Vance v. Lozano - 981 N.E.2d 554 (Ind. Ct. App. 2012)

Rule:

A compromise, like any other contractual agreement, must be supported by consideration on both sides. Notably, a claim need not be valid or well-founded to support a compromise; rather, the settlement of a doubtful claim is sufficient consideration for a compromise if the claim is made fairly and in good faith, even if it is possibly meritless. No investigation into the character of the relative values of the different claims involved will be entered into, it being enough if the parties to the agreement thought that there was an actual controversy between them, without regard to what may afterwards turn out to have been an inequality of consideration.

Facts:

Appellant homeowner, David Vance, hired appellee contractors, Rock Solid Concrete Inc. and Francisco Lozano to do some concrete work at his Fort Wayne home. Over a year later, his driveway had some pitting. The parties disagreed over what caused the pitting and brought in a third party, who concluded that the pitting was caused by road salt—not bad concrete. Nevertheless, negotiations continued and appellee, Rock Solid, agreed to replace the driveway at no cost to appellant. When appellee, Rock Solid did not timely follow through with its promise, appellant sued in small-claims court. The small-claims court found that appellee, Rock Solid, made a good-will gesture that was not an enforceable contract. Appellant challenged the decision. 

Issue:

Under the circumstances, was there an enforceable settlement agreement between appellant homeowner and appellee contractor? 

Answer:

Yes.

Conclusion:

The court reversed the decision of the small-claims court. According to the court, there was an enforceable settlement agreement between appellant homeowner and appellee contractor that settled their dispute as to the cause of the pitting and scaling of the homeowner's driveway and that its purpose was to avoid litigation on the subject. The settlement of a doubtful claim was sufficient consideration for a compromise if the claim was made fairly and in good faith, even if it was possibly meritless. There was no evidence in the record that the homeowner had not acted fairly or in good faith.