Law Review: A duress mess
Finality should not be fleeting. A case, once settled, should not be subsequently litigated for years. But law has a mysterious of way of turning the end into the beginning. What is done can be undone. What is agreed can be rescinded.
In Laura Fettig v. Hilton Gardens Inns Management LLC et al., the California Court of Appeal, Second Appellate District, considered whether to vacate a settlement agreement where Ms. Fettig claimed to be under duress of a third party when settlement was reached.
Ms. Fettig was hit by a bus. Well, maybe. She came in contact with a bus owned by Hilton, that much is certain. But according to Hilton, Ms. Fettig was the one that did the hitting – striking her fist against the bus in anger after a perceived slight. Ms. Fettig was also injured. Well, maybe. Ms. Fettig allegedly suffered personal injuries, including “foreign accent syndrome” – a speech disorder manifesting in accented speech associated with traumatic brain injury – but offered no medical bills to support her damages. Hilton claimed Ms. Fettig faked her maladies. And that, dear readers, is a recipe for a good ol’ American lawsuit.
Ms. Fettig sued Hilton and the case proceeded to trial. But before the case was submitted to the jury for verdict, the parties agreed to settle for $85,000 – yes, Hilton agreed to make payment. The trial court put the settlement on the record, gave Ms. Fettig two breaks to think it over, and even offered to reconvene the next day. Ms. Fettig decided to move forward and agreed to the settlement on the record. The court then dismissed the jury and the case was resolved. Except, it wasn’t.
A few months later, Ms. Fettig was back with new attorneys and brought a motion to set aside the settlement. Ms. Fettig alleged her original attorney threatened her to accept the settlement by stating, among other things, “the defense will take your house for costs and I will not remain on the case any further.” She demanded the settlement agreement be vacated pursuant to California Civil Code section 1689, which permits contracts to be rescinded on various grounds, including when a contract is obtained under duress. The trial court denied the motion and Ms. Fettig appealed the decision.
The court of appeal sided with Hilton. Pursuant to California case law, a party cannot rescind a contract due to duress by a third party if “the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.” The court held that Hilton had no knowledge of the alleged duress by Ms. Fettig’s attorney, had materially relied on the settlement agreement, and was, throughout the settlement process, “blameless.” The court summarily denied Ms. Fettig’s rescission due to duress argument.
The court of appeal also denied Ms. Fettig’s contention that the settlement should be set aside on broad equitable principles. The court noted that “weaknesses plagued Fettig’s case” and that the case was “wafer thin.” Regarding the foreign accent syndrome, the court pointed out that Ms. Fettig spoke in an accent in front of the jury, but curiously lost the accent when the jury was absent. The court also highlighted Ms. Fettig’s “relatively calm and composed demeanor” when agreeing to settle, and her own assertion of being “capable” to enter the settlement agreement. On such facts, the court held the settlement was not only equitable, it was “generous.”
The settlement agreement stands, and so, the matter is concluded. Well, not exactly. Court records indicate Ms. Fettig is suing her original attorney for malpractice. Finality will have to wait. But justice will eventually be served. Or something like that. The takeaway here … a real head-scratcher.
Ravn R. Whitington is a partner at Porter Simon licensed in California and Nevada. Ravn is a member of the firm’s Trial Practice Group where he focuses on all aspects of civil litigation. He has a diverse background in trial practice ranging from complex business disputes to personal injury to construction law, and all matters in between. He may be reached at firstname.lastname@example.org or http://www.portersimon.com. Like us on Facebook
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