Opinion ID: 2612171
Heading Depth: 1
Heading Rank: 3

Heading: admissibility of representations made by the bank during settlement negotiations

Text: The Bank argues that Kirschbaum's claim arises only because the Bank mentioned the dragnet clause during settlement negotiations and that Evidence Rule 408 excludes evidence of statements made and positions taken during such negotiations. Evidence Rule 408 states: Evidence of (1) furnishing or offering or promising to furnish or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible... . This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution, but exclusion is required where the sole purpose for offering the evidence is to impeach a party by showing a prior inconsistent statement. According to the Bank, if the evidence upon which Kirschbaum relies is inadmissible that evidence cannot provide the basis for summary judgment. Further, the Bank makes an appealing policy argument that Evidence Rule 408 should be construed broadly to extend its privilege to the kinds of comments and representations that Kirschbaum contends are admissible. The Bank argues that lenders will be reluctant to meet with defaulting borrowers and help them work out their problems in a manner less drastic than foreclosure if statements made by lenders during such negotiations may subsequently be employed to defeat the lenders' claims. Kirschbaum counters that Rule 408 is by its terms inapplicable because the Bank's claim against him was not disputed as to either validity or amount. [15] The crucial question is whether evidence of discussions and statements made at a time when the parties agreed on the validity and the amount of the claim, but were negotiating remedies, is excludable under Evidence Rule 408. In our view the answer to this question is supplied by the text of the rule. Rule 408 provides in part that evidence relevant to a claim which was disputed as to either validity or amount is not admissible to prove liability. (emphasis added) This language indicates that the validity or amount of the claim must have been in dispute at the time that the statements sought to be admitted were made. In other words, the language of the rule does not require exclusion of the evidence upon which Kirschbaum bases his claims since they were made at a time when neither the validity nor the amount of the Bank's claim was disputed. The superior court's grant of summary judgment in favor of Kirschbaum is REVERSED.