Settling A Claim

The United States District Court, S.D. Texas, McAllen Division, denied a defense motion for summary judgment in a case where the defendant settled a claim with a homeowner who had two claims, asserting that the release covered both claims.  The case is styled, Aidee Bazan v. State Farm Lloyds.

Bazan had insurance with State Farm insuring his residential property.  Two storms are alleged to have damaged Bazan’s property – the first in March 2016, and the second in May 2016 – forming the basis of two different lawsuits against State Farm.

A dispute arose about the damages sustained by Bazan and a lawsuit was filed as to the March 2016 damage.  Bazan later filed a lawsuit on the second storm damage.   This second claim was assigned claim number 912. The pleadings on the two lawsuits are essentially the same.

In April 2017, Bazan and State Farm entered into a settlement that clearly disposed of the first case.  When the second suit was filed, State Farm removed the case to federal court and filed its motion for summary judgment contending that the settlement/release disposes of both cases.

Under Federal Rule of Procedure 56, summary judgment is proper when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.  In conducting its analysis, the Court may consider evidence from the entire record, viewed in the light most favorable to the non-movant.

A release, “valid on its fact, is a complete bar to any later action based upon matters covered in  the release.”

In order to establish release as an affirmative defense, the defendant must prove “beyond peradventure” that the essential elements of a valid contract are met with regard to the settlement and release document, including: “(1)an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party’s consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding.”  Moreover, the Defendant must establish that the action in question falls within the scope of that contract.
Here, even assuming the settlement agreement is valid, the second suit and insurance claim 912 do not come withing the scope of that agreement.  Although the second suit did not exist at the time the agreement was executed, claim 912 did exist at that time, and thus its absence from the language of the the agreement is inexplicable unless it was not intended to be included.
State Farm’s Motion for Summary Judgement was denied.