A plaintiff who received fifty five million dollars (and 22,500 acres of land) via a settlement was able to hang on to all of it, despite allegations that it had been obtained by means of fraud on the court, thanks in part to broad language in the settlement agreement.
The plaintiff was the United States government; the claim arose out of California’s “Moonlight” fire. The defendants were landowners and others whose supposed negligence caused the fire. A few days before trial the case was settled; the agreement included the following:
The Parties understand and acknowledge that the facts and/or potential claims with respect to liability or damages regarding the above-captioned actions may be different from facts now believed to be true or claims now believed to be available (“Unknown Claims”). Each Party accepts and assumes the risks of such possible differences in facts and potential claims and agrees that this Settlement Agreement shall remain effective notwithstanding any such differences…. Accordingly, this Settlement Agreement, and the releases contained herein, shall remain in full force as a complete release of Unknown Claims notwithstanding the discovery or existence of additional or different claims or facts before or after the date of this Settlement Agreement.
The defendants — bolstered by the finding in a parallel case that the government’s prosecution of the case was “corrupt and tainted . . .reek[ing] of bad faith,” marked by destruction of “critical evidence” in a “systematic campaign of misdirection” — moved to set aside the settlement agreement. The District Court dismissed, and the Ninth Circuit affirmed:
To begin with, the district court correctly noted that the express settlement terms appear to preclude any relief, even for newly discovered facts or evidence. In agreeing that the “Settlement Agreement … shall remain in full force as a complete release of Unknown Claims notwithstanding the discovery or existence of additional or different claims or facts before or after the date of this Settlement Agreement,” it appears that the Defendants bound themselves not to seek future relief, even for fraud on the court. Thus, the district court did not abuse its discretion by finding that relief is precluded on this ground.
United States v. Sierra Pac. Indus., Inc., 862 F.3d 1157, 1169–70 (9th Cir. 2017) (emphasis supplied).
Settling parties who desire maximum finality will certainly go to school on the Sierra Pacific settlement agreement.Robert ("Bob") M. Frey