COA splits on whether email was contract between apartment owner, vendor

A settlement offer received via email between a former apartment owner and a service vendor was an enforceable contract, a majority of the Indiana Court of Appeals has affirmed. A dissenting judge, however, would reverse the order requiring the parties to be bound by the terms of a March 2016 email exchange.

Appellant-plaintiff Jetz Service Company Inc. in September 2015 entered a lease with Ellis Ventures to install three pay-to-use washers and dryers in the Cherry Street Apartments in Terre Haute. The following February, however, Michael Ellis of Ellis Ventures told Jetz that the lease would be terminated because Ellis was considering eliminating the apartment complex.

Michael Ellis and Brad Applegate, a Jetz representative, agreed via email in March 2016 to an $8,000 settlement to break the lease. However, after several months without contact, Ellis in June 2016 told Applegate that the apartments had been sold, rescinded the previous offer and offered to pay $120 a month to keep the units in storage until the lease was terminated.

When further settlement discussions failed, Jetz sued Ellis and Highland Quarters LLC, which had bought the apartments, for breach of contract. Two years into the litigation, Ellis moved to enforce the original settlement agreement that called for an $8,000 payment. The Vigo Superior Court entered an order enforcing the settlement, finding that even though Jetz wanted a greater amount and Ellis wanted to pay less, “both are forgetting that both agreed on March 17, 2016 to settle.”

Jetz appealed, arguing the March 2016 agreement was not a valid settlement agreement because there was no “meeting of the minds.” An Indiana Court of Appeals majority, however, affirmed in Jetz Service Company, Inc. v. Ellis Ventures d/b/a Cherry Street Apartments, Michael Ellis, and Highland Quarters, LLC, 20A-PL-1461.

“Here, as the trial court found, on March 16, 2016, there was an offer, acceptance, and consideration. The parties agreed that Ellis would pay Jetz $8,000, that their lease would be terminated, and that Jetz would remove its equipment from Cherry Street Apartments,” Judge Patricia Riley wrote, joined by Judge Edward Najam. “The essential terms of the settlement agreement were reached on that day without any qualification. Their exchange of emails created a contract, and the execution of a more elaborate written agreement to memorialize the contract was not required.

“As there is evidence in the record to support the trial court’s judgment that there was a meeting of the minds on March 16, 2016, we conclude that the trial court did not err in granting Ellis’s motion to enforce the settlement agreement,” Riley wrote.

But Judge Terry Crone dissented, writing separately that “the majority has disregarded the critical second step of the analysis: determining whether the parties ‘intended that they would be bound only after executing a subsequent written document.’ Wolvos v. Meyer, 668 N.E.2d 671, 675 (Ind. 1996).”

“Based on the parties’ conduct and correspondence, I believe that the answer is yes,” Crone wrote, pointing to Ellis’ request that Jetz forward him a termination agreement and Ellis’ later desire to revise the terms of the agreement. “… Because the parties intended that they would be bound only after executing a subsequent written document that was never executed, I would reverse the trial court’s order granting Ellis’s enforcement motion.”

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