KATIE SMITH and NORTH
CAROLINA FARM BUREAU
MUTUAL INSURANCE COMPANY,
v. New Hanover County
No. 01 CVS 3559
BOBBY JAMES MURRELL and
Ennis, Newton & Baynard, P.A., by Stephen C. Baynard, for
Young, Moore & Henderson, P.A., by Glenn C. Raynor, for defendants-appellees.
On 15 November 1997, an automobile accident occurred involving Katie Smith and Bobby Murrell, with Mr. Murrell being at fault. This appeal arises out of a dispute between Ms. Smith's underinsured motorist carrier, plaintiff North Carolina Farm Bureau Mutual Insurance Company ("Farm Bureau"), and Mr. Murrell's insurance carrier, Progressive Insurance Company ("Progressive"). Farm Bureau advanced payment of Mr. Murrell's policy limits to Ms. Smith and, in this action, sought reimbursement from Progressive.
Farm Bureau appeals from the trial court's judgment, following a
bench trial on stipulated facts, concluding that Farm Bureau's
claim was barred by the statute of limitations. Farm Bureau seeks
reversal on the grounds that the facts establish (1) an enforceable
settlement agreement between the carriers, and (2) the defense of
equitable estoppel. Because the stipulated facts support the trial
court's conclusion that Farm Bureau did not accept Progressive's
settlement offer in a reasonable time and that Farm Bureau did not
prove the elements of equitable estoppel, we affirm the trial
6 September 2000 letter, stating that Farm Bureau was unwilling to
sign the release provided by Mr. Arredondo with its current wording
and insisting on reimbursement for the full $25,000.00. Mr. Gray
suggested that his prior correspondence substitute for a release.
In a letter dated 28 September 2000, Mr. Arredondo replied, "I have
reviewed your September 6, 2000 letter with management and we agree
with you up to a point." Progressive stated that it would not
require Farm Bureau to sign a full release, but it would require
Ms. Smith to do so. Mr. Arredondo enclosed another release for Ms.
Smith's signature, and repeated that Progressive would pay "the
remainder of [Progressive's] policy limits" to Farm Bureau only
upon the return of the release signed and dated by Ms. Smith.
Progressive received no response to Mr. Arredondo's 28 September
2000 letter, and Farm Bureau did not return the release.
The three-year statute of limitations on Ms. Smith's claims ran on 15 November 2000. Progressive heard nothing further from Farm Bureau until April 2001, when Mr. Gray contacted Mr. Arredondo and requested that Progressive make payment of $25,000.00 to Farm Bureau. On 18 April 2001, Mr. Arredondo notified Farm Bureau that no payment would be made without proof that the statute of limitations had been tolled. Finally, on 25 May 2001, Farm Bureau provided to Progressive a copy of a "Full Release Of All Claims With Indemnity" signed by Ms. Smith. The release did not state when Ms. Smith actually signed it.
On 28 August 2001, plaintiffs filed this action, alleging motor vehicle negligence and breach of contract and seeking a
declaratory judgment. The parties filed cross-motions for summary
judgment that the trial court denied. The case was tried to the
Honorable Ernest B. Fullwood in a bench trial on stipulated facts.
Judge Fullwood entered judgment in favor of defendants on 11 June
2003. Plaintiffs filed timely notice of appeal to this Court.
extent that Ms. Smith's claims against Mr. Murrell are barred by
the statute of limitations, Farm Bureau's subrogation claims are
It is undisputed that the statute of limitations on Ms. Smith's claims expired on 15 November 2000. Since Farm Bureau did not file suit until 28 August 2001, its subrogation claim would ordinarily be barred. Farm Bureau argues, however, that the statute of limitations does not bar Farm Bureau's subrogation claim because (1) it entered into an enforceable settlement agreement with Progressive, or, alternatively, (2) if no agreement exists, Progressive is equitably estopped from asserting the statute of limitations as a defense.
A. Existence of a Settlement Agreement
With respect to the existence of a settlement agreement between the carriers, the trial court concluded that "there was never any meeting of the minds of the parties with regard to the terms of any alleged contract to settle Farm Bureau's subrogation claims." Accordingly, the trial court ruled that "[t]here is no existing contract between Progressive and Farm Bureau pursuant to which Farm Bureau is entitled to recovery of any damages from defendants Progressive or Mr. Murrell as a result of the November 15, 1997 accident between plaintiff Ms. Smith, and Mr. Murrell."
"It is axiomatic that a valid contract between two parties can only exist when the parties 'assent to the same thing in the same sense, and their minds meet as to all terms.'" Normile v. Miller, 313 N.C. 98, 103, 326 S.E.2d 11, 15 (1985) (quoting Goeckel v.
Stokely, 236 N.C. 604, 607, 73 S.E.2d 618, 620 (1952)). Mutual
assent _ or a "meeting of the minds" _ requires that the party
accepting an offer communicate to the offeror an acceptance of the
"exact terms" set out in the offer. Id. If the acceptance
attempts to change the terms of the offer or add any new terms,
"'there is no meeting of the minds and, consequently, no
contract.'" Id. (quoting 8A G. Thompson, Commentaries on the
Modern Law of Real Property, § 4452 (1963)). Such a purported
acceptance is actually a counteroffer that amounts to a rejection
of the original offer. Id. See also Richardson v. Greensboro
Warehouse & Storage Co., 223 N.C. 344, 346, 26 S.E.2d 897, 898
(1943) (citations omitted) ("There must be no lack of identity
between offer and acceptance, and the parties must appear to have
assented to the same thing in the same sense."). Nevertheless, as
our Supreme Court has explained,
Where the contract, as here, is in several writings _ as offer and acceptance _ and not contained in a single document which both parties have executed, the Court will not, of course, be astute to detect immaterial differences in the phrasing of offer and acceptance which might defeat the contract, but will try to give to each writing a reasonable interpretation under which substantial justice may be reached according to the intent of the parties. But it is the mutual intent that governs, and for this reason there must be substantial agreement between offer and acceptance in all material particulars in order that such mutuality may appear.
Id. The question presented by this appeal is whether there was agreement on all material terms.
"immaterial." Farm Bureau cites Carver v. Britt, 241 N.C. 538, 85
S.E.2d 888 (1955), in which a telegram stating "[y]our telegram
relative sale my property is accepted subject to details to be
worked out by you and T. O. Pangle" was held to be an acceptance of
an offer to purchase real property. The Court stated that "[w]here
an offer is squarely accepted in positive terms, the addition of a
statement relating to the ultimate performance of the contract does
not make the acceptance conditional and prevent the formation of
the contract." Id. at 540, 85 S.E.2d at 890. With respect to the
telegram, the Court observed, "[t]he defendant's acceptance of the
offer was positive. How can a statement relating not to the making
of the contract, but merely to the working out of the details of
performance be deemed to change it?" Id. at 541, 85 S.E.2d at 891.
In this case, however, Farm Bureau never positively accepted Progressive's offer. Farm Bureau had flatly refused to sign a release on its own behalf, as requested in Progressive's first offer, and then did not communicate any agreement to having Ms. Smith sign the second proposed release. The question of the release did not relate "merely to the working out of the details of performance," id., but instead went to the heart of the contract. The wording of the release was at the core of the negotiations and was an issue on which the parties disagreed. Moreover, there was also a dispute as to the amount to be paid by Progressive. Progressive offered to pay $24,845.50, while Farm Bureau insisted on $25,000.00. Even though the difference is the modest amount of
$154.50, we cannot say that the lack of agreement as to the amount
to be paid involved an immaterial term.
Here, the material terms of the settlement were the amount to be paid by Progressive and the release to be provided by Farm Bureau. Since neither of these terms was finally agreed upon in the series of letters in the summer of 2000, the trial court properly concluded there was no settlement agreement between the carriers as of September 2000.
Farm Bureau alternatively contends that, even if there was no contract formed in September 2000, it accepted Progressive's 28 September 2000 offer by returning the release in May 2001. The trial court, however, concluded that Farm Bureau did not accept the 28 September 2000 counteroffer within a reasonable time. We agree with the trial court.
"'As a general rule, where no time is fixed for the termination of a contract it will continue for a reasonable time, taking into account the purposes that the parties intended to accomplish . . . .'" City of Gastonia v. Duke Power Co., 19 N.C. App. 315, 318, 199 S.E.2d 27, 30 (emphasis added) (quoting 2 Strong's N.C. Index 2d Contracts § 17, at 322), cert. denied, 284 N.C. 252, 200 S.E.2d 652 (1973). Here, Farm Bureau did not send Progressive a copy of the release signed by Ms. Smith until 25 May 2001. By that time, the statute of limitations period had run, and the condition included in Progressive's offer _ the release _ was no longer meaningful. The trial court did not, therefore, err in
concluding that Progressive's offer was not accepted within a
B. Equitable Estoppel
Farm Bureau also assigns as error the trial court's conclusion that equitable estoppel did not bar Progressive from raising a statute of limitations defense. On this issue, the trial court concluded that "[p]laintiffs have not presented evidence to this Court that defendant Mr. Murrell or defendant Progressive engaged in any conduct or statement to plaintiffs which would support the application of equitable estoppel to preclude defendants' assertion of the applicable statute of limitations."
North Carolina courts "have recognized and applied the principle that a defendant may properly rely upon a statute of limitations as a defensive shield against 'stale' claims, but may be equitably estopped from using a statute of limitations as a sword, so as to unjustly benefit from his own conduct which induced a plaintiff to delay filing suit." Friedland v. Gales, 131 N.C. App. 802, 806, 509 S.E.2d 793, 796 (1998). The essential elements of equitable estoppel are:
"(1) conduct on the part of the party sought to be estopped which amounts to a false representation or concealment of material facts; (2) the intention that such conduct will be acted on by the other party; and (3) knowledge, actual or constructive, of the real facts. The party asserting the defense must have (1) a lack of knowledge and the means of knowledge as to the real facts in question; and (2) relied upon the conduct of the party sought to be estopped to his prejudice."
false sense of security and caused Farm Bureau to forgo pursuing
its legal remedy against Mr. Murrell.
In a series of cases, this Court has held that "requests for further negotiations or participation in settlement discussions are not conduct which would invoke the doctrine of equitable estoppel and prevent a party from relying on a statute of limitations defense." Teague v. Randolph Surgical Assocs., P.A., 129 N.C. App. 766, 772, 501 S.E.2d 382, 387 (1998). In Teague, the parties' representatives engaged in negotiations, and the defendants' representative proposed a time and date to meet with counsel and discuss settlement. Even though the plaintiffs' counsel agreed to the scheduled meeting, the defendants' representative canceled further negotiations, citing his belief that the claim was time- barred. This Court held that "[defendant's representative's] offer to discuss settlement or possible arbitration was not of such a nature as to reasonably lead plaintiffs to believe that defendants would not assert any defenses they might have, including the statute of limitations, in the event settlement was not accomplished." Id.
Similarly, in St. Paul Mercury Ins. Co., St. Paul conceded, during negotiations between the parties, that there was the "possibility" of coverage under the St. Paul policy, and later proposed a compromise to Duke by tendering 50% of the legal expenses incurred by Duke. 95 N.C. App. at 673, 384 S.E.2d at 43. The Court held that this was not sufficient to show that St. Paul should be equitably estopped from pleading the statute of
limitations because the parties' participation in settlement
negotiations did not waive St. Paul's right to assert the statute
of limitations. Id. The Court observed that "'[m]ere negotiations
with a possible settlement unsuccessfully accomplished is not that
type of conduct designed to lull the claimant into a false sense of
security so as to constitute an estoppel by conduct thus precluding
an assertion of . . . [limitations] by the insured.'" Id.
(alteration in original; quoting Desai v. Safeco Ins. Co. of
America, 173 Ga. App. 815, 328 S.E.2d 376, 379 (1985)).
Plaintiffs cite Duke Univ. v. Stainback, 320 N.C. 337, 357 S.E.2d 690 (1987), as analogous to the present case. In Stainback, the defendant's counsel repeatedly assured Duke that the defendant's accrued bills would be paid. When Duke subsequently filed suit for payment, the defendant asserted a statute of limitations defense. Our Supreme Court held:
[T]he facts found are sufficient to support the conclusion that Stainback is estopped to plead the statute of limitations as a defense. The factual findings indicate a course of conduct by Stainback, through his attorney, which misled Duke. The actions and statements of Stainback's attorney caused Duke to reasonably believe that it would receive its payment for services rendered once the case between Stainback and Investors was concluded, and such belief reasonably caused Duke to foregoing pursuing its legal remedy against Stainback. The actions and statements of Stainback lulled Duke into a false sense of security. Defendant has breached the golden rule and fair play, justifying the entry of equity to prevent injustice.
Id. at 341, 357 S.E.2d at 693.