Yaros v. Trustees of the University of Pennsylvania

Superior Court of Pennsylvania
742 A.2d 1118 (1999)

ELI5:

Rule of Law:

An oral settlement offer made during trial that does not specify an expiration date remains open for a reasonable period of time. The determination of what constitutes a reasonable time is a question of fact dependent on the surrounding circumstances and does not automatically terminate upon the commencement of the next phase of the trial.

Facts:

Dr. Nancy Yaros sued the Trustees of the University of Pennsylvania for negligence after she fell at one of its ice skating rinks.
During the trial, Dr. Yaros's counsel, Attorney Haaz, informed the University's counsel, Attorney Orlando, that a $1.5 million settlement demand would expire once Dr. Yaros testified.
On January 29, 1998, during a ten-minute recess just before closing arguments, Orlando offered Dr. Yaros a $750,000 settlement.
Orlando told Haaz, 'you’ve got to get back to me,' but did not state that the offer would expire when closing arguments began or set any other explicit time limit.
Haaz was unable to confer with Dr. Yaros before closing arguments commenced.
During the University's closing argument, Dr. Yaros authorized her attorney to accept the $750,000 offer.
Immediately following the conclusion of all closing arguments, at a sidebar conference, Haaz informed Orlando that Dr. Yaros accepted the offer.
Orlando responded to the acceptance by stating, 'I don’t know if it’s still there, judge.'

Procedural Posture:

Dr. Yaros filed a negligence action against the University in the trial court.
The case proceeded to a jury trial.
After closing arguments but before jury deliberations, Dr. Yaros orally moved to enforce the settlement agreement.
The trial judge denied the motion pending an evidentiary hearing and the jury's verdict.
The jury returned a verdict in favor of the University.
Following the trial, Dr. Yaros filed a formal Motion to Enforce Settlement.
After conducting evidentiary hearings, the trial court granted Dr. Yaros's Motion to Enforce Settlement.
The University, as appellant, appealed the trial court's order to the Superior Court of Pennsylvania, with Dr. Yaros as appellee.

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Issue:

Does an oral settlement offer, made without a specified time limit immediately before closing arguments, remain open for acceptance approximately 70 minutes later, after closing arguments have concluded?

Opinions:

Majority - Orie Melvin, J.

Yes, the offer remains open for acceptance because it was accepted within a reasonable time under the circumstances. Although oral offers made during direct negotiations ordinarily terminate at the end of the conversation (the 'conversation rule'), a contrary intention was indicated here when the University's counsel told Dr. Yaros's counsel to 'get back to me,' thereby extending the time for acceptance beyond their immediate conversation. Because no specific time limit was placed on the offer, it remained open for a reasonable time. Proceeding to closing arguments did not constitute a rejection of the offer, as Dr. Yaros was not put on notice that such conduct would be viewed as a rejection, and the University's counsel believed she was not even aware of the offer at that time. The roughly seventy minutes that passed between the offer and acceptance was a reasonable period, and the commencement of a significant trial event like closing arguments does not, as a matter of law, terminate a pending settlement offer.

Analysis:

This case clarifies the application of contract principles to oral settlement offers made in the fluid, high-pressure environment of a trial. It establishes that the 'conversation rule,' which presumes an oral offer lapses when the conversation ends, can be overcome by words or circumstances indicating the offer remains open. The decision reinforces that if an offeror wishes to impose a strict deadline, such as the start of closing arguments, they must do so explicitly and unambiguously. By treating the question of 'reasonable time' as a fact-intensive inquiry, the court signals that it will not create rigid per se rules about when trial offers expire, thereby placing the burden on the offering party to be clear about the terms of its offer.

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