Drafting a settlement agreement is always part science, part art. The drafting needs to be technically solid. The economic aspects of the deal need to be clearly worked out, although this issue is usually pretty simple, no matter how many zeros are after the dollar sign (party A pays part B $___ to settle). The less tangible aspect of the deal – but probably the most important contribution made by counsel – is anticipating everything that can go wrong and working defenses against these contingencies into the deal.
The Art of the "General Release"
The linked-to opinion is an example of superb lawyering anticipating and building defenses against an unscrupulous litigant into a global settlement agreement. In this case son challenged probate of his father’s will by suing his mother and a friend of the family, who were dad’s PRs and trustees of dad’s trust. Son settles case against dad’s estate in exchange for certain estate assets and the exchange of general releases. Son then breaches deal by suing again when mom passes away.
Fortunately the lawyers negotiating the original settlement deal had anticipated this turn of events in the form of general releases that shielded the good guys from this type of attack. Here’s how the 3d DCA described the three categories of general release at issue in this case:
- First general release: shield mom’s estate from future attack by disgruntled son:
Pursuant to the clear and unambiguous language of the first general release executed by Hernandez, Hernandez agreed to release his mother, Doña Alicia, from any and all causes of action and to renounce any right in Doña Alicia’s estate, except to the extent, if any, that Doña Alicia named him a beneficiary under her will. Further, if not named as a beneficiary under his mother’s will, Hernandez agreed not to contest the validity of the will and waived his right to enter an appearance in any probate proceeding pertaining to his mother’s estate and, to the extent that he would make such challenge or enter any such appearance, he would be deemed to have predeceased his mother.
- Second general release: shield the trustee from future attack by disgruntled son:
In a second analogously termed release, Hernandez agreed to renounce any right, title, or interest, vested or contingent, he had, has, or may have in the future in the Trust and in any other trust in which either of his parents was a settlor or beneficiary.
- Third general release: shield family friend from individual future attack by disgruntled son:
In a third release, Hernandez agreed to release Gil, individually, and in her capacity as executrix and personal representative of Don Manolo’s estate, and in her capacity as the trustee of the Trust, from any and all claims whatsoever, in law or in equity, which he ever had, has, or may have in the future.
Good drafting worked . . . to an extent. Although no one could physically prohibit disgruntled son from breaching the terms of the settlement deal, the general releases he signed provided effective tools for shielding against his future attacks. Here’s how the 3d DCA described how disgruntled son breached original deal and how the general releases described above worked to thwart him:
The record indicates that Doña Alicia died in July 2003 and did not name Hernandez as a beneficiary under her last will and testament. Not surprisingly, Hernandez entered an appearance in the probate proceedings of his mother’s estate and filed a petition challenging the administration of her will, in clear contravention of the express terms of the GSA. Hernandez also filed a lawsuit against Gil, individually, for tortious interference with his rights to his mother’s inheritance. Pursuant to the clear and unambiguous language of the GSA and the corresponding releases, Hernandez bargained away his right to challenge his mother’s will and in the event that he did so, he would be deemed to have predeceased his mother. Having challenged his mother’s will, Hernandez is deemed to have predeceased her and therefore, has no right to any inheritance from his mother.