Question: Can you get out of an agreement to settle a disputed claim when the evidence shows that you did nothing wrong?
In May 2009, Mr. Vance and Rock Solid entered into an agreement whereby Rock Solid would remove and replace a driveway and sidewalks. Rock Solid performed the work in July 2009 and warned Vance about the standard of care for newly poured concrete, including the danger of road salt. Approximately 1.5 years later, Vance reported to Rock Solid that his driveway had some pitting and scaling. Thereafter, Vance and Rock Solid engaged in discussions about the possible causes of the pitting and scaling. In 2011, the parties arranged for a third party to inspect Vance’s driveway, test the concrete, and determine the cause of the pitting and scaling. The non-binding conclusion was that the concrete was structurally sound and that the pitting and scaling was due to indirect salt application, that is, “snow melting from cars onto the driveway.” After reviewing findings, Rock Solid wrote a letter to Vance offering to power wash and re-seal Vance’s driveway as a “one time” “Customer Accommodation.” Rock Solid “apologize[d] for the difficulties” that Vance had experienced with the pitting and scaling but felt “that this problem [was] related [to] salt damage, not the concrete, nor the workmanship.” Since Vance was unhappy with this proposal, Rock Solid offered to replace Vance’s driveway at no charge to him. Rock Solid said that it would try to replace the driveway by the end of August 2011. Vance sent Rock Solid several letters, emails, and text messages requesting tentative dates, but Rock Solid never responded. Frustrated by the lack of responses, Vance filed a notice of claim against Rock Solid and Lozano in the small-claims court alleging breach of contract. At trial, judge entered judgment in favor of Rock Solid on Vance’s breach-of-contract claim.
On appeal, the Indiana Court of Appeal noted that Indiana strongly favors settlement agreements. Settlement agreements are governed by the same general principles of contract law as any other agreement. A “compromise” or “settlement” is a contract between two or more people to amicably settle or adjust their differences on such terms as they can agree. More specifically, a “compromise” has been defined as an agreement whereby the parties, through concessions made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship. A “settlement agreement” constitutes a “compromise”; the underlying purpose is to end a claim or dispute and avoid, forestall, or terminate litigation. The Court went on to find there was an enforceable settlement agreement between the parties that settled their dispute as to the cause of the pitting and scaling of Vance’s driveway and that its purpose was to avoid litigation on the subject. Even though Rock Solid argues that no good-faith dispute existed because the pitting and scaling was from road salt, the settlement of a doubtful claim is sufficient consideration for a compromise if the claim is made fairly and in good faith, even if it is possibly meritless. There is no evidence in the record that Vance has not acted fairly or in good faith. Accordingly, the Court of Appeals reversed the trial court’s judgment in favor of Rock Solid. Vance v. Lozano, 981 N.E.2d 554 (Ind.App. 2012).