GOOD MORNING FLINT!
3/29/09 By Flint Divorce Attorney Terry Bankert ,
contact at http://FlintDivorce.com/
or http://DivorceLawGuy.com/
Posted first to Blogging for Michigan
http://bloggingformichigan.com/
This issue will be discussed by Flint Divorce Lawyer Terry Bankert, on WFLT 1420 AM out of Flint, 9 AM to 9:30. Saturday 3/29/09. The Program "Know the Law" presents family law issues and is a call in program for your question 239-5733 area code 810. You are invited.
WHAT IS MEDIATION?
Here is how one mediator describes the process."Mediation Process: We will start in joint session with everyone present. Each side will provide an overview of the case from their perspective, and I encourage both counsel and their clients to speak at this time, if they so desire. It is generally helpful for the parties to communicate their views and feelings in joint session. Many times participants hear things they had not heard or considered before, and many issues can be resolved with everyone at the table. At some point we will probably break into separate meetings, in which we will further explore settlement possibilities privately. Then we will most likely re-convene to negotiate the final settlement terms, and reduce the agreement to writing."[1]
Another describes it as follows."Mediation is a voluntary non-binding information process in which disputing parties come together in good faith and sit with a mediator to discuss ways of resolving their problems. The participants explore options and share information. When an agreement is reached, it is put in writing and signed by both parties only after they have had the opportunity to review the document with their attorneys. Mediation is confidential and all parties will be asked to sign a confidentiality agreement along with an agreement to mediate."[1]
MEDIATION, WHEN DOES IT BECOME BINDING?
Flint Divorce Attorney Terry Bankert is also a mediator in decisions concerning child support, parenting time and divorce. Mediation is a voluntary process where you control the decision making process. But once you present your mediated decision to a court it will become binding.
In this "hot off the presses" case , Flint Divorce Lawyer Terry Bankert, the Issues are :
1.Denial of the plaintiff-wife's motion to set aside the settlement agreement obtained through mediation; Reno v. Gale; Woodard v. Custer; MCR 2.507(G); Plamondon v. Plamondon; Howard v. Howard; Windham v. Morris;
2.Whether the plaintiff was "tricked into signing the agreement" by her attorney; Whether plaintiff signed the agreement based on her "mistaken" belief she had to accept it to get spousal support; Ford Motor Co. v. Woodhaven; Meyer v. Rosenbaum;
3.Whether the terms of the agreement gave the defendant-husband an "unconscionable advantage"; Jackson v. Wayne Circuit Judge; Brown v. Siang; Clark v. DaimlerChrysler Corp.; MCR 3.216(A) and (H)(7)
The Source is :
S T A T E O F M I C H I G A N C O U R T O F A P P E A L S
SANDRA MILLER, Plaintiff-Appellant,UNPUBLISHED,March 24, 2009
v No. 282997,Oakland Circuit Court,JOHN MILLER, LC No. 2007-729752-DM
Defendant-Appellee. Before: Cavanagh, P.J., and Fort Hood and Davis, JJ.
PER CURIAM.e-Journal Number: 42246
[Disclaimer: This document has been alterd for media presentation. Consult with an attorney before you rely on its content.]
A quick Summary:
Since mediation is not binding unless it results in a mediation settlement agreement accepted by both parties, the plaintiff-wife was free to reject the agreement and proceed to trial, and admitted as much under oath on the record, and because she failed to show the settlement agreement was procedurally unconscionable, she did not establish a right to relief on this ground.
The case was referred to nonbinding mediation, following which both parties and their attorneys executed a settlement agreement.
The next day, plaintiff appeared in court and admitted on the record in open court she had read and voluntarily signed the agreement.
Although she claimed on appeal she was "tricked" into signing the agreement by her attorney, she executed the agreement based on her mistaken belief she had to accept it to obtain spousal support, and the terms of the agreement gave the defendant-husband an unconscionable advantage, the court disagreed where she was free to reject the agreement and proceed to trial and did not establish the settlement agreement was procedurally unconscionable. Affirmed.
–
A more complete version of the case with additions follows:
WHEN YOU DO NOT AGREE WITH A JUDGEMENT FIRST MOTION TO SET IT ASIDE THEN TAKE IT UP ON APPEAL
Plaintiff appeals by right the judgment of divorce entered by the circuit court following
the denial of her motion to set aside a settlement agreement. We affirm. This appeal has been
decided without oral argument pursuant to MCR 7.214(E).
DID THE LOCAL COURT ABUSE ITS DECISION MAKING OR DISCRETION
We review the trial court’s decision whether to set aside a party’s acceptance of a
mediation evaluation for an abuse of discretion. Reno v Gale, 165 Mich App 86, 92; 418 NW2d
434 (1987). "An abuse of discretion occurs when the decision results in an outcome falling
outside the principled range of outcomes." Woodard v Custer, 476 Mich 545, 557; 719 NW2d
842 (2006).
COURTS ARE A DECISION MAKING PROCESS
An agreement between parties to an action or their attorneys, if subsequently denied by
either party, "is not binding unless it was made in open court, or unless evidence of the
agreement is in writing, subscribed by the party against whom the agreement is offered or by that
party’s attorney." MCR 2.507(G).
SOMETHING HAS TO BE WRONG
Generally, a party may obtain relief from a settlement agreement for mutual mistake, fraud, unconscionable advantage, or ignorance of a material term of the settlement agreement. Plamondon v Plamondon, 230 Mich App 54, 56; 583 NW2d 245 (1998); Howard v Howard, 134 Mich App 391, 394, 399-400; 352 NW2d 280 (1984).
Other grounds for relief include unilateral mistake induced by fraud, Windham v Morris, 370 Mich 188, 193; 121 NW2d 479 (1963); innocent misrepresentation, Alibri v Detroit Wayne Co
Stadium Auth, 470 Mich 895; 683 NW2d 147 (2004); lack of capacity to contract, Star Realty,
Inc v Bower, 17 Mich App 248, 250; 169 NW2d 194 (1969); and duress or coercion, Lafayette
Dramatic Productions, Inc v Ferentz, 305 Mich 193, 216-217; 9 NW2d 57 (1943).
NON BINDING MEDIATION MEANS VOLUNTARY
The instant case was referred to nonbinding mediation, following which both parties and
their attorneys executed a settlement agreement. The following day, plaintiff appeared in court
and admitted on the record in open court that she had read and voluntarily signed the agreement.
SHE SAID I WAS TRICKED, BY HER ATTORNEY?
Plaintiff first argues that she was tricked into signing the agreement by her attorney. However,
coercion by one’s own attorney is not a valid basis for setting aside a settlement agreement
"absent a showing that the other party participated in the coercion." Howard, supra at 397.
Plaintiff has neither alleged nor shown that defendant colluded with her attorney to secure her
consent to the settlement agreement.
SHE THOUGHT SHE WAS GOING TO GET SPOUSAL SUPPORT, HE DID NOT.
Plaintiff also contends that she executed the settlement agreement based on her mistaken
belief that she had to accept it to obtain spousal support. A mistake of fact warranting rescission
must be mutual, i.e., shared and relied on by both parties. Ford Motor Co v Woodhaven, 475
Mich 425, 442; 716 NW2d 247 (2006). Plaintiff has neither alleged nor shown that defendant
shared her mistaken belief and a unilateral mistake of fact is not grounds for voiding a contract.
Meyer v Rosenbaum, 71 Mich App 388, 394; 248 NW2d 558 (1976).
SHE SAYS HE HAD TOO GREAT OF AN ADVANTAGE
Plaintiff lastly contends that the agreement should be set aside because the terms gave
defendant an unconscionable advantage. The unconscionable advantage that warrants relief from
a contract is "unconscionable advantage taken by one party over the other." Jackson v Wayne
Circuit Judge, 341 Mich 55, 60; 67 NW2d 471 (1954).
MUTUAL LAWYERS SHOULD HAVE LEVELED THE PLAYING FIELD
Given that plaintiff was represented by counsel at mediation and has not alleged that defendant took advantage of her during settlement negotiations, unconscionable advantage is not a basis for relief.
Rather, plaintiff appears to contend that various terms of the settlement were unconscionable. A contract can be found to be invalid if it is one of adhesion, as where its terms are oppressive or unconscionable. Brown v Siang, 107 Mich App 91, 106-107; 309 NW2d 575 (1981).
In order for a contract or contract provision to be considered
unconscionable, both procedural and substantive unconscionability must be
present.
PROCEDURAL UNCONSCIONABILITY
Procedural unconscionability exists where the weaker party had no
realistic alternative to acceptance of the term. If, under a fair appraisal of the
circumstances, the weaker party was free to accept or reject the term, there was no
procedural unconscionability.
SUBSTANTIVE UNCONSCIONABILITY
Substantive unconscionability exists where the challenged term is not substantively reasonable.
However, a contract or contract provision is not invariably substantively unconscionable simply because it is foolish for one party and very advantageous to the other.
IT MUST SHOCK THE CONSCIENCE
Instead, a term is substantively unreasonable where the inequity of the term is so extreme as to
shock the conscience. [Clark v DaimlerChrysler Corp, 268 Mich App 138, 143-
144; 706 NW2d 471 (2005) (citations omitted).]
The case was referred to mediation, but mediation is not binding unless it results in a
settlement agreement accepted by both parties. MCR 3.216(A)(2) and (H)(7).
WHAT DO OTHERS SAY ABOUT UNCONSCIONABILITY?
The term unconscionability is not defined in the UCC. Comment 1 to UCC 2-302 provides the following insight:
The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract … . The principle is one of the prevention of oppression and unfair surprise … and not of disturbance of allocation of risks because of superior bargaining power.[2]
Courts have attempted to identify factors and otherwise give meaning to the term unconscionability. For example, in John Deere Leasing Co v Blubaugh, 636 F Supp 1569 (D Kan 1986), the court offered a definition of unconscionability that involved ten elements. [2]
"(1) The use of printed form or boilerplate contracts drawn skillfully by the party in the strongest economic position, which establish industry-wide standards offered on a take it or leave it basis to the party in a weaker economic position … (2) a significant cost-price disparity or excessive price; (3) a denial of basic rights and remedies to the buyer of consumer goods … (4) the inclusion of penalty clauses; (5) the circumstances surrounding the execution of the contract, including its commercial setting, its purpose and actual effect … (6) the hiding of clauses which are disadvantageous to one party in a mass of fine print trivia or in places which are inconspicuous to the party signing the contract … (7) phrasing clauses in language that is incomprehensible to a layman or that divert his attention from the problems raised by them or the rights given up through them; (8) an overall imbalance in the obligations and rights imposed by the bargain; (9) exploitation of the underprivileged, unsophisticated, uneducated and the illiterate … and (10) inequality of bargaining or economic power."[2]
Id. at 1572–1573 (quoting Wille v Southwestern Bell Tel Co, 219 Kan 755, 758–759, 549 P2d 903 (1976)) (cites and emphasis omitted); see also Pride v Ford Motor Co, 341 F Supp 2d 617, 622 (ND Miss 2004) (" ‘an unconscionable contract is one such as no man in his senses and not under a delusion would make on the one hand, and no honest and fair man would accept on the other’ "; quoting Entergy Mississippi, Inc v Burdette Gin Co, 726 So 2d 1202, 1207 (Miss 1998));[2]
b. Procedural Unconscionability
§3.22 What's New in this Section Procedural unconscionability has been equated with unfair surprise as that term is used in comment 1 to UCC 2-302. Unfair surprise typically involves one of the following: (1) assent obtained by one party’s ignorance or carelessness, which is known to the other party; (2) assent obtained by the signing of forms that are difficult to read or deceptively arranged; or (3) an attempt to contract out of the contract’s dominant purpose. William B. Davenport, Unconscionability and the Uniform Commercial Code, 22 U Miami L Rev 121, 138 (1967). A lack of meaningful choice has become synonymous with procedural unconscionability. 2 William D. Hawkland, Uniform Commercial Code Series §2-302:03 (1992 & Supps).
The indicators of procedural unconscionability generally involve either a lack of knowledge or a lack of voluntariness. A lack of knowledge is demonstrated by a party’s relative unsophistication or an absence of an opportunity to study a contract term so that the term is not understood. An absence of voluntariness is illustrated by typical adhesion contracts, in which a substantial imbalance of bargaining power and an absence of meaningful choice exists. 3 Bender’s Uniform Commercial Code Service: Sales and Bulk Transfers under the Uniform Commercial Code §4.08
[2] (Richard W. Duesenberg & Lawrence P. King 1997). .[2]
Procedural unconscionability is evidenced by factors bearing on what may be called "the ‘real and voluntary meeting of the minds’ of the contracting parties: age, education, intelligence, business acumen and experience, relative bargaining power, who drafted the contract, whether the terms were explained to the weaker party, whether alterations to the printed terms were possible, whether there were alternative sources of supply for the goods." Johnson v Mobil Oil Corp, 415 F Supp 264, 268 (ED Mich 1976); see also Andersons, Inc v Horton Farms, Inc, 166 F3d 308 (6th Cir 1998); Jenkins v First American Cash Advance of Georgia, LLC, 400 F3d 868 (11th Cir 2005). In Pichey v Ameritech Interactive Media Servs, 421 F Supp 2d 1038 (WD Mich 2006), the court ruled that plaintiffs did not show that defendants had the sort of monopolistic power associated with procedural unconscionability.[2]
In Ozormoor v T-Mobile USA, Inc, No 08-11717, 2008 US Dist LEXIS 58725 (ED Mich June 19, 2008), the court found that cost-splitting requirements relating to arbitration were procedurally unreasonable because there was no reasonable alternative, but ultimately ruled that the suspect provisions could be severed from the rest of the arbitration provisions.[2]
c. Substantive Unconscionability
What's New in this Section Substantive unconscionability applies to transactions referenced in UCC 2-302 comment 1 as "one-sided" or "oppressive." Substantive unconscionability therefore focuses on the one-sided nature of a contract or a contract term. It may be present when one party is deprived of most of the agreement’s benefits or is left without a remedy for the other party’s breach. Procedural unconscionability concerns the contract formation process, while substantive unconscionability looks to the agreement’s content. 3 Bender’s Uniform Commercial Code Service: Sales and Bulk Transfers under the Uniform Commercial Code §4.08[2] (Richard W. Duesenberg & Lawrence P. King 1997).[2]
The majority of substantive unconscionability cases fall into two categories. The first category is excessive price cases. A number of courts have held contracts to be unconscionable solely on account of excessively high prices. See Shurgard Storage Ctrs v Lipton–U City, LLC, 394 F3d 1041 (2004) (price term in lease agreement’s purchase option was unconscionable as written because it would allow lessee to purchase property for less than half of its value), later proceeding, 454 F3d 934 (8th Cir 2006); Sitogum Holdings v Ropes, 352 NJ Super 555, 800 A2d 915 (2002) (great disparity between $800,000 at which plaintiff had gained right to purchase property and later appraisal and ultimate sale of property to others for nearly twice that amount demonstrated substantive unconscionability of option contract).[2]
The second category of substantive unconscionability cases involves specific clauses in contracts.
The more common examples include: [2]
disclaimers of remedies and warranties, Martin v Joseph Harris Co, 767 F2d 296 (6th Cir 1985) (disclaimer of warranty and limitation of remedy clause held unconscionable); Mallory v Conida Warehouses, Inc, 134 Mich App 28, 350 NW2d 825 (1984) (limiting remedy to seed’s purchase price found unconscionable);[2]
exclusion of consequential damages, World Enters, Inc v Midcoast Aviation Servs, Inc, 713 SW2d 606 (Mo App 1986) (where both parties to repair contract were commercial entities that had previously contracted with each other, limitation of liability for incidental and consequential damages was not hidden in fine print, and its terms were neither unusual nor harsh, neither procedural nor substantive unconscionability resulted); In re Feder Lithographic Servs, Inc, 40 BR 486 (Bankr ED Mich 1984) (absent factors that make exclusion of consequential damages unconscionable when contract was made or in its performance, buyer’s recovery for breach of warranty is limited to damages flowing from that breach);[2]
termination clauses, Gianni Sport, Ltd v Gantos, Inc, 151 Mich App 598, 391 NW2d 760 (1986) (clause allowing retailer to terminate clothing orders at any time where clothing was made especially for retailer was unconscionable); Walton v Hoover, Bax & Slovacek, LLP, 149 SW3d 834 (Tex App 2004) (termination clause in attorney fee agreement was unconscionable where it provided that fee: (1) was paid to law firm that was discharged over year and a half before settlement of case, (2) equaled 63 percent–100 percent of former client’s recovery, (3) was not tied to work performed or risk incurred by firm, (4) arose from agreement that did not clearly and accurately explain how fee was to be calculated, (5) allowed discharged attorneys unfettered discretion in determining value of their fee, and (6) was derived in part from settlement offer rejected by client), aff’d in part and rev’d in part on other grounds, 206 SW3d 557 (2006);[2]
default provisions, John Deere Leasing Co v Blubaugh, 636 F Supp 1569 (D Kan 1986) (where default provision was written on back of equipment lease in fine, light print and constituted unduly harsh remedy, provision was unconscionable);[2]
indemnification provisions, Maxon Corp v Tyler Pipe Indus, Inc, 497 NE2d 570 (Ind App 1986) (imposition of broad indemnification clause, placed in relative obscurity on back of invoice at end of long passage, without express consent of proposed indemnitor, was found unconscionable);[2]
contractual statutes of limitations, Clark v DaimlerChrysler Corp, 268 Mich App 138, 706 NW2d 471 (2005); Thurman v DaimlerChrysler, Inc, 397 F3d 352 (6th Cir 2004) (limitation of six months for bringing employment action upheld in both cases);[2]
arbitration clauses, Al-Safin v Circuit City Stores, Inc, 394 F3d 1254 (9th Cir 2005) (arbitration clauses regarding coverage of claims, remedies, arbitration fees, cost-splitting, statute of limitations, class actions, and modifications rendered arbitration agreement excessively one-sided and unconscionable); and [2]
limitation of liability, Pichey v Ameritech Interactive Media Servs, 421 F Supp 2d 1038 (WD Mich 2006) (liquidated damage provision did not shock conscience).[2]
SHE COULD HAVE REJECTED IT
Plaintiff was free to reject the settlement and proceed to trial on the scheduled trial date and admitted as much under oath on the record.
SHE LOSES
Because she has not shown that the settlement agreement was
procedurally unconscionable, she has not established a right to relief on this ground.
Posted Here by Flint Divorce Lawyer Terry Bankert 3/29/09
You are invited to continue this discussion on my Face Book Page. http://www.facebook.com/people/Terry-Bankert/645845362
other sources
[1]
Marketing Track: Educating Lawyers and Clients About the Mediation Process - What Every Litigant and Advocate Needs to Know About YOUR Process By Robert E. Lee Wright, Presented at
7th Annual Advanced Negotiation & Dispute Resolution InstituteThursday, March 13, 2008
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