Emerson v. Kusano
260 Or. App. 577
| Or. Ct. App. | 2014Background
- Plaintiff sued Defendant for auto accident injuries seeking $171,000; parties entered settlement negotiations shortly before trial.
- On July 22, 2011 an Allstate adjuster communicated that Allstate was "tendering our policy limits of $50,000"; defense counsel also told plaintiff’s counsel "50."
- Plaintiff accepted the offer but requested a continuance to obtain UIM consent; on August 8 plaintiff’s counsel discovered the declarations sheet showing Allstate policy limits were actually $100,000.
- Both parties were mistaken about the policy limit due to Allstate’s good-faith error; plaintiff’s UIM coverage made settlement for policy limits important to preserve UIM recovery.
- Plaintiff moved to reform the settlement to the actual policy limits ($100,000); the trial court granted reformation.
- On appeal the court considered whether there was an antecedent agreement (a meeting of minds) to settle for policy limits such that reformation was proper; it reversed and remanded because the record lacked clear and convincing evidence of such an antecedent agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether reformation is available — was there an antecedent agreement to settle for policy limits rather than a fixed $50,000 amount? | The material term was settlement for policy limits; the numerical amount was a mistaken description and subject to correction by reformation. | The parties had conflicting understandings (Allstate thought $50,000; plaintiff thought "policy limits"); no true meeting of minds — rescission, not reformation, is appropriate. | Court held plaintiff failed to prove by clear and convincing evidence an antecedent agreement to settle for actual policy limits ($100,000); reformation was error. |
Key Cases Cited
- Jensen v. Miller, 280 Or. 225 (discussing elements required for reformation)
- Pioneer Resources, LLC v. D. R. Johnson Lumber Co., 187 Or. App. 341 (reformation burden and standards)
- Koennecke v. Waxwing Cedar Products, 273 Or. 639 (clear and convincing evidence requirement for reformation)
- Muzzy v. Uttamchandani, 250 Or. App. 278 (appellate review standards for equity cases)
- Ball v. Gladden, 250 Or. 485 (assumption of trial court findings where none explicitly made)
- OEA v. Oregon Taxpayers United, 253 Or. App. 288 (limits on reweighing evidence in appellate review)
- Newton/Boldt v. Newton, 192 Or. App. 386 (objective theory of contract interpretation)
- Bagley v. Mt. Bachelor, Inc., 258 Or. App. 390 (objective standard over subjective intent)