Opinion ID: 2585525
Heading Depth: 4
Heading Rank: 8

Heading: encouraging settlement

Text: DuPont argues that preventing a party from being held liable in a subsequent, collateral proceeding for litigation conduct, including fraud, encourages settlement. Quoting Amantiad v. Odum, 90 Hawai`i 152, 161-62, 977 P.2d 160, 169-71 (1999), in support of its argument, DuPont states: We acknowledge the well-settled rule that the law favors the resolution of controversies through compromise or settlement rather than by litigation. Such alternative to court litigation not only brings finality to the uncertainties of the parties, but is consistent with this court's policy to foster amicable, efficient, and inexpensive resolutions of disputes. In turn, it is advantageous to judicial administration and thus to government and its citizens as a whole. We agree with the policy and law of settlements which the Supreme Court of Arkansas succinctly sets forth in Ragland v. Davis, 301 Ark. 102, 106-107, 782 S.W.2d 560, 562 (1990) (citation omitted): Courts should, and do, so far as they can do so legally and properly, support agreements which have for their object the amicable settlements of doubtful rights by parties; the consideration for such agreements is not only valuable, but highly meritorious. Because they promote peace, voluntary settlements ... must stand and be enforced if intended by the parties to be final, notwithstanding the settlement made might not be that which the court would have decreed if the controversy had been brought before it for decision. Such agreements are binding without regard to which party gets the best of the bargain or whether all the gain is in fact on one side and all the sacrifice on the other.    The Washington Supreme Court said it even more tersely: The law favors settlements and consequently it must favor their finality. However, from within the excerpt cited, DuPont omits this court's highlighted statement: ` It is an elemental rule that the law favors compromise and settlement of disputes and generally, in the absence of bad faith or fraud, when parties enter into an agreement settling and adjusting a dispute, neither party is permitted to repudiate it. ' Amantiad, 90 Hawai`i at 162, 977 P.2d at 170 (italics in original) (underscored emphasis added) (quoting Matter of Estates of Thompson, 226 Kan. 437, 601 P.2d 1105, 1108 (1979)). Indeed, the portion of this court's opinion omitted by DuPont clearly articulates the law's disapproval of settlements obtained through fraud. Further, as the Ninth Circuit has noted: Insistence on the finality of settlements is based on the assumption that the parties have freely bargained to exchange the costs, risks and potential rewards of litigation for the certainty of a settlement that seems fair in light of facts known at the time. Settlements induced by fraud are set aside however, because the defrauded party has not freely bargained but has been induced to settle by affirmative misrepresentations by the other party. Enforcing such a settlement would undermine the policy of encouraging voluntary settlement of disputes: if litigants cannot assume the disclosures and representations of the opposing party are made in good faith, they will be reluctant to settle. Matsuura, 166 F.3d at 1012. Settlement is the voluntary relinquishment of the right to a determination by a court of law. Thus, encouraging parties to forego the protections associated with a trial requires adequate assurance that appropriate remedies exist for settlements reached through bad faith and misconduct. Accordingly, the policy of encouraging settlements does not favor limiting liability for fraud engaged in during prior litigation proceedings. In sum, of the eight policies underlying the litigation privilege, the policy of avoiding the chilling effect resulting from the threat of subsequent litigation clearly favors limiting liability in subsequent proceedings. However, the remaining policies of: promoting the candid, objective, and undistorted disclosure of evidence; placing the burden of testing the evidence upon the litigants during trial; reinforcing the finality of judgments; limiting collateral attacks on judgments; promoting zealous advocacy; discouraging abusive litigation practices; and encouraging settlement do not. With the aforementioned policies in mind, we now address the first certified question presented.