Sumerel v. Goodyear Tire & Rubber Co.
232 P.3d 128 (2009)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A communication that invites further discussion is a preliminary negotiation, not a binding offer, and an offeree may not form an enforceable contract by "snapping up" a purported offer they know or have reason to know is based on a significant, material mistake.
Facts:
- Plaintiffs won a products liability jury verdict against Goodyear Tire & Rubber Company (Goodyear) for a defective hose.
- The jury awarded various damages and specified that Goodyear was only responsible for a percentage (36% or 48%) of certain damages categorized as "other costs and losses."
- Following an appeal, the case was returned to the lower court for the sole purpose of calculating prejudgment interest on these damages.
- Lawyers for both parties began exchanging calculations to agree on the final amount, but discovered a "six-figure" discrepancy between their respective totals.
- Goodyear's co-counsel, Brooks, sent an email to plaintiffs' co-counsel, Gray, with attached charts, stating, "Here are our charts providing the numers [sic] that Goodyear believes are appropriate.... Please review these, then let’s discuss."
- The charts contained a clerical error, calculating Goodyear's liability for "other costs and losses" at 100% instead of the jury's 36%/48% allocation, resulting in an overstatement of over $550,000.
- Plaintiffs’ counsel recognized the obvious error but did not inform Goodyear's counsel or call to discuss the charts as requested.
- Instead, plaintiffs' lead counsel contacted Goodyear's lead counsel (who had not been involved in the recent calculations) and purported to "accept" the figures in the charts as a final settlement offer.
Procedural Posture:
- Plaintiffs sued Goodyear in a Colorado district court (trial court) for products liability.
- A jury returned a verdict in favor of the plaintiffs, and the trial court entered judgment.
- The trial court denied plaintiffs' request for prejudgment interest on a portion of the damage award.
- Both parties appealed to the Colorado Court of Appeals (intermediate appellate court).
- The Court of Appeals affirmed the damages but reversed the denial of prejudgment interest, remanding the case to the trial court with instructions to calculate the interest.
- On remand, plaintiffs filed a motion in the district court to enforce a purported settlement agreement based on Goodyear's calculations.
- The district court granted the motion, ruling that an enforceable agreement had been formed.
- Goodyear (appellant) appealed the district court's enforcement order to the Colorado Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an email containing a significant calculation error, sent during ongoing discussions to reconcile figures and explicitly inviting further conversation, constitute a valid and enforceable settlement offer?
Opinions:
Majority - Judge Gabriel
No, an email containing a significant calculation error, sent during ongoing discussions and inviting further conversation, does not constitute a valid and enforceable offer. First, the context and language of the email indicate it was part of preliminary negotiations, not a final offer. The parties were attempting to reconcile a mathematical discrepancy, not negotiate a new settlement amount. The email's language—stating the numbers are what Goodyear 'believes are appropriate' and inviting a discussion ('let's discuss')—demonstrates an intent to continue dialogue, not to be immediately bound. Second, under the 'snapping up' doctrine, an offeree cannot accept an offer that is 'on its face manifestly too good to be true.' Plaintiffs' counsel immediately recognized the over $550,000 error, which was inconsistent with the jury's verdict and prior communications. This knowledge created a duty to inquire about the obvious mistake rather than attempting to accept it. As an alternative holding, even if a contract had been formed, it would be voidable due to unilateral mistake. Goodyear made a material mistake, plaintiffs knew of the mistake, and enforcing the contract would be unconscionable to Goodyear while providing plaintiffs an undeserved windfall. Voiding the agreement imposes no hardship, as plaintiffs will still receive the full amount to which they are legally entitled.
Analysis:
This decision reinforces the principle that contract formation is judged by an objective standard of what a reasonable person would understand from the parties' communications and the surrounding context. It solidifies the 'snapping up' doctrine, establishing that an offeree's knowledge of a mistake can prevent the formation of a valid contract and imposes a duty to inquire when an offer appears too good to be true. The ruling also underscores the power of courts to use the equitable doctrine of unilateral mistake to prevent one party from unconscionably profiting from another's obvious clerical error, thereby promoting fairness over rigid formalism in contract law.
Unlock the full brief for Sumerel v. Goodyear Tire & Rubber Co.