Duress and Undue Influence in Mediation Agreements

by Stanley Leasure on March 17, 2012

As we have previously discussed, mediation is one of the most important forms of alternative dispute resolution. The goal of ADR generally is, of course, the execution of a settlement agreement. As we discussed last time, there are a number of common law defenses are available to set aside mediation agreements. These include duress and undue influence.  Each goes to the voluntariness of the mediated settlement agreement. These terms are typically interpreted as follows:

Duress: Force or threats of force used by one party to an agreement to induce another party to enter into the agreement against her free will.

Undue Influence:  The use of significant influence—arising as a result of a special relationship with another person—to  overcome free will and induce that person to enter into an agreement.

Claims of duress and undue influence usually boil down to questions of fact which, as we will see in the following two cases, can be exceedingly difficult to prove.

Peacock v. Spivey

The Georgia Court of Appeals addressed a claim of duress in Peacock v. Spivey, 629 S.E.2d 48, 06 FCDR 971 (2006).  Peacock sued an asphalt company and several state employees. He claimed that his land had been contaminated by diesel fuel spills and that the defendant state employees had violated the state open records law.  The parties participated in mediation and entered into a settlement agreement.

Subsequently Peacock resisted enforcement of the settlement agreement claiming, among other things, that he was forced to sign the mediation agreement as a result of physical duress. The claimed duress consisted of the following:

“[H]e is a diabetic and his blood sugar went up, he was in severe physical pain, he was prevented from leaving the building when he wanted to terminate the negotiations, and his ex-attorney refused to let him leave the mediation session without signing the agreement.”

Based on contradictory testimony from the ex-attorney, the trial court rejected the claim of duress. The Court of Appeals agreed, because: “The trial court … as factfinder, was entitled to credit the testimony of Peacock’s ex-attorney and reject any conflicting testimony by Peacock himself.”

 Vela v. Hope Lumber & Supply Company

A case dealing with similar issues was decided by the Oklahoma Court of Civil Appeals, Vela v. Hope Lumber & Supply Company, 966 P.2d 1196 (1998). This case involved the mediation settlement agreement in a car wreck case brought by Vela against Hope Lumber.

The parties and their attorneys participated in a mediation which resulted in the signing of a Mediation Agreement. Under the terms of the agreement, Vela would be paid and would dismiss her claims against the defendants. The defendants tendered the agreed upon sum of money. Vela refused to accept it and refused to execute a release and dismissal, claiming that the Mediation Agreement was unenforceable on the grounds of  “economic duress, coercion, unconscionability, and/or undue influence.”

The specifics of her claims were set out in the Court of Appeals opinion:

“Vela states that she was under economic duress due to medical bills; … that [her] attorney “allowed” the mediator to bully [her]; that [her] attorney was just in it for the money; that [she] cried for an hour without either her attorney or the mediator offering her a tissue; that both her attorney and the mediator warned her of possible ‘articles’ regarding insurance fraud; that insurance fraud was against the law; that her attorney, the mediator, and the defense attorney were all friends; and that the trial judge knew her attorney and defense counsel. Vela also averred that her attorney and the mediator indicated a possible discrepancy regarding the origination of [her] injury.”

The trial court ruled that the Mediation Agreement was enforceable. Vela appealed.

The Court of Appeals first pointed out that to win on appeal, she must point to something in the trial court record more than just her own allegations of economic duress, coercion, unconscionability, and/or undue influence. The Court of Appeals noted in its opinion that it found no such factual basis to support Vela’s claims. Accordingly the Appellate Court agreed with the trial court’s decision that the Mediation Agreement was enforceable.

Stan Leasure
Eminent Domain ADR, LLC





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