Wednesday, July 20, 2016

Plaintiff Changes Mind about Settlement

Originally published by Thomas J. Crane.

In many lawsuits, the two opposing parties eventually turn to mediation or talks about settlement. Not every case settles at mediation, but many do. Typically at mediation, if the parties reach a verbal agreement, they then reduce that verbal agreement to a very brief written agreement. The mediator will usually have on hand a generic, one-size-fits-all agreement. The idea is that the parties will then negotiate a more detailed written agreement in the next few days. But, what happens if there are new provisions in the more detailed agreement? That is often the case, since attorneys for both sides typically are accustomed to fairly mundane clauses that may cause concern to a person new to the process. Most, if not all, plaintiffs are new to the process. For example, all settlement agreements in employment cases involve a confidentiality clause. But, the generic, two page settlement agreement used by most mediators does not include a confidentiality clause. When the plaintiff signs that brief agreement, there is no confidentiality clause. What happens if a plaintiff sees new clauses as some form of subterfuge?

Trust in your lawyer is key at times like that. Many plaintiffs have no real understanding of these “legalese” clauses. They are asked to learn too much too fast. It can be overwhelming. Many plaintiffs’ first reaction is to run away. Buying a car is similar. The car salesman is so friendly and smiling. Until the big moment. It is time to sign. He tries to rush you through it. You know you need to read those papers. But, that car is so shiny and pretty. Why wait?

But, a settlement is different. You had to compromise. You had to accept $20,000 when you were convinced your case was worth half a million. That car just ain’t so pretty at moments like that.

In Sanders v. UNUM Life Ins. Co. of America, No. SA-15.CV-310-DAE (W.D. Tex. 2/5/2016), the plaintiff appears to have had a similar reaction. She went to mediation over an ERISA claim. The plaintiff had received disability benefits and was then cut off. She filed suit. The life insurance company counter-sued saying Mrs. Sanders had received $35,000 in benefits that she should not have received. UNUM wanted that $35,000 back. It was a major lawsuit. The parties reached an agreement at mediation on Nov. 5, 2015. They signed the short mediator’s agreement. But, when they started working on the more detailed settlement agreement, Mrs. Sanders balked. She met with her lawyer for over two hours. They exchanged emails. They spoke on the phone. According to the plaintiff’s lawyer, the plaintiff raised new concerns that she had not previousl;y raised. The plaintiff’s hesitation and discussions extended over two months.

The discussions between a lawyer and client are privileged. So, we do not know what specific new concerns were raised by the plaintiff. If the new concerns were based on new clauses added by the insurance company, then her new concerns might have some justification. But, that appears to not be the case. Because the plaintiff’s lawyer asked to withdraw. After two months of negotiating, the insurance company said it would file suit to enforce the brief mediator’s settlement agreement. The plaintiff had signed that brief agreement on Nov. 5.  Now, in late January, 2016, the insurance company had already agreed to make some changes to the settlement agreement to satisfy Mrs. Sanders. But, she apparently was still raising new issues. So, they threatened to file a motion to enforce the brief settlement agreement.

At this point, the plaintiff’s lawyer must decide whether she can legitimately oppose a motion to enforce. If there are no grounds to oppose the motion to enforce the brief settlement agreement, then she must withdraw from the case. Otherwise, the plaintiff’s lawyer risks being sanctioned by the court. A frivolous breach of the brief settlement agreement is a breach of contract. If a person lacks good grounds for doing so, both the party and the lawyer risk being sanctioned. This is federal court, after all.  So, Mrs. Sanders’ lawyer asked to withdraw. The court granted the motion to withdraw.

Moral of the story is trust your lawyer. If you do not trust your lawyer, you need a new one. Second moral is to be careful when you agree to settlement. Once you sign that piece of paper, no matter how brief and simple it is, you are bound. Third moral is that buyer’s remorse is as common in settling cases as when buying a shiny, new car. Understand it and be ready for some buyer’s remorse the day after.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

from Texas Bar Today
via Abogado Aly Website

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