## Facts

- The Selmer Company (“Selmer”) was a subcontractor on a construction project for which Blakeslee-Midwest Company (“Blakeslee-Midwest”) was the general contractor; Westinghouse Electric Corporation and Federal Insurance Company were also named as defendants, with liability dependent on Blakeslee-Midwest’s.
- Selmer’s subcontract called for Selmer to receive $210,000 for erecting prestressed concrete materials supplied by Blakeslee-Midwest.
- Blakeslee-Midwest allegedly failed to perform as required, including being tardy in supplying the prestressed concrete materials, which increased Selmer’s costs and disrupted performance.
- Selmer could have terminated the subcontract without penalty, but instead orally agreed to complete the work if Blakeslee-Midwest would reimburse Selmer’s added completion costs caused by Blakeslee-Midwest’s defaults.
- After Selmer finished the work, a dispute arose over the amount owed for the extra costs.
- Selmer demanded $120,000; Blakeslee-Midwest offered $67,000 and refused to increase the offer.
- Selmer was in severe financial difficulty and accepted the $67,000 payment in settlement.
- Two and a half years later, Selmer filed a diversity suit seeking additional payment, alleging its extra costs were $150,000 (treating $120,000 as only a prior settlement position), and demanded $150,000 minus the $67,000 already received, plus consequential and punitive damages.
- Selmer conceded its lawsuit was barred if the settlement agreement was valid and therefore attacked the settlement as procured by economic duress under Wisconsin law.

## Issues

1. Whether Selmer raised a triable issue under Wisconsin contract law that the $67,000 settlement agreement was voidable for economic duress.
2. Whether Blakeslee-Midwest’s refusal to pay more than its $67,000 offer in resolution of a disputed claim constitutes the “wrongful or unlawful act or threat” required for economic duress.
3. Whether Selmer’s ability to refuse the offer and pursue legal remedies, and its two-and-a-half-year delay in challenging the settlement while retaining the payment, defeats its economic duress theory.

## Decision

- The Seventh Circuit (Posner, J.) affirmed summary judgment for Blakeslee-Midwest, Westinghouse Electric Corporation, and Federal Insurance Company.
- The court held that, even accepting Selmer’s account for summary-judgment purposes, no reasonable factfinder could conclude that the settlement was procured by economic duress under Wisconsin law.
- Blakeslee-Midwest’s firm settlement stance on a disputed obligation was treated as hard bargaining, not a wrongful threat or unlawful pressure.
- Selmer had reasonable alternatives, including refusing the discounted payment and pursuing a timely lawsuit for the amount it believed was owed.
- Selmer’s lengthy delay in repudiating the settlement, after taking the settlement money, supported enforcement of the agreement.
- Because the additional defendants’ potential liability was dependent on Blakeslee-Midwest’s, the court did not analyze them separately.

## Legal Principles

- Under Wisconsin law, economic duress requires a wrongful or unlawful act or threat by the other party that effectively overcomes the complaining party’s free will.
- Financial distress, standing alone, does not make an agreement voidable; the doctrine focuses on coercive misconduct, not merely economic pressure.
- Refusing to pay more than a settlement offer on a genuinely disputed claim is not, by itself, a wrongful threat; insisting on a discount to resolve a dispute is not extortion.
- The existence of reasonable alternatives—such as declining the offer and filing suit—cuts against a finding that assent was coerced.
- A party seeking to avoid a settlement for duress must act promptly; substantial delay while keeping the benefits of the agreement supports ratification.
- Settlement agreements are enforced as contracts, and courts are reluctant to set them aside without evidence of unlawful coercion.

## Conclusion

The Seventh Circuit enforced Selmer’s $67,000 settlement with Blakeslee-Midwest and held that Selmer’s later attempt to recover additional sums was barred because Selmer failed to show a triable claim of economic duress under Wisconsin law: Blakeslee-Midwest’s conduct amounted to bargaining over a disputed payment, Selmer had legal alternatives to settling, and Selmer waited years to challenge the agreement after accepting its benefits.


Selmer Co. v. Blakeslee-Midwest Co., 704 F.2d 924 (7th Cir. 1983)