Open-Ended Settlement Offer Expires upon Announcement of Arbitration Award

Sherrod v. Kidd (April 17, 2007)

The plaintiff was injured by a dog bite. The defendants made an open-ended settlement offer. The plaintiff proceeded to arbitration, which resulted in an award less than the settlement offer. The plaintiff then purported to accept the settlement offer, and the trial court enforced the settlement agreement.

On appeal, the plaintiff argued that the consideration for the settlement was the same before and after arbitration -- her promise to dismiss the lawsuit. The court of appeals reversed and held that the offer expired when the arbitrator announced the award. The court reasoned that "[i]mplicit in an offer (and an acceptance) to settle a personal injury suit is the party's intent to avoid a less favorable result at the hands of a jury, a judge or, in this case, an arbitrator."