Brown v. County of Genesee, 84-CV-8157-FL.
| Decision Date | 08 December 1987 |
| Docket Number | No. 84-CV-8157-FL.,84-CV-8157-FL. |
| Citation | 694 F. Supp. 250 |
| Parties | Stephanie Ann BROWN, Plaintiff, v. The COUNTY OF GENESEE, Defendant, and Michigan Council 25, AFSCME AFL-CIO Local 2259, Intervening Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
Gregory T. Gibbs, Flint, Mich., for plaintiff.
Raymond J. Branch, Flint, Mich., for defendant.
Thomas A. Ricca, Detroit, Mich., for intervening defendant.
There is one remaining motion pending in this matter. The issue is whether plaintiff is entitled to have ¶ 2b of her settlement agreement modified, because the agreement was entered into while under the mistaken impression that the highest rate of pay to which plaintiff would have been entitled upon her reinstatement was the "C" level, when in reality the highest rate was the "D" level. The parties have stipulated to an extensive set of facts. (See Exh. A to Docket Entry # 52). Briefly, the relevant facts follow.
Both plaintiff and defendant agreed to an interim settlement of this case in July, 1985, pursuant to which plaintiff agreed basically to release defendant from liability for receipt of her back pay and other relief.1 In order to arrive at complete relief, the union intervened to work out a judgment on liability and retroactive seniority.
Prior to effectuating this judgment, a dispute arose as to plaintiff's placement at the appropriate pay step level2 if her employment commenced on June 16, 1982, the date she was told that she would not be hired because of her diabetes (Stipulated Facts 2). Plaintiff has emphasized that during settlement negotiations, she conveyed to defendant's counsel that her objective was to be paid at a rate at which she would have been paid if she had been hired on June 16, 1982, and that she would not settle otherwise (Stipulated Facts 12, 16). She rejected one proposed settlement stipulation because it only offered pay at the "B" level (Stipulated Facts 14, 15). At this point, defendant requested that plaintiff draft a stipulation setting forth the precise provisions she sought to have included in the settlement; plaintiff thereafter substituted the "C" level for the "B" level in the previous stipulation (Stipulated Facts 17). When defendant's counsel checked with the Personnel Director after receiving the proposed agreement, he learned that the highest rate of pay that plaintiff could be earning was at the "D" step. Defendant's counsel candidly admits that "he believed it probable that Plaintiff and her counsel were under the mistaken impression that the `C' step was the highest pay step Plaintiff could have been at had she been hired on July 16, 1982." Defendant nevertheless did not inquire of plaintiff and her counsel what they believed in this regard (Stipulated Facts 21, 22). The settlement was thus executed with the "C" step as the measure of compensation. Plaintiff subsequently became aware that the "C" step was not the highest and attempted to modify the settlement, which defendant would not do (Stipulated Facts 23, 24).
Plaintiff claims that the settlement should be modified because: 1) defendant had a duty to inform plaintiff that the "D" rate was the highest rate she could have earned had she started work on June 16, 1982; and 2) defendant's failure to correct plaintiff's misimpression constitutes a silent fraud or an innocent misrepresentation. Defendant argues that plaintiff requested only that she receive a rate of pay that she would have received had she started working on June 16, 1982, and not that she receive the highest rate of pay that would be possible to earn. Further, defendant submits that it never misrepresented a fact to plaintiff since plaintiff never asked defendant to represent the highest rate of pay for which she would be eligible.3
In order to sustain a cause of action for innocent misrepresentation, a plaintiff must prove:
Eaton Corp. v. Magnavox, 581 F.Supp. 1514, 1535 (E.D.Mich.1984); see also, U.S. Fidelity & Guaranty v. Black, 412 Mich. 99, 313 N.W.2d 77 (1980). As noted, the representation must be false at the time that it was made. Id. at 117, 313 N.W.2d 77. On the other hand, silent fraud requires a legal or equitable duty of disclosure and usually results from the failure to disclose that a representation, on which a party relied to enter into a contract, became false prior to the consummation of the transaction. Id. at 127, 313 N.W.2d 77.
Did defendant owe plaintiff a duty to disclose the highest pay rate when that fact became known to it? In support of plaintiff's position that such a duty existed, she cites a personal injury case in which plaintiff's attorney failed to disclose to defendant that the plaintiff died prior to the conclusion of their settlement negotiations. Virzi v. Grand Trunk Warehouse and Cold Storage Co., 571 F.Supp. 507 (E.D. Mich.1983). In Virzi, Judge Gilmore emphasized that an attorney has an absolute duty of candor and frankness to opposing counsel to volunteer information critical to settlement, even though defendant did not ask whether plaintiff was still alive.
It must be noted that the settlement being challenged here was one under the auspices of the Court incidental to a lawsuit as in Virzi and thus involves not only defendant's relationship with plaintiff and her counsel, but also one with the Court.
Based on the factual stipulation upon which this dispute is to be resolved, both counsel were aware that the settlement plaintiff intended to enter into contemplated the principle that plaintiff was to be placed at the highest rate of pay that she could have received had she been hired on June 16, 1982. At the time of their execution of the settlement agreement, plaintiff and her counsel believed it to be the "C" step. Defendant's counsel knew that this was the belief of both plaintiff and her counsel when plaintiff's counsel inserted the "C" step in the proposed settlement stipulation. Before accepting this stipulation, defendant's counsel found out that the highest rate would in fact have been...
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Brown v. County of Genesee, AFL-CI
...the plaintiff below and appellee herein, in this action alleging employment discrimination resulting from Brown's physical impediment, 694 F.Supp. 250. The case was submitted to the trial court for disposition upon stipulated facts. Brown is a diabetic who requires daily injections of insul......