Thursday, March 11, 2010
Let's Compromise, Take 2: DDC Correctly Finds Rule 408 Inapplicable In Absence Of A Claim In Armenian Genocide Museum Dispute
Federal Rule of Evidence 408(a) provides that
Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction:
(1) furnishing or offering or promising to furnish--or accepting or offering or promising to accept--a valuable consideration in compromising or attempting to compromise the claim; and
(2) conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.
Last week, I posted an entry about the United States Court of Appeals for the District of Columbia incorrectly reversing a defendant's convictions by finding that the United States District Court for the District of Columbia failed to apply Federal Rule of Evidence 408(a) to an alleged settlement offer. As I noted in the post, the problem with the appellate court's opinion was that there was no "claim" at the time of the alleged offer, i.e., there was no litigation or threatened litigation. In Armenian Genocide Museum and Memorial, Inc. v. Cafesjian Family Foundation, Inc., 2010 WL 770557 (D.D.C. 2010), the United States District Court for the District of Columbia failed to apply Federal Rule of Evidence 408(a) to alleged settlement negotiations because there was no "claim." Will the United States Court of Appeals for the District of Columbia again erroneously reverse?
out of a very bitter and very unfortunate dispute between...The Armenian Genocide Museum & Memorial, Inc....and...The Cafesjian Family Foundation, Inc...., John J. Waters Jr...., John J. Waters Sr...., and Gerard L. Cafesjian..., relating to the construction of an Armenian genocide museum and memorial in Washington, D.C.
While Waters, Jr. was the Secretary and Treasurer of The Armenian Genocide Museum & Memorial ("AGM & M"), he executed a Memorandum of Agreement ("MO") between the museum and The Cafesjian Family Foundation, Inc. ("CFF"). According to AGM & M,
the evidence clearly show[ed] that the MOA was not filed in good faith and was not in AGM & M's best interests....[AGM & M] point[ed] to the fact that Waters Jr. executed the MOA while he was planning to resign as Secretary and Treasurer of AGM & M,...that Waters Jr. never informed the Board of his actions,...and that Cafesjian testified at deposition that the purpose of the MOA was to “protect myself,” “to prevent it from being sold out from under me,” and “to protect what was mine, according to the agreement that we had,”...[AGM & M] also contend[ed] that the MOA on its face create[d] a benefit for CFF to the detriment of AGM & M. This self-interested motive is apparent, [AGM & M] contend[ed], from Cafesjian's May 26, 2006, letter from his counsel to the Trustees proposing that he terminate his involvement with AGM & M and recover the Adjacent Properties.
According to the defendants, however, this letter was inadmissible under Federal Rule of Evidence 408(a) because it was sent in the context of settlement negotiations. But the district court disagreed, finding that
Rule 408 does not apply unless there is actually a claim in dispute between the parties, and at the time of this correspondence, it was not apparent that AGM & M had or would assert any claim against Cafesjian. The May 26, 2006, letter can only be construed as a proposal by Cafesjian to modify the existing contractual agreements between the parties, and Rule 408 does not exclude such evidence.
This ruling was absolutely correct, and I hope that the United States Court of Appeals for the District of Columbia views it the same way should the issue reach it.