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SCHAAP v. EXECUTIVE INDUS.

April 8, 1991

KENNETH SCHAAP and MARLENE SCHAAP, Plaintiffs,
v.
EXECUTIVE INDUSTRIES, INC. and MOTOR VACATIONS UNLIMITED, INC., Defendants



The opinion of the court was delivered by: BUA

 NICHOLAS J. BUA, UNITED STATES DISTRICT JUDGE

 Nearly one year after judgment was entered in this case, the litigants are still trying to stake out their rights and liabilities. The dispute centers around a defective motor home that was manufactured by Executive Industries, Inc. ("Executive"), and distributed by Motor Vacations Unlimited, Inc. ("Motor Vacations"). The purchasers of the motor home, Kenneth and Marlene Schaap, filed suit against those two companies to recover damages stemming from the defects. The case proceeded to trial and, on May 31, 1990, the jury returned a verdict in favor of plaintiffs. The parties then entered into settlement negotiations. Plaintiffs contend that a settlement was finally reached on December 18, 1990. When defendants refused to abide by the settlement agreement, plaintiffs filed a motion to enforce the agreement. The court referred that motion to Magistrate Judge Joan H. Lefkow. In a report and recommendation dated January 28, 1991, the magistrate judge recommended that this court grant plaintiffs' motion.

 Before a court will enforce a settlement agreement, the traditional elements of a contract must be present. The parties will be bound by the agreement if "there is clearly an offer to compromise and acceptance and there is a meeting of the minds as to the terms of the agreement." McAllister v. Hayes, 165 Ill. App. 3d 426, 427, 519 N.E.2d 71, 72, 116 Ill. Dec. 481 (1988). Without establishing the existence of these elements, plaintiffs cannot prevail on their motion to enforce the settlement agreement. On the other hand, if a settlement has been reached, the terms of the agreement will be given full force and effect. Id. After all, settlement benefits not only the litigants, but the judicial system as well.

 After reviewing defendants' objections to the magistrate judge's report and recommendation, the court concludes that a settlement was reached in this case. The settlement arose from the following sequence of events.

 On October 16, 1990, after several months of negotiations, defendants extended a settlement proposal to plaintiffs. Plaintiffs were not amenable to all of the terms of this proposal, and settlement negotiations reached an impasse. On December 4, 1990, this court presided over a settlement conference, during which the parties found new inspiration to settle. The parties decided to revise the original settlement proposal. Following the conference, plaintiffs promptly sent a letter to defendants outlining their understanding of the proposed revisions. The letter specifically addressed four settlement terms that were discussed at the conference.

 In a letter dated December 5, 1990, defendants responded to each of the four points set forth in plaintiffs' December 4 letter. For the most part, defendants agreed to the revisions. But defendants took issue with a proposed revision to the payment schedule. Plaintiffs had contemplated that the first monthly installment payment would be made on January 1, 1991, with the payments continuing until July 1, 1991. Defendants, in their December 5 letter, proposed that the first installment payment be made March 1, 1991 (rather than January 1) and that payments continue until August 1, 1991.

 Plaintiffs first responded to the offer on December 7, 1990. They indicated that defendants' proposal with respect to the payment schedule was unacceptable:

 
Executive proposes that the December 1, 1990 payment of $ 20,000 be pushed back to March 1, 1991. The Schaaps have serious reservations about this additional concession in light of the uncertainty of Executive's financial situation. The Schaaps were willing to make the initial concession to push the December 1 payment back to January 1, 1991. They are unwilling at this time to make any further concessions due to the delays they have already experienced.
 
. . . .
 
We would appreciate Executive's reply either today or Monday, December 10, 1990 at the latest. . . .

 (Emphasis added.) This letter cannot be deemed an unequivocal acceptance of defendants' offer. Plaintiffs did not embrace the payment schedule referred to in the offer. *fn1" "An acceptance requiring any modification or change of terms constitutes a rejection of the original offer and becomes a counteroffer that must be accepted by the original offeror before a valid contract is formed." Ebert v. Dr. Scholl's Foot Comfort Shops, Inc., 137 Ill. App. 3d 550, 558, 484 N.E.2d 1178, 1185, 92 Ill. Dec. 323 (1985); see also Anand v. Marple, 167 Ill. App. 3d 918, 920, 522 N.E.2d 281, 283, 118 Ill. Dec. 826 (1988). By proffering a payment schedule that was different from the one proposed by defendants, plaintiffs effectively rejected defendants' offer and presented a counteroffer of their own. Plaintiffs' counteroffer did not result in a binding agreement until accepted by defendants.

 Defendants did not accept this counteroffer. Nonetheless, they did place their previous offer on the table again. On December 14, 1990, defendants contacted plaintiffs and indicated that the terms of the December 5 offer were still available, with the following modification to the payment schedule arrangement: defendants would tender a $ 15,000 payment on January 15, 1991, and the regular monthly installment payments would commence on March 15, 1991. On December 18, 1990, plaintiffs delivered a letter to defendants in which they accepted defendants' offer. ...


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