## Facts

- Mary Mathis died after being admitted to the emergency room at St. Alexis Hospital (St. Alexis).
- About one year later, Mary’s children, Rodney and Donna Mathis (the children), sued St. Alexis for wrongful death.
- The children retained an expert witness, who later informed the children and their attorney (and communicated to the court) that, in the expert’s opinion, St. Alexis was not the proximate cause of Mary Mathis’s death.
- After receiving that opinion, the children voluntarily dismissed the wrongful-death action.
- Following the dismissal, the children and their attorney entered into a written settlement agreement (a covenant not to sue) with St. Alexis:
  - The children promised not to pursue any legal claims against St. Alexis arising out of their mother’s death.
  - St. Alexis agreed not to ask the court to award costs or attorney’s fees from the prior lawsuit.
- Roughly one year later, the children filed another wrongful-death suit against St. Alexis based on the same events.
- The children sought rescission of the settlement agreement, arguing it lacked consideration because St. Alexis was not entitled to recover costs or attorney’s fees from the children (as distinct from their attorney).
- St. Alexis argued it reasonably believed it could seek costs and attorney’s fees for a frivolous lawsuit from the children or their attorney, and that its forbearance from pursuing that claim was valid consideration.
- The trial court granted summary judgment to St. Alexis. The children appealed.

## Issues

1. Whether the covenant not to sue was supported by consideration where the hospital promised to forbear seeking costs and attorney’s fees that it reasonably believed it could recover for an allegedly frivolous prior lawsuit.
2. Whether, if supported by consideration, the covenant not to sue barred the children’s later wrongful-death action against the hospital based on the same events.

## Decision

- The court of appeals affirmed the trial court’s grant of summary judgment for St. Alexis.
- The court held that St. Alexis’s promise to forbear pursuing costs and attorney’s fees was sufficient consideration because the hospital had a good-faith, reasonable basis to believe it could seek such relief.
- Because the agreement was supported by consideration, the covenant not to sue was enforceable and barred the later wrongful-death suit against St. Alexis within the covenant’s scope.

## Legal Principles

- A promise to forbear pursuing a legal claim may be valid consideration when the party forbearing has a good-faith, reasonable belief that the claim may be pursued, even if the claim’s ultimate success is uncertain.
- Consideration exists where there is a bargained-for exchange involving a benefit to one party or a detriment to the other; giving up a colorable right to request costs or attorney’s fees can satisfy this requirement.
- A covenant not to sue that is supported by consideration is enforceable according to its terms and can operate as a contractual bar to later litigation based on the same underlying dispute.

## Conclusion

The court enforced the covenant not to sue because St. Alexis gave consideration by agreeing, in good faith, to forgo seeking costs and attorney’s fees it reasonably believed it could request from the first wrongful-death case; that forbearance made the settlement binding and barred the children’s later wrongful-death action against the hospital.


Mathis v. St. Alexis Hospital, 650 N.E.2d 141 (1994)