## Facts

- Beverly Murphey was injured when her vehicle was struck by a vehicle driven by Laura Wiggs, who was insured by Mid-Century Insurance Company (Mid-Century).
- Mid-Century assigned claims adjuster Kevin Lash to handle Murphey’s bodily-injury claim.
- Murphey’s attorney negotiated with Lash by email regarding settlement of Murphey’s claims.
- Murphey’s attorney initially demanded more than $366,000, supported by medical and other documentation.
- Mid-Century previously offered $116,000, and Murphey’s counsel later reduced the demand to $310,000.
- Lash emailed: “Against $310,000, we provide a counteroffer of $221,000 …” to settle the claim.
- Murphey’s attorney replied by email: “the offer of $221,000 is hereby accepted.”
- Later the same day, Lash emailed that “$221,000 was a typographical error” and that he meant to offer $121,000.
- The parties continued to exchange emails disputing whether the $221,000 offer created a binding settlement.
- Murphey sued Mid-Century and Wiggs in Kansas state court for breach of contract and a declaratory judgment that an enforceable settlement existed; Mid-Century removed the case to federal court.
- Mid-Century denied an enforceable $221,000 agreement and filed a counterclaim seeking rescission based on unilateral mistake, asserting that Lash lacked internal settlement authority above $160,000.

## Issues

1. Whether the parties formed an enforceable settlement agreement under Kansas law through the email exchange offering and accepting $221,000.
2. If a settlement contract was formed, whether Mid-Century could rescind it for unilateral mistake based on the adjuster’s claimed typographical error and internal authority limit.
3. Whether Murphey was entitled to judgment on the pleadings against Mid-Century’s rescission counterclaim.

## Decision

- The court granted Murphey summary judgment on her breach-of-contract/settlement-enforcement claim, holding that the emails created a binding settlement agreement for $221,000.
- The court granted Murphey judgment on the pleadings on Mid-Century’s rescission counterclaim, concluding the alleged unilateral mistake did not justify rescission on the pleaded facts.
- The court enforced the settlement for $221,000; Mid-Century’s post-acceptance “correction” email did not undo the agreement.

## Legal Principles

- Under Kansas law, settlement agreements are contracts and are evaluated using ordinary contract rules (offer, acceptance, and consideration).
- Kansas applies an objective approach to contract formation: outward manifestations control, not a party’s unexpressed intent.
- Email communications can form an enforceable settlement agreement when they show a definite offer and an unequivocal acceptance of essential terms.
- An offer generally cannot be revoked after acceptance; a revocation must be communicated before acceptance is communicated.
- A unilateral mistake does not automatically void a contract; rescission generally requires more than a mistaken term, such as circumstances showing the non-mistaken party knew or had reason to know of the mistake, or that enforcement would be inequitable under the governing standard.
- An insurer’s uncommunicated internal settlement-authority limits do not, by themselves, prevent contract formation when the claimant reasonably relies on the adjuster’s written offer.

## Conclusion

The court held that Mid-Century’s adjuster made a definite $221,000 settlement offer by email and Murphey accepted it without qualification, forming an enforceable settlement contract under Kansas law; the insurer could not avoid the agreement by later claiming a typographical error or pointing to internal authority limits, and its unilateral-mistake rescission counterclaim failed as a matter of law on the pleadings.


Murphey v. Mid-Century Insurance Company, 2014 WL 2619073 (2014)