Misrepresentations by Tortfeasor During Mediation: Fool Me Once…
So you’ve sued someone for undue influence, tortious interference with expectancy of inheritance, or a similar tort grounded upon fraud. It is well-settled in Florida that such causes of action are based upon fraud and must be pled with specificity. Although the Florida Supreme Court did acknowledge in In re Carpenter’s Estate, 253 So.2d 697 (Fla. 1971) that undue influence by its very nature is committed to secret and thus is not susceptible to direct proof, plaintiffs are faced with another dilemma when trying to settle undue influence cases at mediation: “What else did the defendant do that we don’t know about?”
Deciding whether and upon what terms to settle a case is often difficult enough, so the unknown only makes it even more difficult when contemplating whether to give the defendant a full general release. While Florida law does provide a basis for obtaining relief from settlement agreements if the agreement was induced by fraud, an action to set aside a settlement based upon fraud must also be pled with specificity. A recent opinion by the Third DCA in Sugar v. Estate of Stern, 40 Fla. L. Weekly D2191 (Fla. 3d DCA 2015) lays some of the groundwork for what plaintiffs should do to protect themselves at settlement from a defendant with a propensity for being dishonest. In that case, the Court held that when a settlement agreement provided that it was based upon representations of the parties as of the date of the settlement, but did not specify the representations, the agreement could not be avoided on the basis of misrepresentations during settlement negotiations by a party who had already been accused of being dishonest. The Court reasoned that unless the representations of the parties are (a) specifically written and incorporated into the agreement, or (b) are attached or referred to in separate writing detailing those representations, then there is no evidentiary foundation for a later attempt to avoid the settlement agreement.
Aside from the fact that statements made during settlement negotiations are privileged and inadmissible in subsequent proceedings in the same case, the Third DCA resorted to a simpler adage, “fool me once, shame on you; fool me twice, shame on me.” The lesson to be learned here is that when a settlement agreement is induced by representations from the opposing party, make sure the settlement agreement spells out each and every material representation that was relied upon in arriving at the decision to execute the settlement agreement.