Step Plan Services, Inc. v. Koresko
12 A.3d 401
| Pa. Super. Ct. | 2010Background
- STEP Plan and Koresko defendants settled after mediation in 2008; settlement was marked by the court while a Massachusetts action sought to attach settlement proceeds to satisfy Cahaly creditors.
- Travelers Property & Casualty intervened in enforcement proceedings, defending the insured and later settling on behalf of the Koresko-Defendants with consent limited by policy rights and a reservation of rights.
- Massachusetts injunction temporarily barred distribution of settlement proceeds; STEP argued this and related events frustrated the settlement's purpose and rendered performance impracticable.
- The trial court granted enforcement of the settlement, finding no frustration of purpose or impracticability, and that anticipated attachments were foreseeable and did not excuse performance.
- STEP appealed arguing frustration of purpose and mistaken assumptions; Koresko-Defendants appealed on jurisdiction, standing, insurer authority, and related issues; the appellate court addressed whether enforcement was proper notwithstanding antecedent defects.
- The appellate court held that settlements are enforceable under contract law, that Massachusetts injunction did not frustrate purpose, and that Travelers had authority to settle and intervene; enforcement of the agreement was affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether frustration of purpose excused enforcement | STEP argues Massachusetts injunction/franchise impaired settlement purpose | Koresko argues issues of jurisdiction and insurer actions undermine enforceability | Frustration of purpose not proven; settlement enforceable |
| Whether supervening events rendered performance impracticable | STEP claims impracticability due to third-party attachment and injunction | Koresko contends impracticability excused performance | Impracticability not established; performance remains due |
| Authority of Travelers to settle and intervene | STEP/Travelers acted within policy rights to settle; intervention proper to protect interests | Koresko contends Travelers lacked authority and overstepped | Travelers had authority to settle and to intervene; enforcement affirmed |
| Subject matter jurisdiction and standing | Enforcement can proceed despite underlying jurisdictional questions | Lack of certificate of authority and ERISA preemption raise standing/jurisdiction problems | Settlement enforcement upheld; standing/jurisdiction not fatal to enforcement |
Key Cases Cited
- Mastroni-Mucker v. Allstate Ins. Co., 976 A.2d 510 (Pa. Super. 2009) (contractual interpretation; de novo standard of review)
- Ragnar Benson, Inc. v. Hempfield Tp. Mun. Authority, 916 A.2d 1183 (Pa. Super. 2007) (frustration of purpose and implied terms; voidable contracts)
- Hart v. Arnold, 884 A.2d 316 (Pa. Super. 2005) ( Restatement guidance on settlements; enforceability notwithstanding unforeseen complications)
- Caplan v. Fellheimer Eichen Braverman & Kaskey, 68 F.3d 828 (3d Cir. 1995) (insurer settlements; good faith and policy limits; settled without insured consent)