During the next few months, United and Scottsdale exchanged estimates and discussed the appropriate costs to repair the portions of the building that had sustained wind damage. George Lester handled the negotiations on behalf of United, and Scott Rothman participated in the negotiations on behalf of Scottsdale.

On March 24, 2013, Rothman submitted a revised repair estimate of $469,714.65 to Lester, which included certain items and expenses that Lester had requested, but that were not included within the prior repair estimate obtained by Scottsdale. Rothman's email stated, “Attached is revision for discussion purposes.”

On March 25, 2013, Lester replied:

I looked through the estimate. You added the items. We will work off your estimate. If we have any code upgrades required by the city, may we supplement those items if incurred? What should I tell Mr. McKeown the time frame will be for the payment? I am going to proceed with the repairs. Thank you for your help in the matter.

On March 26, 2013, Rothman sent an email response to Lester that stated, “I have requested authority to issue payment and should do so w/in a week or so.” Rothman informed Lester that he would discuss policy limitations on mold remediation and any code issues directly with Coleman. He also asked Lester for an estimate of completion.

On April 9, 2013, Rothman sent McKeown a letter that stated:

As you are aware, an agreement was reached on the replacement cost loss of covered damage to the structure subject to terms, conditions and limits of the policy, with United American Contractors in the amount of $470,714.65…. Previous payments totaling $280,649.61 have been issued and a payment of $156,575.68 is forthcoming under separate cover…. Once again, note that all options under the policy of insurance remain at your disposal, and acceptance of this check will not waive any of your rights under the policy of insurance.

Coleman cashed Scottsdale's checks, totaling $437,225.29, but never made repairs to the building. In October 2014, Coleman's counsel sent Scottsdale a repair estimate prepared by John Tricozzi, who determined the cost to repair the damage caused by the wind to be $917,110.62.

Scottsdale refused to pay for the balance owed on the Tricozzi estimate, and Coleman filed suit against Scottsdale for breach of contract and breach of the implied covenant of good faith and fair dealing.

Scottsdale moved for summary judgment. Among other things, Scottsdale argued that it was entitled to judgment in its favor on Coleman's claims because Coleman and Scottsdale had entered into a binding settlement agreement as a result of the email exchanges between Lester of United and Rothman of Scottsdale.

For its part, Coleman argued that United did not have the authority to bind it to any settlement and that, even if United did have such authority, no settlement had ever been agreed to.

5 disputed issues

The district court ruled that disputed issues of material fact precluded the summary resolution of the parties' differing views on the purported settlement agreement. In its decision, the district court noted the following disputed issues:

1. Whether United had authority to bind Coleman to any settlement;
2. Whether Lester and Rothman's email exchange constituted the requisite intent that the total payment to Coleman out of the insurance policy would be limited to $470,714.65;
3. Whether the parties had agreed to the scope of the damages and the cost to repair those damages;
4. The import of Scottsdale continuing to adjust the claim with Coleman after the purported settlement; and
5. Why Scottsdale had not requested that Coleman sign a release.

The district court ruled that Coleman had met its burden to defeat summary judgment by providing sufficient material facts that disputed Scottsdale's. The court concluded that it was for a jury to decide whether the parties had entered into an enforceable settlement agreement that precluded Coleman from pursuing its lawsuit against Scottsdale.

The case is Coleman Enterprises Co. v. Scottsdale Ins. Co.

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at [email protected].