It's The Law: Settlement agreement is tough to undo

Settlement agreement is tough to undo

Question: I was in a lawsuit and the judge ordered us to mediation. In the mediation, I settled with the other party. I now realize the settlement agreement is unfair and want to get rid of it. How hard will that be?

Answer: Almost every Florida lawsuit is referred to mediation. Mediation is conducted with a neutral third party. The goal of the mediator is to get the parties to agree on a settlement. If mediation is unsuccessful, that case proceeds to trial and the judge tells the parties what each recovers or loses in the case.

A mediated settlement is much like any other contract. At mediation, offers and counter offers are usually abundant and the process can take hours. In particularly complex case, the process can take days. Because the process creates a contract, challenging a mediated settlement is difficult. It is also difficult because courts do not want to encourage such challenges and want settlements to be final.

Your first possibility is to see if the settlement agreement was signed by all parties. If not, the agreement is not binding. If signed by all parties, you might still have an opportunity to challenge the agreement as you would any other contract. You could argue the agreement is the product of coercion, but that can be a difficult argument if you are represented by an attorney and the mediator separated the parties in different rooms and shuttled between the parties to convey offers, counter offers and discuss potential settlement separately with each.

You might also challenge the settlement agreement if it is the product of fraud. But, fraud is more than someone not telling you something. Fraud generally requires intentional misstatement. Negligent misstatement maybe basis for setting aside a settlement agreement if it was an important factor relied on by the parties, but that is also hard to win.

Mistake is probably the most common claim to try and set aside a settlement agreement. But, the courts are in no hurry to agree. The courts have frequently noted the standard for disregarding a settlement agreement between parties is high and fact that one party made a bad bargain is not sufficient ground, by itself, to set the agreement aside. That is why courts generally limit grounds for setting aside a mediated settlement to fraud, misrepresentation or coercion. As noted in the case of Pierce v. Pierce, “buyer’s remorse” is not a sufficient basis to overturn a settlement agreement.

The courts are a bit lenient in the area of mistake. When evidence confirms that a provision was left out of a settlement agreement by mistake of both parties and an error in drafting, the court can reform or set aside the agreement. But, if the mistake is merely by one party (i.e. one party did not understand or read the settlement agreement), the effort to set aside will likely be denied.

A settlement agreement is a contract. Like all contracts, it should not be entered without a complete understanding of the terms and effect. If you have a claim to set aside a settlement based on one of the grounds outlined in this article, you should discuss with an experience attorney promptly. Delay in challenging settlement can hurt your chances for success.

William G. Morris is an attorney with offices at 247 North Collier Boulevard on Marco Island, Florida. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.

Questions for this column can be sent to: William G. Morris, e-mail: wgmorrislaw@embarqmail.com or by fax, (239) 642-0722. Other articles of interest can be viewed at our website, www.wgmorrislaw.com.

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