, Tucker, Mullen, Walker, Tucker & Gelman,

L.L.P., Iowa City, for appellant.

Patrick L. Woodward and Ryan F. Gerdes of McDonald, Woodward &

Carlson, P.C., Davenport, for appellee.

Considered by Doyle, P.J., and Mullins and McDonald, JJ.
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DOYLE, Presiding Judge.

David Arch appeals the district court’s order granting Jared White’s motion

to enforce a settlement agreement. Upon our review, we conclude a valid and

enforceable agreement was entered into by both parties and there was no material

breach of the agreement. Accordingly, we affirm the court’s order granting White’s

motion to enforce the settlement agreement.

I. Background Facts and Proceedings.

For the purposes of this appeal, the facts are essentially undisputed. The

case arises from a June 2, 2017 motor vehicle collision involving Arch and White.

On August 15, 2017, Arch filed his lawsuit against White claiming damages

resulting from the collision. Arch held off on service of the suit papers pending

ongoing settlement negotiations with White’s insurance carrier, State Farm

Insurance Company (State Farm). After a settlement was reached, Arch’s

attorney, L. Craig Nierman, faxed a letter addressed to State Farm claims adjuster

Stefanie Edwards, stating:

My client has instructed me to accept your $3,000.00 offer.
Please immediately forward to me your release (please incorporate
any amounts paid for property damage on the amount listed on the
release) and check payable to “Phelan Tucker Trust Account” . . .
only. I am assuming that you will not be including any other parties
on the settlement draft unless we agree otherwise. Regardless, I will
not distribute the proceeds until the release has been properly
executed and sent to you.

State Farm followed up by sending a release form to Nierman. No settlement draft

was enclosed with the cover letter.1 The release states:

1
The cover letter is not a part of our record.
3

For the Sole Consideration of

Three thousand ($3,000) dollars the receipt and sufficiency whereof
is hereby acknowledged, the undersigned hereby releases and
forever discharges Jared White his heirs, executors, administrators,
agents and assigns, and all other persons, firms or corporations
liable or, who might be claimed to be liable, none of whom admit any
liability to the undersigned but all expressly deny any liability, from
any and all claims, demands, damages, actions, causes of action or
suits of any kind or nature whatsoever, and particularly on account
of all injuries, known and unknown, both to person and property,
which have resulted or may in the future develop from an accident
which occurred on or about June 02, 2017, at or near [location
omitted].

This release expressly reserves all rights of the parties released to
pursue their legal remedies, if any, against the undersigned, their
heirs, executors, agents and assigns.

Undersigned hereby declares that the terms of this settlement have
been completely read and are fully understood and voluntarily
accepted for the purpose of making a full and final compromise
adjustment and settlement of any and all claims, disputed or
otherwise, on account of the injuries and damages above mentioned,
and for the express purpose of precluding forever any further or
additional claims arising out of the aforesaid accident.

Undersigned hereby accepts draft or drafts as final payment of the
consideration set forth above. [Emphasis added].

After receiving the release, but not a settlement draft, Nierman emailed Edwards

on October 9, 2017, asking: “Where are we at on the check?” Edwards responded

via email on October 10, 2017, stating: “Craig, please review the letter I sent on

9/15. Once we receive the completed Release, we will issue the draft to you and

your client.” Later that afternoon, a telephone conversation took place between

Nierman and Edwards. Nierman memorialized this conversation with an email,

sent to Edwards later that day:

This confirms our conversation this afternoon in which I requested
that you send the settlement check. You refused.
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I then directed your attention to the fact that your release recites that
my client has received the settlement proceeds. Knowing this, you
continued to refuse to issue the settlement check until you received
the signed release.

You also refused to transfer me to supervisory personnel upon my
request.

You continued to insist that I send you a signed release with
inaccurate information, i.e., that my client had received the
settlement proceeds, even after I indicated that my only alternative
was to add a breach of settlement count to the litigation. You then
continued to refuse to mail the proceeds.

Both parties dug in their heels and refused to budge from their respective

positions. With the settlement issue at a standoff, Arch proceeded with his lawsuit

and served White with the suit papers on October 17, 2017. White filed an answer.

On November 15, 2017, White filed a motion to enforce the settlement agreement,

asking the district court to enter an order compelling Arch to comply with the terms

of the settlement and dismiss Arch’s claims against him. White resisted, and the

matter was set for hearing.

On February 28, 2018, the district court entered its order granting White’s

motion. The court noted that the parties did not dispute the existence of the $3000

settlement agreement. The court found that the dispute before it arose out of State

Farm’s refusal to provide the agreed upon settlement funds to Arch absent Arch

signing a release. The court set forth each party’s position:

[Arch] claims that the release contained language that was
inaccurate and to sign the release would have been tantamount to
committing a fraud. [Arch] now claims that [White] materially
breached the settlement agreement and that should excuse him from
performance under the agreement. Furthermore, he argues that he
should now have the right to pursue his claim as if the agreement
had never been made.
[White] asks that the Court enforce the settlement agreement
previously reached. [White] argues that he never refused to carry
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out any of the essential terms of the agreement. Specifically, [White]
indicates that he was willing to provide the $3,000.00 to [Arch] but a
dispute arose regarding this exchange of funds occurring before or
after the release was to be signed by [Arch].

Finding no fraud, misrepresentation, or concealment, the court concluded the

settlement agreement should be enforced. The court ordered: (1) White “shall

deliver the funds to [Arch] within 10 days of the date of this order” and (2) Arch

“shall execute a release immediately upon receipt of the funds in question.” Arch

filed a motion to enlarge or amend. White resisted. The district court denied the

motion on May 1, 2018. Arch appealed.

II. Standard of Review.

It is generally recognized that district courts have the authority to enforce

settlement agreements made in pending cases. See Wright v. Scott, 410 N.W.2d

247, 250 (Iowa 1987); Wende v. Orv Rocker Ford Lincoln Mercury, Inc., 530

N.W.2d 92, 94 (Iowa Ct. App. 1995). If the material facts are not in dispute, the

court may summarily enforce the agreement on motion by one of the parties.

Wende, 530 N.W.2d at 94. However, if the material facts are in dispute, the issue

must be resolved by the finder of fact. Id. On appeal, a trial court’s enforcement

of a settlement agreement is typically reviewed for correction of errors at law.

Estate of Cox v. Dunakey & Klatt, P.C., 893 N.W.2d 295, 302 (Iowa 2017).

III. Discussion.

There is no dispute between the parties as to the existence and essential

terms of the settlement agreement. State Farm agreed to pay Arch $3000 in

exchange for Arch releasing all claims against White. The current dispute arises
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out of the parties’ inability to agree on how to carry out the settlement agreement.

Arch asserts

despite [State Farm’s] actual knowledge that it was demanding that
Arch sign a receipt for funds he never received, it refused to issue
the check until Arch made a false written statement in connection
with an insurance claim. In other words, [State Farm] conditioned
the payment of settlement funds on Arch delivering a written
statement it knew was false. Because Arch would not make a
dishonest statement—particularly in conjunction with making an
insurance claim—he exercised his option to seek a jury trial for his
damages.

White acknowledges:

Arch's issue with the settlement is the inclusion of language in the
proposed release indicating that the settlement draft had been
received, along with the claims adjusters' refusal to send the
settlement draft prior to Arch signing the release.

“The law favors settlement of controversies.” Wright v. Scott, 410 N.W.2d

247, 249 (Iowa 1987). The Supreme Court has routinely held that settlement

agreements are “essentially contractual in nature” and contract principles are used

when interpreting settlement agreements. Phipps v. Winneshiek Cty., 593 N.W.2d

143, 146 (Iowa 1999); Wright, 410 N.W.2d at 249. Therefore, settlement

agreements, like contracts, are enforced absent fraud, misrepresentation, or

concealment. Id. The district court found, and we agree, that there are no facts

supporting a finding of fraud, misrepresentation, or concealment.

However, a settlement agreement, like any binding agreement, “must be

definite and certain in order to be given legal effect.” Palmer v. Albert, 310 N.W.2d

169, 172 (Iowa 1981). Yet, “this rule should not be carried to extreme lengths nor

should it be used to defeat the intent of the parties.” Id. A party may rescind a

contract where the other party has performed a material breach—a breach that “is
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so substantial as to defeat the object of the contracting parties.” Beckman v.

Carson, 372 N.W.2d 203, 208 (Iowa 1985). However, rescission is “not permitted

for a slight, casual, or technical breach, but, as a general rule, only for such as are

material and willful, or, if not willful, so substantial and fundamental as to strongly

tend to defeat the object of the parties in making the contract.” Maytag Co. v.

Alward, 112 N.W.2d 654, 660 (Iowa 1962). Furthermore, it is well-settled contract

law that a party cannot seek rescission when they are in default of performance.

See Atlas Brewing Co. v. Huffman, 252 N.W. 133, 137 (Iowa 1934).

Arch argues the release language contained a falsehood—an

acknowledgment that he received the settlement funds. He claims State Farm

was, whether intentionally or unintentionally, setting him up to commit insurance

fraud, a felony, by conditioning payment on signing of the release.2 Arch argues

that the release added a new condition to the agreement and White materially

breached the agreement, through State Farm, allowing Arch to be excused from

performance under the agreement and pursue his claim as if the agreement had

never been made. White asks that the agreement be enforced as he was always

willing to pay the $3000 to Arch, as long as Arch released his claim.

In its ruling denying Arch’s motion to enlarge or amend findings or

conclusions, the district court found and concluded:

Though [Arch] contends that it is disputed whether [White] breached
the Settlement Agreement by adding a new condition to the
Agreement, the Court disagrees that this is a material fact in dispute.

2
Arch also notes, “using mail, email, or fax to transmit the release—containing a statement
that Arch knew was false—could have put him in jeopardy of committing mail or wire
fraud.” (citations omitted). Also that, “These same arguments could also be made against
an attorney who assists a client to submit a false document. This would have a chilling
effect on individuals receiving the zealous representation that they need.”
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[White] has indicated that it has been and is willing to pay the $3,000
to [Arch] in settlement of [Arch]’s claims, if [Arch] releases his claim.
[Arch] does not appear to dispute the contention that [White] is willing
to pay the $3,000. Yet, [Arch] asserts that the issue is whether the
$3,000 had to be paid prior to the release of his claim. The Court
finds that [White]’s request to receive the release prior to turning over
the $3,000 was not a new condition to the Agreement, and the Court
finds that this was not a material fact in dispute surrounding the
agreement. The Court finds that the material facts surrounding the
agreement are not in dispute – i.e., that [White] would pay $3,000 to
[Arch] to settle this claim and that [Arch] would sign a release.
[Emphasis in original].

We agree.

The parties had a number of different options available to them in resolving

this dispute without the court’s intervention, but they failed to pursue any of them.

State Farm could very well have sent Arch’s attorney the settlement draft and the

release with instructions that the draft not be negotiated until Arch signed the

release and returned it to State Farm. Arch’s refusal to execute the release prior

to receipt of the settlement draft is understandable. Nevertheless, we conclude,

like the district court, there is no valid reason to undo the settlement agreement

reached by the parties in 2017. “[V]oluntary settlements of legal disputes should

be encouraged, with the terms of settlements not inordinately scrutinized.” Wright,

410 N.W.2d at 249. We commend the district court in applying a healthy dose of

common sense to the situation. Accordingly, we affirm the district court’s order

granting the White’s motion to enforce the settlement agreement.

AFFIRMED.