While a settlement can be a beneficial way to end a legal dispute, it can have long-lasting implications. If you are considering signing a settlement agreement and release, you must understand the possible effects of entering into such an agreement. A prior settlement agreement and release could result in a dismissal of a future lawsuit you bring against a party on the other side of the settlement agreement. The following lawsuit shows why one should carefully review any settlement agreement before signing. Otherwise, you may suffer harsh consequences.
Steven Richard was involved in a car accident in Concordia Parish, Louisiana. Richard claimed that while driving westbound on U.S. Highway 425, his vehicle was hit by a car Fred Taylor was driving. Richard later sued Taylor, Fred’s Automotive (the shop where Taylor’s vehicle was repaired), and Caitlin Insurance, the insurance company that covered Fred’s Automotive. This article will focus on the claims Richard brought against Taylor, and the next post will focus on the claims Richard brought against Fred’s Automotive and its insurance company.
Taylor filed an exception of res judicata. Under La. R.S. 13:4231, a claim can be dismissed when there was a final and valid prior judgment involving the same parties and the cause(s) of action in the second suit existed at the time of the first judgment and arose out of the same occurrence as the first action. Taylor argued that the lawsuit against him should be dismissed under the doctrine of res judicata because Richard had previously signed a release with him. Taylor introduced into evidence a document titled “Release of All Claims” that Richard had previously signed. The trial court dismissed the claim against Taylor, holding the res judicata applied. Richard appealed, arguing that the trial court erred in finding that res judicata applied.
Under La. C.C. Art. 3071, a compromise (or settlement) agreement is a contract where the parties settle a potential legal claim. A party can claim res judicata based on a compromise agreement when that party was also a party to the compromise agreement and the words of the agreement are clear that it applies to the at-issue claim. On appeal, the court reviewed the trial court’s applicable factual findings to see whether they were manifestly erroneous or clearly wrong.
The appellate court reviewed Richard’s signature on the release form Taylor had introduced into evidence. The court found that the release Richard executed was valid and final. The release stated that it applied to the same accident in the current lawsuit. Richard’s counsel also admitted that he had been provided the document to review before Richard signed it. Additionally, the court found that the other party to the release, Taylor’s insurance company, would have wanted to release all parties with a potential claim against them. The court noted that Richard and Taylor were parties to the release and the lawsuit. The cause of action in the current lawsuit existed when the release was executed and arose from the same occurrence (the motor vehicle accident) covered by the release. Therefore, the appellate court agreed with the trial court’s ruling that res judicata applied because of the prior release between Richard and Taylor.
Richard’s case shows that if you are considering signing a release to settle part of a lawsuit, scrutinize every word. You wouldn’t want to let someone off the hook that you didn’t intend to.
Additional Sources: Richard v. Taylor et al.
Written By Berniard Law Firm
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