An all-too-frequent misfortune is the over-inclusive or the under-inclusive settlement. A recent Minnesota Court of Appeals decision reflects a litigant’s apparently inadvertent surrender of a negligence claim.
A tree company (“TC”) contracted with a horticulture specialist (“HS”) to spray the tree company’s trees. The tree company, unhappy with HS’ performance, withheld the $3,500 payment for the services.
HS sued TC. The case, brought in conciliation court, then removed to the district court, settled for a $3,000 payment from HS to TC. Two years later, TC brought a negligence claim against HS for the allegedly shoddy spraying. Surely to its surprise, TC’s negligence claim was found to be barred by the settlement of the earlier claim.
The key language in the settlement agreement: The settlement agreement provided that it “does not settle any disputes that may arise between these parties not alleged” in the conciliation court file.
Presumably, TC read that narrowly to mean (1) just the conciliation court file, not the district court file; and/or (2) the “conciliation court file” did not contain any reference to TC’s negligence claim, but only reference to HS’ contract claim.
The case stands for the general proposition that courts favor settlement and favor finality. Any ambiguity may be construed in favor of those policies. Caveat litigator.