Troy Jonas v. State Farm Life Insurance Company
2016 Ind. App. LEXIS 92
Ind. Ct. App.2016Background
- In 2007 Troy Jonas and his then-wife purchased reciprocal $1,000,000 life policies from State Farm; Jennifer was the insured on the relevant policy with Jonas as primary beneficiary.
- A Texas divorce decree (Aug. 2011) ordered Jennifer to transfer ownership of the policy to Jonas; she did not execute the transfer before her death on Aug. 30, 2012.
- State Farm interpleaded the policy proceeds ($1,016,216.78, including contractual 2% interest) in federal district court due to uncertainty under Texas law; the district court authorized the interpleader and deposited the funds with the clerk.
- After district-court proceedings and a subsequent appeal, Jonas and State Farm reached an oral settlement on Apr. 15, 2014 for $60,000; State Farm prepared a release, Jonas’s counsel secured removal of a confidentiality clause, State Farm mailed the check and release, and Jonas later repudiated the settlement and pursued the appeal.
- The Seventh Circuit vacated and remanded for dismissal for lack of subject-matter jurisdiction; Jonas then sued State Farm in Indiana state court claiming interest, fees, and bad faith, while State Farm counterclaimed to enforce the prior settlement.
- The trial court granted summary judgment enforcing the oral settlement and finding Jonas breached it; the court concluded the ADR rules did not require a signed written agreement and State Farm had not waived enforcement.
Issues
| Issue | Plaintiff's Argument (Jonas) | Defendant's Argument (State Farm) | Held |
|---|---|---|---|
| Whether a binding settlement existed | No meeting of minds; required writing/signature; confidentiality objection meant no agreement | Oral agreement + counsel’s emails accepting removal of confidentiality + check mailed = binding settlement | Settlement enforceable; Jonas breached by refusing to perform |
| Whether Indiana ADR/mediation rules required a written signed agreement | ADR rules require written signed settlements from mediations | ADR rules do not apply because no Indiana state-court case or mediation was pending | ADR rules inapplicable; no writing/signature required |
| Whether State Farm waived right to enforce by not raising settlement in 7th Cir. | State Farm implicitly waived/enforced position by allowing appeal to proceed and by emails from appellate mediator | State Farm could not intervene as non-appellant; it never expressly relinquished enforcement rights and told mediator it would defend appeal | No waiver; State Farm preserved enforcement rights |
| Whether Jonas can obtain interest/fees under Texas law despite settlement | Jonas claims entitlement to 18% penalty interest and attorneys’ fees under Texas law | Settlement resolved Jonas’s claims; breach of settlement controls outcome | Court did not reach Texas-law damages because settlement breach governs; Jonas’s damages arguments were unnecessary |
Key Cases Cited
- Sands v. Helen HCI, LLC, 945 N.E.2d 176 (Ind. Ct. App. 2011) (Indiana strongly favors enforcement of settlement agreements)
- Pohl v. United Airlines, Inc., 213 F.3d 336 (7th Cir. 2000) (oral settlement agreements can be enforced; parties may not unilaterally revoke before performance)
- Herrnreiter v. Chicago Hous. Auth., 281 F.3d 634 (7th Cir. 2002) (appeal continues until written agreement or notice of dismissal; settlement enforcement may proceed in state court when federal jurisdiction is lacking)
- Dillard v. Starcom Int’l, Inc., 483 F.3d 503 (7th Cir. 2007) (state law governs whether a settlement contract was made)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (federal courts lacking jurisdiction cannot decide merits)