Before a case ever makes it way to a courtroom, each side will attempt to settle. Even if the two sides are oceans apart and have no chance of settling, courts make the two sides at least try to settle. The Georgia Court of Appeals recently held that a trial court erred by refusing to grant plaintiff’s motion to withdraw the offer of settlement as the offer’s reference to $12,000 instead of $125,000 was a unilateral mistake resulting from negligence by plaintiff’s attorney.
The plaintiff filed a lawsuit alleging negligence against the driver of another car after an auto accident. Her attorney sent the defendant’s attorney an offer of settlement for $12,000. Due to delays in the mail, the defendant’s attorney didn’t get the offer for some time. She emailed the plaintiff’s attorney requesting that the offer remain open for 30 days from her receipt of the offer. The plaintiff’s attorney responded, “Yes of course.” The defendant’s attorney subsequently accepted the offer.
A short while later, the plaintiff filed a motion to withdraw the offer of settlement, asserting that the offer was intended to state a sum of $125,000 and that the reference to $12,000 was a scrivener’s error. She explained that her attorney told his paralegal to prepare an offer of settlement for $125,000 and that the paralegal prepared an offer — mistakenly demanding $12,000 — and placed it in the mail without first having it reviewed by the lawyer. She noted that during discovery she’d itemized $43,372.62 in medical expenses and contended that in light of those expenses, the offer of settlement for $12,000 was clearly a mistake. The trial court concluded that the situation was the result of negligence on the part of the plaintiff’s counsel and that rescission of the offer would prejudice the defendant because he’d be forced to risk a judgment in an amount far greater than $12,000. As a result, the trial court denied the motion, enforced the settlement, and dismissed the action with prejudice. The plaintiff then filed this appeal.
On appeal, the plaintiff contended that the offer’s reference to $12,000 was a mistake of fact and that pursuant to OCGA § 23-2-21, she should be permitted to withdraw her offer. She also argued that the defendant wouldn’t be prejudiced by allowing her to withdraw her offer except to the extent that he wouldn’t be able to take advantage of her mistake.
Presiding Judge M. Yvette Miller of the Court of Appeals wrote that OCGA § 23-2-21 identifies mistakes that are relievable in equity, providing:
- A mistake relievable in equity is some unintentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence.
- Mistakes may be either of law or of fact.
- The power to relieve mistakes shall be exercised with caution; to justify it, the evidence shall be clear, unequivocal, and decisive as to the mistake.
Further, the judge explained that Georgia law provides for rescission and cancellation for a mistake of fact material to the contract of one party only. And pursuant to OCGA § 23-2-32(b), “[r]elief may be granted even in cases of negligence by the complainant if it appears that the other party has not been prejudiced thereby.”
In the context of a claim for money had and received, the Georgia Supreme Court has stated that this statute “may be stated generally to be whether the circumstances have so changed that it would be inequitable to require full restitution.”
In cases applying this principle, the Court of Appeals has identified four key factors:
- Whether enforcement of the mistake would’ve been unconscionable;
- Whether the mistake related to the substance of the consideration;
- Whether the mistake happened regardless of the exercise of ordinary care; and
- Whether the other party hadn’t been prejudiced.
Additionally, the complainant is usually required to give the other party prompt notification of his mistake and of his intent to withdraw.
Here, the trial court concluded that the offer’s reference to $12,000 was a unilateral mistake resulting from negligence by the plaintiff’s attorney, and there was ample evidence to support that conclusion. Nonetheless, Georgia law is clear that even where a unilateral mistake was caused by the complaining party’s negligence, relief may be granted in equity “if it appears that the other party has not been prejudiced thereby.” Judge Miller wrote, quoting OCGA § 23-2-32 (b).
Was the Defendant Prejudiced?
Here, the trial court found “that rescission of Plaintiff’s settlement offer would prejudice Defendant in that he would need to continue litigating this case and be forced to risk a judgment or settlement in an amount far greater than $12,000.00.” But the Court of Appeals found that the inability to hold one’s adversary to his unilateral mistake, standing alone, isn’t typically the type of prejudice that will prevent a party from obtaining relief from a unilateral mistake. This is particularly true where the record establishes that the mistake was “obvious” to the opposing party, Judge Miller opined.
Did the Trial Court Balance the Equities?
In this case, Judge Miller said that the trial court failed to conduct a balancing of the equities under the framework set out in First Baptist Church. The trial court didn’t evaluate whether it would be unconscionable to enforce the mistake and whether the plaintiff acted promptly to rescind the offer once she discovered the mistake. Further, the trial court didn’t evaluate whether the mistake was “obvious” to the defendant when he received the offer, particularly in light of his previous discovery response itemizing over $43,000 in medical expenses. Finally, the trial court’s conclusion that the defendant would be prejudiced by having to litigate, rather than settle, judge found the underlying case to be “tenuous because the only prejudice the trial court identified is that he will lose the ability to “take advantage of the law firm’s mistake.”
While when, as here, a party has requested equitable relief, the issue falls “within the sound discretion of the trial court,” here the trial court failed to weigh all of the relevant factors before ruling on the plaintiff’s motion, so the Court of Appeals couldn’t affirm its decision. As a result, the Court of Appeals remanded the case so the trial court could consider the plaintiff’s request for relief under the appropriate standard.
The judgment was vacated, and the case remanded. Miller v. Evans, 2023 Ga. App. LEXIS 82 (Ga. App. February 17, 2023).
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