Pena was injured in an auto accident involving Fox. Pena's attorney sent an offer to Fox's insurance company offering to drop all claims with respect to Pena, but not any other parties, in exchange for a certain payment. Fox's insurer replied that it would pay the amount, but the payment would settle all possible claims related to the matter. Pena contended the reply was a rejection of the offer and sued. The trial court held that the parties had agreed to settle the matter so there could be no suit. Was that correct?
A) Yes because Pena and Fox were the only parties involved in the accident.
B) Yes because the payment would exhaust the funds the policy could provide.
C) No because other possible parties did not agree to the settlement.
D) No because under state law settlements may only be done party by party.
E) None of the other choices are correct.

Question

Pena was injured in an auto accident involving Fox. Pena's attorney sent an offer to Fox's insurance company offering to drop all claims with respect to Pena, but not any other parties, in exchange for a certain payment. Fox's insurer replied that it would pay the amount, but the payment would settle all possible claims related to the matter. Pena contended the reply was a rejection of the offer and sued. The trial court held that the parties had agreed to settle the matter so there could be no suit. Was that correct?
A) ​Yes because Pena and Fox were the only parties involved in the accident.
B) ​Yes because the payment would exhaust the funds the policy could provide.
C) ​No because other possible parties did not agree to the settlement.
D) ​No because under state law settlements may only be done party by party.
E) ​None of the other choices are correct.

Quizplus · Accepted Answer

Pena's initial offer explicitly stated that it would only drop claims with respect to Pena, not any other parties. Therefore, the insurance company's response that the payment would settle all possible claims related to the matter was a rejection of the offer as it did not meet the terms of the original proposal. Other possible parties did not agree to the settlement, and the trial court was incorrect to hold that the matter was settled between Pena and Fox.

Pena Was Injured in an Auto Accident Involving Fox