My colleague, Alec Wisner, brought two interesting court decisions to my attention. (Thank you, Alec!). The first is an unpublished decision in California, Cosolo v. Verizon California, Inc., Court of Appeals of California, Fourth District, Case No. E409017, 2011 Cal. App. Unpub. Lexis 1908 issued March 14, 2011. ( cosolo_w_20_verizon_californ) In this case, Plaintiffs sued Verizon Communications, Inc. and its subcontractors for nuisance and negligence. In laying underground fiber optic cable, one of Verizon’s subcontractors punctured a lateral sewer line connecting the Plaintiffs’ homes to the city’s main line. As a consequence, the homes were flooded with raw sewerage.
The litigation proceeded quite vigorously with voluminous discovery being conducted. But, after awhile, the parties settled, although leaving the issue of attorneys’ fees to be decided by motion before the court. Subsequently, the motion for attorneys’ fees was duly filed, and the trial court awarded fees.
Verizon appealed the award. In an attempt to beef up its reply brief, it sought to augment the record on appeal by including both deposition transcripts which were never considered by the court below and mediation briefs which, in no respect, would ever be considered by the trial court. (Id. at *7 – *9).
As one might surmise, the appellate court denied the motion to augment. Citing California Evidence Code §1119(b), the appellate court pointed out that “no writing . . . that is prepared for the purpose of . . . a mediation . . . is admissible . . . and disclosure of the writing shall not be compelled . . .”. After reviewing the mediation brief, the appellate court noted that “. . . the brief itself reflects that it is the very type of writing prepared for mediation that is forbidden from disclosure.” The court agreed that Verizon’s disclosure of the brief “is an egregious violation of mediation confidentiality” and agreed to entertain the argument that Verizon should be monetarily sanctioned for such tactics. (Id. at *8 – *10).
The second decision arises out of the federal court in Florida and shows just how difficult it is to undo a settlement. In Shepard v. Florida Power Corporation, U.S. District Court, MD. Florida, Tampa Division, Case No. 8:09-CV-2398 – T- 27 TGW (2011 U.S. Dist. Lexis 44242), Plaintiff sued Defendant alleging racial discrimination and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000e et seq. as well as related state law claims. The suit was filed in November 2009. ( shepard_w_20_florida_w_20_po)
Almost a year later, in late September 2010, the parties participated in a court-ordered mediation. After 6 to 7 hours of mediation, the parties settled, and Plaintiff signed a settlement agreement.
Afterwards, Plaintiff’s counsel moved to withdraw on the basis that Plaintiff refused to complete the settlement documentation and refused to communicate with counsel. The court granted the motion.
The Defendant moved to enforce the settlement. With new counsel, Plaintiff moved to set it aside on grounds of duress and lack of capacity. Plaintiff’s new counsel contended that:
“(1) at the end of the mediation conference, Plaintiff (who has a heart condition including blockage of four arteries) began to experience chest pain, a headache, and some faintness and dizziness; (2) Plaintiff was crying and had difficulty talking, and his former counsel made a remark to him whose substance cannot be discerned from the motion (Plaintiff’s [former] counsel said to the Plaintiff or [sic] that Plaintiff needed to go to his began his behind [sic] because he had a bad heart” [DKt. 43 at 2]) and thereafter acknowledged to Plaintiff’s spouse that Plaintiff was “not okay.” Id.; (3) Plaintiff’s former counsel responded to the spouse’s expression of concern about Plaintiff’s health by indicating (outside Plaintiff’s presence) “that Plaintiff needed to sign the papers and get this behind him and will on [sic] with her [sic] to the Plaintiff,” Id.; (4) after taking some additional medication, Plaintiff continued to experience chest pains; (5) after the mediator stated that Defendant was going to leave if Plaintiff did not accept the settlement, Plaintiff signed the agreement while “crying and holding his head down and not talking.” Id. at 3, and (6) the settlement amount was “considerably less than what Plaintiff had discussed with Plaintiff’s counsel,” and was an amount that Plaintiff believes to be unfair, id.”
(Id. at *3 – *4).
In sum, Plaintiff urged he was coerced by his former attorney into signing an unfair settlement agreement and so should not be required to go through with it.
The court rejected both arguments (i.e., duress and lack of capacity). With respect to “duress”, it pointed out that the alleged improper influence must come from the other contracting party; not from his own attorney. “Plaintiff’s mere dissatisfaction with the advice of his then attorney cannot support a finding that his agreement to settle and release his claims were not knowing and voluntary.” (Id. at *10).
With respect to Plaintiff’s claim that he lacked capacity, the court pointed out that “Plaintiff does not allege facts showing that he could not understand the nature and effect of the agreement.” (Id at *12). Further, the court noted that although Plaintiff claims he was suffering chest pains et cetera, he does not allege that either the Defendant or the mediator were aware of his medical distress and took advantage of it. Rather, in sum, what he alleges is that “it was his attorney’s pressure to settle that induced him to execute the agreement” (Id. at *13). Thus, while Plaintiff may be greatly dissatisfied with his attorney’s advice and conduct, he has not shown sufficient duress or lack of capacity to undo the settlement. (Id. at *12 – *13).
Consequently, the court granted Defendant’s motion to enforce the agreement and denied Plaintiff’s motion to set it aside.
Courts in California have reached similar results; most recently in Chan v. Lund (Case No. HO34196 – Sept. 29, 2010) that I discussed in my blog post “Signing on the Dotted Line.” And, of course, in Cassel v. Superior Court, California Supreme Court, Case No. 5178914 issued January 13, 2011. (Cassel opinion)
In short, executing a settlement agreement is “for keeps”; very, very rarely will a court undo it.
. . . Just something to think about.