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A Better Partnership
March 08, 2015

COA rules unilateral mistake no defense to binding settlement agreement

Settlement agreements in the state of Michigan may only be set aside in cases of fraud, mutual mistake, or duress.  In Clark v. Progressive Insurance Company, No. 319454, the Court of Appeals reaffirmed this proposition and held that an adversary in litigation has no duty to ensure that his opponent has considered all relevant factors before making a settlement decision.

Carol Sue Clark suffered injuries in two car accidents and settled her personal injury protection claim with her no-fault insurer, Progressive Insurance Company, in an agreement that provided that all personal injury protection benefits incurred as of November 5, 2013, would be settled in exchange for $78,000 from Progressive.  Days after the agreement was made, Ms. Clark received a bill for a facility charge for shoulder surgery she had in May 2013 for $28,000.  Ms. Clark and her attorney attempted to void the universal settlement agreement by asserting that they were unaware of this $28,000 charge at the time they agreed to the settlement, in effect, arguing a unilateral mistake of fact.
The trial court agreed with plaintiff’s argument and held that the settlement did not include the $28,000 bill.  The Court of Appeals reversed, finding that because the plaintiff did not assert fraud, mutual mistake, or duress the settlement agreement must stand.  Additionally, the court found that were it to agree with plaintiff’s theory, this case would stand for the unprecedented proposition that an adversary in litigation has a duty to ensure that his opponent considered all relevant factors before making a settlement decision.   The court articulated that to shift what is rightly the obligation of plaintiff’s attorney to opposing counsel or the defendant would fly in the face of the adversarial nature of litigation and compromise a lawyer’s obligation to represent his client zealously, and his client alone, without any conflicts.  Because of this, the Court of Appeals reversed the decision of the trial court and remanded the case for entry of an order to enforce the settlement agreement. 

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