Arbitration & Mediation

Settlement Agreement Included Too Many Parties

By Christopher B. Hopkins, Esq.

The opinion in Patrick Flynt v. Progressive Consumers Insurance Company et al. probably should have included more facts -- if not a little "color" -- since we do not fully get the picture as to how one defendant settled and somehow convinced plaintiff and counsel to include the other defendant on the release. Relying upon the de novo standard for summary judgment, the appellate court put a roadblock in the path of enforcing this agreement but it is not for certain that summary judgment could not be obtained with some better affidavits.

The plaintiff, Flynt, was struck by a car driven by defendant #1 (Lashon Jarrells) and owned by defendant #2 (Wilbert and Manuel Gordon). Defendant #1 was insured by State Farm while Defendant #2 was insured by Progressive. That latter Progressive policy was for $10k and was tendered with a release which named Defendant #2, State Farm, and... Defendant #1. Plaintiff signed it. No word on review or involvement of counsel.

Flynt brought suit for recission/reformation claiming mutual mistake. Progressive responded with an affidavit essentially reflecting that it was clear that the Plaintiff was told about the co-defendant possibly having other insurance and that the Plaintiff signed the release which named Defendant #1.

At that point in the 2-page opinion, the Fifth DCA Panel (Evander, Pleus, and Orfinger) switched from facts directly to the (de novo) standard of review for summary judgments which essentially allows the appellate court to re-decide the issue. Quick note to appellate decisions readers: it is typically a bad sign for the side which won summary judgment when the decision goes directly from facts to standard of review. Not always, but it is often is a set up for the court explaining why it reversed. Read on...

The Fifth DCA reversed claiming that reformation was allowed if the inclusion of Defendant #1 was a mistake; Florida law permits recision for unilateral mistake unless it is due to inexcusable lack of due care or reliance by the other side would make it inequitable to rescind. The Court held that Progressive's affidavit supporting summary judgment simply confirmed the existance of Defendant #1 on the release and do not address mutual mistake. There was some suggestion that the defense on mutual mistake would, however, merely get into a question of fact.

Lawyer note: first, it is probably a best practice for plaintiff's lawyers to make sure they are not unintentionally releasing "the world" or even co-defendants in these situations. Obviously, there are times when global releases are perfectly appropriate.

Second, and more interestingly, let's probe this "unilateral mistake" issue and what precedent a true decision on this issue might provide. First, let's assume that Progressive darn well knew that "extra" defendants were on the release and they gave it to the Plaintiff to simply see if he would sign it (indeed, releasing co-defendants works in Progressive's interest so the defendants don't later sue each other for indemnity/contribution). So now we have the Plaintiff making a unilateral mistake by signing an overly-inclusive release. I note there is no reference in the decision to the line of cases saying that people are bound to the contracts they voluntarily sign, even if they don't read them before signing. That line of cases would be very pro-enforcement. A bar to reformation/recision is whether the unilateral mistake was due to an "inexcusable lack of care." If the case law is that you are bound by your signature, isn't that consistent with signing-without-reading/understanding is an inexcusable lack of care? And then could there possibly be a claim for legal malpractice...?

Full post as published by Florida Arbitration Law on May 07, 2008 (boomark / email).