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Court of Appeal:
Rescission Can’t Be Based on ‘Duress by Third Person’
Wiley Says That Even If Lawyer’s Intimidation Caused Plaintiff to Assent to Settlement, Agreement Cannot Be Set Aside Where Defendants Had No Part in the Coercion
By a MetNews Staff Writer
The Court of Appeal for this district yesterday affirmed an order denying a motion to set aside a settlement to which the plaintiff had assented in open court, holding that even if her lawyer did bully her into accepting the mid-trial offer, as she claims, that does not afford a basis for rescission.
Justice John Shepard Wiley Jr. of Div. Eight authored the opinion. He wrote:
“ ‘Duress by a third person’ is the legal label for this contract case. Laura Fettig is trying to escape a settlement she put on the record. She claims her trial lawyer forced her to take the deal. But duress by a third person cannot void a contract when the other contracting party did not know about the duress and relied in good faith. Fettig settled with defendants who were unaware of the alleged duress. Fettig’s accusation against her lawyer does not enable her to rescind a contract with others.”
Fettig filed her personal injury action on Sept. 29, 2015. She sued Hilton Gardens Inns Management. LLC, as well as Madison Brown, the driver of a hotel shuttle bus which she claims hit her.
Brown insists that she thumped her fist on the bus, then lied on the ground, feigning injuries.
Trial began on Feb. 5, 2020, in the courtroom of Los Angeles Superior Court Judge Armen Tamzarian. Fettig was represented by La Habra attorney Jared Eli Gross.
After Fettig rested on Feb. 10, and Tamzarian denied a motion for nonsuit, the parties conferred, and announced a settlement for $85,000.
Fettig Questioned
The judge questioned Fettig as to her amenability to settling. This dialogue took place:
“The Court: Okay. So you’re 100 percent sure you want to proceed right now?
“Ms. Fettig: Yes.
“Mr. Gross: Proceed to trial or proceed with settlement?
“The Court: Proceed with settlement. Is that right?
“Ms. Fettig: I wish they weren’t so stingy.
“The Court: I’m not hearing a yes. So if it’s not yes, it’s not a problem. We can keep going with the trial. But there are no footnotes. There are no asterisks. Either you agree or you don’t. There’s only two decisions. There isn’t a third way, ‘I have reservations. I’m hiding something behind my hack, and later I’m going to come and challenge this settlement.’ There is no coming back. This is a permanent, forever fork in the road that you can never return from if you want to settle it. If you don’t want to settle it. it’s not a problem.
“Do you understand that?
“Ms. Fettig: Yes sir.
“The Court: Apart from any perceived weaknesses in the evidence you provided, are you under any duress? Has somebody threatened you, for example?”
Notwithstanding Fettig’s statement to the judge that she had not been under duress, the plaintiff, through new counsel, on Feb. 6 moved for an order setting aside the settlement, claiming that Gross coerced her into assenting. She contended he told her that if she did not accept the offer, “the defense will take your house for costs and I will not remain on the case any further.”
Tamzarian’s Ruling
In denying the motion on June 25, Tamzarian pointed to this provision of the Restatement of Contracts:
“If a party’s manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.”
The judge commented:
“Here, Fettig alleges that her consent was obtained through duress exercised by Gross, not defendants or their attorneys. There is no evidence or even an allegation that defendants or their counsel connived with Gross to place Fettig under duress or knew about Gross’s alleged threats. Moreover, defendants gave something of value as part of the settlement, namely $85,000. At the time, given the relatively weak evidence presented by Fettig on liability, causation, and damages, defendants’ offer was reasonable and certainly made in good faith. In the court’s view, the offer was generous.”
Tamzarian cited the Sixth District Court of Appeal’s Sept. 29, 2010 decision in Chan v. Lund, saying:
“There, the plaintiff’s attorney threatened on the eve of trial to withdraw from the case if the plaintiff refused to settle the matter. The court rejected the plaintiff’s claim that he could rescind the contract due [to] duress. The court reasoned that even if the attorney’s threat of withdrawal constituted duress, the plaintiff ‘presented no legal grounds for rescission’ because the attorney was not a party to the settlement and did not connive with the defendants to pressure plaintiff….
“Chan is directly on point. Even assuming Fettig’s consent to the settlement was obtained through duress caused by Gross’s conduct. Fettig has presented no legal ground for rescission.”
Wiley found Tamzarian’s reasoning to be compelling. The jurist said:
“Fettig ignores the Restatement rule. So too does she refuse to grapple with the case the trial court cited as its chief precedent: Chan. By avoiding mention of Chan, Fettig effectively concedes its controlling force.
“The trial court was right: Fettig had no grounds for rescinding a contract with parties that had not known about the supposed duress by third person Gross. Hilton materially relied on the settlement: midtrial, it surrendered the possibility of a defense verdict. Throughout the process, Hilton was blameless.”
Fettig had sought to avoid the settlement based on “mistake, inadvertence, surprise, or excusable neglect,” invoking the discretionary-relief provision in Code of Civil Procedure §473. Wiley said the plaintiff “sought to use this provision as an end run around the Restatement rule,” and that Tamzarian was correct in rebuffing that effort.
“She cites no case favoring her effort to dress her argument about contractual duress in this camouflage,” he wrote. “The trial court rightly refused to put the form of the argument over the substance of the carefully considered Restatement rule, which controls here.”
The case is Fettig v. Hilton Garden Inns Management LLC, B307348.
Fettig was represented by Torrance attorney Thomas F. Mortimer Jr. and El Segundo lawyer James J. Orland. Jeff G. Harmeyer and Timothy B. Pickett of the San Diego firm of Harmeyer Law Group argued the position of Hilton Garden Inns and Brown.
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