Panel knocks lawyers for language in settlement agreement; says "precision is important in writing"

By Jonathan Bilyk | Apr 3, 2014


One of the world’s largest parcel shipping companies and a man suing it over a worker’s compensation claim could have avoided additional and costly legal proceedings if lawyers for both sides had “been more studious and careful in choosing” a word other than “plus” in a settlement agreement reached months ago, an Illinois appeals panel held.

In a March 26 opinion, the First District Appellate Court ruled against plaintiff James Paluch in his dispute with his former employer, United Parcel Service (UPS), after determining the language in the parties' settlement agreement was unclear and ambiguous, and thus, required an evidentiary hearing at the trial court level to clarify.

The panel's opinion overturned the decision of Cook County Circuit Judge Daniel Gillespie, who ruled the language laying out the terms of the settlement agreement required UPS to pay Paluch a Medicare set-aside annuity, in addition to a $400,000 cash payment to settle his worker’s compensation claim.

Justice Michael B. Hyman authored the court’s opinion. Justices Aurelia Pucinski and Mary Anne Mason concurred in the judgment and opinion.

In addition to resolving the dispute, the panel's opinion took the lawyers to task for failing to resolve the issue on their own by drafting a document containing more precise verbiage.

“In drafting settlement agreements, lawyers should, quoting novelist Vladimir Nabokov’s advice to writers, ‘have the precision of a poet,’ leaving out the poet’s creativity, originality or artistic flourishes,” Hyman wrote for the panel.

He added, “Had the lawyers here been more studious and careful in choosing a single word (‘plus’), this case undoubtedly would not have been necessary.”

The dispute between UPS and Paluch centers on one word in the agreement: “Plus.”

The agreement, as quoted in the appellate opinion, states: “Respondent (UPS) agrees to pay and Petitioner (Paluch) agrees to accept $400,000 in a lump sum plus payment of a Medicare set-aside (MSA), in annuity form, in full and final settlement of all claims for benefits past, present and future based on injuries arising out of an accident on or about July 11, 2006.”

However, further down in the settlement agreement, additional language states the “total amount of the settlement” would be $400,000, minus attorney’s fees and fees for various medical reports, which would bring the “amount employee will receive” to $353,788.16.

Language in a Social Security rider to the settlement noted that Paluch would receive $282.31 per week, based on his life expectancy.

UPS paid Paluch what it believed the settlement agreement stipulated.

Paluch, however, filed suit, claiming the settlement agreement required UPS pay him $400,000, plus the MSA annuity, which is a device included in settlement agreements to ensure that a party does not attempt to shift the burden of paying for certain medical care onto Medicare.

UPS appealed the trial court’s decision that went in favor of Paluch, maintaining the language was not what the judge interpreted it to be.

The appellate justices noted both UPS and Paluch agreed the language of the settlement was “unambiguous," but that both parties “assert different theories about what ‘unambiguous’ means” in this case.

The appeals panel determined the language is anything but “unambiguous,” as the settlement agreement contains “conflicting clauses,” making it difficult to discern the agreement’s true intent.

Saying that "precision is important in writing," the justices remanded the matter for the lower court to conduct an evidentiary hearing on the ambiguous wording.

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