## Facts

- A medical clinic retained a law firm to represent it in an arbitration and later believed the firm committed malpractice.
- The clinic’s president contacted the firm’s professional liability insurer (the Oregon State Bar Professional Liability Fund (PLF)) to discuss resolving potential malpractice claims.
- The clinic initiated settlement discussions and proposed resolving the matter for $40,000.
- The PLF responded with counteroffers that included a cash payment and mutual releases, plus forgiveness of an asserted $5,506.25 reimbursement claim.
- The parties continued bargaining through written correspondence, with the clinic repeatedly stating it was “willing to settle” for $19,000.
- The PLF sent a letter stating it would pay $19,000 on behalf of the law firm, with payment to be delivered upon execution of a mutual release.
- The clinic did not sign the proposed mutual release and instead filed a legal malpractice action.
- The defendants moved for summary judgment, arguing the correspondence formed a binding settlement that barred the lawsuit; the trial court agreed and dismissed the action.

## Issues

1. Whether the parties’ written communications objectively manifested mutual assent to form an enforceable settlement agreement.
2. Whether reference to executing a “mutual release” meant no contract existed until a formal release was signed.
3. Whether contract formation could be decided as a matter of law on summary judgment where the material evidence was undisputed correspondence.

## Decision

- The Oregon Court of Appeals affirmed the dismissal.
- The court held the correspondence formed an enforceable settlement when the PLF accepted the clinic’s $19,000 offer on behalf of the defendants.
- The contemplated mutual release was treated as documentation and an exchange-of-performance term, not a condition precedent to contract formation.
- Because the content and sequence of the writings were undisputed, no genuine issue of material fact existed and summary judgment was proper.

## Legal Principles

- Contract formation is determined under an objective theory: mutual assent depends on what a reasonable person would understand from the parties’ words and conduct, not undisclosed intent.
- Settlement negotiations can create a binding contract through letters and emails if they show definite offer and unequivocal acceptance of essential terms.
- A party’s repeated statement that it is willing to settle at a specified amount can constitute an offer that remains open for acceptance in the negotiation context.
- References to later preparing or signing a formal release generally address performance and memorialization; they do not negate an already-formed agreement unless the writings show execution was a condition to being bound.
- When contract formation turns solely on undisputed written communications, it may be resolved as a question of law on summary judgment.

## Conclusion

The court concluded that the parties formed a binding settlement through their correspondence when the PLF accepted the clinic’s $19,000 settlement offer on the defendants’ behalf; the clinic’s later refusal to sign the release did not undo contract formation, so summary judgment dismissing the malpractice suit was affirmed.


Bridge City Fam. Med. Clinic, P.C. v. Kent & Johnson, LLP, 270 Or. App. 115, 346 P.3d 658 (Or. Ct. App. 2015)