Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 11

In the language of the cou rt
tom, J.P. [Judge Presiding], andrias, Renwick, degrass e, abdus -salaa m, JJ. [Judges]
* * * *
[Adwoa Gyabaah was hit by a bus owned by Rivlab Transportation Corporation. She retained attorney Jeffrey Aronsky to represent her in negotiations with Rivlab, its insurer National Casualty Company, and their attorneys. Gyabaah agreed to pay Aronsky a contingency fee of onethird of the amount of her recovery. Aronsky] commenced this personal injury action on plaintiff's behalf on August 25, 2010 [against Rivlab]. By letter to Aronsky dated October 1, 2010, defendant's carrier tendered its $1 million policy limits for purposes of settlement. Aronsky explained the proposal to plaintiff who, at that time, chose to accept the settlement. Accordingly, plaintiff executed a general release on October 5, 2010 * * *. Aronsky advised plaintiff that he would hold the release pending receipt of * * * advice from plaintiff as to whether she preferred to have the settlement structured [paid over a period of time rather than in one lump sum].
By December 9, 2010, plaintiff had retained new counsel, Kenneth A. Wilhelm, Esq. [Esquire]. On that date, Wilhelm advised Aronsky that plaintiff did not wish to settle the case or have the release sent to defendant. Aronsky moved the court below for an order enforcing what he contended was a $1 million settlement and setting his firm's contingency fee at one-third of the recovery pursuant to plaintiff's retainer agreement. In making his motion, Aronsky did not allege that acceptance of the offer was ever communicated to defendant or its carrier. This omission is fatal to Aronsky's claim of a settlement for reasons that follow. Aronsky maintained that "plaintiff's signing of the General Release constituted a binding legal contract." The court denied the motion and vacated the release in what it perceived to be the interest of justice.
* * * The application of contract law * * * required the denial of Aronsky's motion. A general release is governed by principles of contract law. * * * It is essential in any bilateral contract that the fact of acceptance be communicated to the offeror. Therefore, this action was not settled because the executed release was never forwarded to defendant nor was acceptance of the offer otherwise communicated to defendant or its carrier. This record does not contain a single affidavit by anyone asserting that either occurred. * * * We do not share the * * * view that an October 6, 2010 letter from defendant's counsel to Aronsky "evidenced" an agreement to settle. Defense counsel's statement in the letter that he was "advised" of a settlement does not suffice as evidence that such a settlement was effected. * * * Because there has been no settlement, the amount of Aronsky's fee should be determined upon the disposition of this action [as a percentage of the fee recovered by the Wilhelm firm based on the pro rata share of the work the two attorneys performed in obtaining the recovery]. [Emphasis added.]
* * * We see no need for a hearing to determine whether Aronsky was discharged for cause. The record discloses that plaintiff has not made a prima facie showing of any cause for Aronsky's discharge. Plaintiff stated in her affidavit that she signed the release * * * because she felt "pressured" to do so. Plaintiff made no mention of what the pressure consisted of or, more importantly, what professional misconduct, if any, brought it about. To be sure, a hearing was not warranted by plaintiff's untenable [indefensible] argument that Aronsky disobeyed her instructions by making the instant motion albeit [although] after he had already been discharged as her attorney.
[The order of the lower court denying Aronsky's motion insofar as it sought to enforce a purported settlement and set Aronsky's fee accordingly is affirmed.]
Legal Reasoning Questions
1. Why did the court conclude that the parties in this case were not bound by the settlement and release documents signed by Gyabaah?
2. Why did Aronsky fail to deliver the signed documents to Rivlab or its insurer?
3. What is the most likely reason that Gyabaah did not wish to settle the case with Rivlab or its insurer according to their terms?
4. If Aronsky had informed Rivlab or its insurer that Gyabaah had agreed to the settlement, would her later "change of heart" have been sufficient to set aside the agreement?