Scottsdale retained Nelson Architectural Engineers, Inc., to evaluate the building and determine if any distress had been caused by Sandy. On December 13, 2012, Robin Kemper, a licensed professional engineer employed by Nelson, inspected the building. Ms. Kemper prepared a report dated January 4, 2013 that estimated the cost to repair the wind damage to be $314,222.49.

On January 22, 2013, Coleman retained United American Contractors to work with its insurers and address the storm damage to the building. United prepared an estimate, finding the cost to repair the wind damage to be $585,156.24.

During the next few months, United and Scottsdale exchanged estimates and discussed the appropriate costs to repair the portions of the building that had sustained wind damage. George Lester handled the negotiations on behalf of United and Scott Rothman participated in the negotiations on behalf of Scottsdale.

On March 24, 2013, Mr. Rothman submitted a revised repair estimate of $469,714.65 to Mr. Lester, which included certain items and expenses that Mr. Lester had requested, but that were not included within the prior repair estimate obtained by Scottsdale. Mr. Rothman's email stated, “Attached is revision for discussion purposes.”

On March 25, 2013, Mr. Lester replied:

I looked through the estimate. You added the items. We will work off your estimate. If we have any code upgrades required by the city, may we supplement those items if incurred? What should I tell Mr. McKeown the time frame will be for the payment? I am going to proceed with the repairs. Thank you for your help in the matter.

On March 26, 2013, Mr. Rothman sent an email response to Mr. Lester that stated, “I have requested authority to issue payment and should do so w/in a week or so.” Mr. Rothman informed Mr. Lester that he would discuss policy limitations on mold remediation and any code issues directly with Coleman. He also asked Mr. Lester for an estimate of completion.

On April 9, 2013, Mr. Rothman sent Mr. McKeown a letter that stated:

As you are aware, an agreement was reached on the replacement cost loss of covered damage to the structure subject to terms, conditions and limits of the policy, with United American Contractors in the amount of $470,714.65…. Previous payments totaling $280,649.61 have been issued and a payment of $156,575.68 is forthcoming under separate cover…. Once again, note that all options under the policy of insurance remain at your disposal, and acceptance of this check will not waive any of your rights under the policy of insurance.

Coleman cashed Scottsdale's checks, totaling $437,225.29, but never made repairs to the building. In October 2014, Coleman's counsel sent Scottsdale a repair estimate prepared by John Tricozzi, who determined that the cost to repair the damage caused by the wind to be $917,110.62.

Scottsdale refused to pay for the balance owed on the Tricozzi estimate, and Coleman filed suit against Scottsdale for breach of contract and breach of the implied covenant of good faith and fair dealing.

Scottsdale moved for summary judgment. Among other things, it argued that it was entitled to judgment in its favor on Coleman's claims because Coleman and Scottsdale had entered into a binding settlement agreement as a result of the email exchanges between Mr. Lester of United and Mr. Rothman of Scottsdale.

For its part, Coleman argued that United did not have the authority to bind it to any settlement and that, even if United did have such authority, no settlement had ever been agreed to.

The District Court's Decision

The district court ruled that disputed issues of material fact precluded the summary resolution of the parties' differing views on the purported settlement agreement.

In its decision, the district court explained that the disputed issues included:

1. Whether United had authority to bind Coleman to any settlement.

Coleman disputed that it had granted United authority to agree to a final figure out of the insurance policy, and contended that the contract between Coleman and United only allowed United to communicate with insurance companies about information generated during the scope of work and did not provide that United could bind Coleman on payment of insurance policy proceeds. Coleman also argued that Scottsdale had been aware from its communications with United that United's sole responsibility was to prepare and review damages estimates, and that United discussed the estimates with Mr. McKeown to secure funds as a starting point for the agreed-upon damages, but not as to all of the damages.

2. Whether Mr. Lester and Mr. Rothman's email exchange constituted the requisite intent that the total payment to Coleman out of the insurance policy would be limited to $470,714.65.

Coleman argued that Mr. Rothman's March 24, 2013 email with the estimate for “discussion purposes” and Mr. Lester's March 25, 2013 reply “we will work off your estimate” did not evidence the offer, acceptance, and consideration required of a valid settlement. Coleman argued that the exchange simply showed that they would continue to discuss the estimate as the repairs unfolded, but that the estimate and payment could get the ball rolling. Coleman also argued that the language of Mr. Rothman's April 9, 2013 letter –that Coleman still retained all of its rights under the policy and the acceptance of the check did not waive those rights – directly contradicted Scottsdale's position that they had settled the entire claim.

3. Whether the parties had agreed to the scope of the damages and the cost to repair those damages.

Coleman argued that to the extent that the parties had agreed to the estimate, it did not represent the final undisputed amount, as United had explained that agreeing to an “undisputed amount” with an insurance company could happen repeatedly as they negotiated and the work progressed.

4. The import of Scottsdale continuing to adjust the claim with Coleman after the purported settlement.

Coleman pointed out that in July 2013, Scottsdale wrote to Coleman that it was aware that Coleman was no longer using the services of United, and that it was prepared to re-inspect the premises. Scottsdale again suggested that it re-inspect the premises on November 22, 2013 and December 30, 2013. Coleman argued that this did not demonstrate that Scottsdale had considered the matter settled as of March 2013.

5. Why Scottsdale had not requested that Coleman sign a release.

Coleman argued that Scottsdale's failure to obtain a release from Coleman was further evidence that no valid settlement had been reached.

Scottsdale presented a different view of the parties' email exchange and their actions, including Mr. Rothman's and Mr. Lester's view that there had been a settlement, and it disputed that United did not have the authority to settle Coleman's claim with Scottsdale, as demonstrated by the parties' course of dealing. Scottsdale also argued that post-settlement conduct was irrelevant to the issue of whether a settlement had been agreed to in March 2013.

The district court ruled that Coleman had met its burden to defeat summary judgment by providing sufficient material facts that disputed Scottsdale's. It concluded that it was for a jury to decide whether the parties had entered into an enforceable settlement agreement that precluded Coleman from pursuing its lawsuit against Scottsdale.

The case is Coleman Enterprises Co. v. Scottsdale Ins. Co., No. 1:14-cv-07533-NLH-AMD (D.N.J. March 31, 2017). Attorneys involved include: WILLIAM F. MERLIN, JR., ASHLEY N. HARRIS, MERLIN LAW GROUP PA, TAMPA, FL, on behalf of plaintiff; JONATHAN MARK KULLER, CHRISTIAN ANDREW CAVALLO, CHRISTOPHER RYAN WEISS, DAVIS J. KIM, GOLDBERG SEGALLA LLP, PRINCETON, NJ 08540-6530, on behalf of defendant.