McCormick et al v. Dresdale et al

Filing 37

OPINION AND ORDER denying 16 Motion to Dismiss. So Ordered by Judge William E. Smith on 5/28/10. (Jackson, Ryan)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND ______________________________ WILLIAM R. MCCORMICK, III, CAROL A. MCCORMICK, and WILLIAM R. MCCORMICK, II, ) ) ) ) ) Plaintiffs, ) ) v. ) ) MARCELLA E. DRESDALE, RICHARD ) C. DRESDALE, and BROWN ) UNIVERSITY, et al., ) ) Defendants. ) ______________________________)

CA. No. 09-474 S

OPINION AND ORDER WILLIAM E. SMITH, United States District Judge. This Court recently issued a short Order granting in part and denying in part the motions to dismiss of Defendant Brown University and its agents. The Court did so in an expedited

fashion, deferring the issues raised by co-Defendants, Marcella Dresdale and her father Richard Dresdale ("the Dresdales"), to a later date. The Court now writes separately to address the The reader is referenced to the prior Order

Dresdales' motion.

for the relevant details and background information. Briefly stated by way of introduction, Plaintiff William McCormick (hereinafter "William") was a freshman student on a full scholarship at Brown University ("Brown") when, he alleges,

Defendant falsely

Marcella accused

Dresdale, of was to

then

a

fellow

Brown

freshman, The

him

misconduct, not made

including to law

rape.

accusation, authorities, accusation

however, but

enforcement The

rather quickly

college in

administrators. William's

fairly

resulted

"withdrawal"

from Brown and the corresponding loss of his full scholarship. William filed suit, joined by his parents, Mr. and Mrs.

McCormick ("the parents"), against Brown University, a number of Brown's agents (collectively the "Brown Defendants"), and the Dresdales. The Dresdales filed a motion to dismiss, pursuant to

Rule 12(b)(6), for failure to state a clam upon which relief could be granted, asserting the affirmative defense of release and waiver. the The Dresdales attached to their motion a copy of Settlement Agreement and General Release"

"Confidential

signed by William, which purports to release all legal claims he and his parents may have held against the Dresdales arising out of this incident.1 Because the authenticity of the Agreement is

Defendants argue that Plaintiffs should be made to revise their complaint to include a duress claim, thus shifting the burden onto Plaintiffs to establish their right to cancel the Agreement. See Lawrence Capitol, Inc. v. Stanley-Warner Corp., 152 F. Supp. 889 (D. Mass. 1957). Defendants then also, somewhat incredulously, argue that Plaintiffs' failure to request an equitable remedy to invalidate the Agreememt somehow bars the Court from determining the validity of the Agreement, which they themselves raise as a defense. Plaintiffs, however, do request "other relief deemed just and proper" and unlike in Lawrence Capitol, Plaintiffs do not have any specific legal counts alleging that the Agreement was obtained by fraud and
2

1

not

challenged

and

it

is

referred

to

throughout

the

First

Amended Complaint, the Court agrees with the parties that it is a sufficiently incorporated document, which may be considered without converting Defendants' Motion to Dismiss into a Motion for Summary Judgment. See Beddall v. State St. Bank & Trust

Co., 137 F.3d 12, 16-17 (1st Cir. 1998). Where Defendants are seeking to dismiss Plaintiffs' claims on the basis of a settlement agreement, the burden is on the Defendants to prove that there is a valid agreement which bars the claims, such that "the facts establishing the defense [are] clear `on the face of the plaintiff's pleadings.'" Castro v. Toledo-Davila, 579 F.3d 109, 114 (1st SantanaCir. 2009)

(internal citation omitted) (dismissing complaint on the basis of a statute of limitations defense). Dresdales' motion, Plaintiffs argue In opposition to the that the Agreement is

invalid for lack of valid consideration.

In the alternative,

should the Court conclude that the Agreement is supported by valid consideration, Plaintiffs argue that the Agreement is

voidable because it was procured by duress.

duress. Plaintiffs have included facts that support their theory in the First Amended Complaint, and leave Defendants to assert the Agreement as a defense. Indeed, because the Court agrees that Plaintiffs have alleged sufficient facts to support the claim that there was no consideration for the Agreement, the Court need not address Plaintiffs' duress and Defendants' ratification arguments at this time.
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As mentioned above, after briefing and oral argument on these issues, the Court a deferred Order its with The ruling, respect Court issuing to the in an

expedited

fashion

short to

Brown the

Defendants'

Motions

Dismiss.

now

denies

Dresdales' motion to dismiss, as the Dresdales have not met their burden to demonstrate that on the face of the pleadings (and taking all of the averments in the First Amended Complaint as true) the Agreement is supported by valid consideration. In

particular, Plaintiffs clearly allege that the claims forgone by the Dresdales, in consideration for William's release of the same, were false and made in bad faith. Accepting this as true,

Defendants cannot prevail at this juncture. Confidential Settlement Agreement and General Release The First Circuit has said that it is the responsibility of the district court to "discern whether or not a valid and

binding settlement had been reached, and if so, to enforce it." Mathewson Corp. v. Allied Marine Indus., Inc., 827 F.2d 850, 853 (1st Cir. 1987). faith, settle a Indeed, "[w]here the parties, acting in good controversy, the courts will enforce the

compromise without regard to what the result might have been had the parties chosen to litigate." Id. at 852-53 (quoting Terrain

Enter., Inc. v. W. Cas. & Sur. Co., 774 F.2d 1320, 1321 (5th Cir. 1985)). The Agreement between William and Marcella

provides in ¶ 2.1 that:
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As consideration for the mutual promises contained herein, Dresdale hereby releases and forever discharges McCormick from any and all claims, demands, damages, remedies, contracts (express or implied) and causes of action, whether known or unknown, asserted or unasserted, fixed or contingent, which Dresdale ever had, now has or in the future may or could have, including but not limited to, any allegations of misconduct while at Brown University, against McCormick arising out of or relating to any matter up to the date of the execution of this Agreement . . . And in ¶ 2.2 it provides that: As consideration for the promises contained herein, McCormick hereby releases and forever discharges Dresdale from any and all claims, demands, damages, remedies, contracts (express or implied) and causes of action of any kind or nature whatsoever, whether known or unknown, asserted or unasserted, fixed or contingent which McCormick ever had, now has or in the future may or could have, against Dresdale, including but in no way limited to an action for defamation. In the Agreement, William further promises that he will

voluntarily withdraw as a student from Brown, he will never attend any another school that Marcella attends, he will not come within one thousand (1000) feet of Marcella, he will not enter the City of Providence so long as Marcella is a student at Brown, and he will undergo neurological testing, psychological counseling, and successfully complete a course of instruction on sensitivity to women. The Agreement also contains mutual

promises to maintain the Agreement's confidentiality, as well as a Non-Disparagement clause.

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In order to determine whether the Agreement is supported by adequate consideration the Court must first delve into the

claims that Marcella and William agreed to mutually release. Plaintiffs argue that Marcella's good faith belief regarding the validity of her claims is front and center in this analysis and it is a question that in many ways represents the eye of the storm in this case. Described generally in the Agreement as

"allegations of misconduct while at Brown University," the First Amended Complaint indicates that Marcella's claims could range from harassment to stalking to rape. It is hornbook law that "[a] fundamental requisite to a contract that can be enforced by a court is an exchange of legal consideration by the parties." Ross-Simons of Warwick, Inc. v.

Baccarat, Inc., 182 F.R.D. 386, 397 (D.R.I. 1998) (citing Hayes v. Plantations Steel Co., 438 A.2d 1091, 1094 (R.I. 1982)). This may take the form of a benefit conferred on another or a detriment suffered voluntarily. 397. In Rhode Island, the forbearance of a legal right may also qualify as valid consideration "for a settlement agreement if the claim is `premised on an honest belief in its justness.'" Id. (quoting Lapan v. Lapan, 217 A.2d 242, 244 (R.I. 1966)). Indeed, "the weight of authority holds that although forbearance from suit on a known invalid claim is insufficient consideration
6

See Ross-Simons, 182 F.R.D. at

for a promise, forbearance from suit on a claim of doubtful validity is sufficient consideration for a promise if there is a sincere belief in the validity of the claim." 3 Richard A.

Lord, Williston on Contracts § 7:47 Forbearance or promise of forbearance ­ Forbearance to litigate or promise to forbear ­ Doubtful claims (4th ed. 2008). Thus, while good faith is a necessary prerequisite, a clear win is not. have no Indeed, "[i]f a claim is known by the claimant to it is clear that the forbearance to

foundation,

prosecute the claim is not sufficient consideration."

Sweeney

v. Sweeney Inv. Co., 90 P.2d 716, 719 (Wash. 1939) (internal quotation marks and citation omitted); See Restatement (Second) of Contracts § 74 "Settlement of Claims" (1981) ("[f]orbearance to assert or the surrender of a claim or defense which proves to be invalid is not consideration unless . . . the forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid"). Even a "doubtful claim" that

is likely to be defeated on the merits may qualify as adequate consideration to support an agreement. The claim, however,

"must not be absurd in fact, from the standpoint of a reasonable person in the of position the of the claimant. Second is [Moreover] to enforce the the

preference

Restatement

compromise if the claimant held a subjective good-faith belief in the claim's validity." 3 Williston on Contracts § 7:47.
7

After careful consideration, the Court concludes that the validity of the release cannot be established upon the face of the pleadings. conjured including false rape, Here, Plaintiffs allege that Marcella Dresdale and exaggerated William, allegations thereafter of misconduct, into a

against

entering

settlement agreement promising not to bring those very claims that she knew were false.2 Assuming, as is mandated upon a

motion to dismiss, that her allegations against William were false and therefore, not "premised on an honest belief in its justness[,]" it cannot be shown on the face of the pleadings that there was valid consideration for the Agreement. Lapan v.

Lapan, 217 A.2d 242, 244 (R.I. 1966); See, e.g., Dyer v Nat'l By-Products, Inc., 380 N.W.2d 732, 735-36 (Iowa 1986) (reversing lower court and denying to summary judgment because disputed to

material

facts

"as

whether

[plaintiff's]

forbearance

assert his claim was in good faith" remained). It must be emphasized, however, that the Court is not

holding that the Agreement is invalid; rather, at this juncture where the Court must accept the facts alleged by Plaintiffs, dismissal would be improper. Marcella's good faith and the

The Dresdales position appears to be that any mutual release of rights constitutes valid consideration. Counsel did not address the aspect of Plaintiffs' argument that a knowingly false claim cannot constitute valid consideration, either in their briefs or during hearing.
8

2

truth of the statement that "William had not raped [Marcella]" are not issues amenable to resolution upon a motion to dismiss. (Pls.' First Am. Compl. ¶ 79.) Unfortunately for the Dresdales, these thorny is factual a questions dovetail with whether by the

Agreement

viable

defense,

supported

adequate

consideration. Conclusion For the foregoing reasons, the Court concludes that the

validity of the Agreement cannot be established on the face of the pleadings. DENIED. IT IS SO ORDERED: Therefore, the Dresdales' motion to dismiss is

William E. Smith
William E. Smith United States District Judge Date: May 28, 2010

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