We know that very few cases actually end up making it to trial.  Some reports put the number of cases that settle or that are dismissed before trial around 97 percent.  Many of those that settle likely settled as a result of court-ordered mediation.  As fiduciaries find themselves increasingly the target of litigation, here’s a word of caution out of Florida about the scope of releases in settlement agreements and an admonition about knowing exactly what it is you’ve agreed to.

The trustee of the Julian Marie Breslow Revocable Trust and Pompano Masonry Corporation participated in a court-ordered mediation with Joseph Anastasi, they reached a settlement, and they executed a mediation agreement.  As part of that settlement, the Breslow Trust and Pompano agreed that their release of claims against Anastasi extended to Anastasi’s wife and children.

After the settlement was finalized, the trustee of the Breslow Trust refused to sign the release of claims.  What was the trustee’s reason?

The trustee argued that Anastasi’s wife and children were non-parties to the action and it was not the intent of the parties to release non-parties to the litigation.  In fact, the trustee even executed an affidavit stating she wouldn’t have signed the settlement agreement if she knew it would release potential claims against Anastasi’s daughter.  The Breslow Trust had hired Anastasi to provide expertise in running a business held by the Trust.  The trustee had claimed that Anastasi made an unauthorized payment of $250,000 from the business to his daughter.  According to the trustee, she never intended to release that potential claim against Anastasi’s daughter.

When the trustee refused to provide the release required under the terms of the settlement, the trial court imposed sanctions against the trustee by awarding Anastasi attorney’s fees.

In Pompano Masonry Corp. v. Anastasi, a Florida court of appeals upheld the award of sanctions because the trustee failed to perform under the terms of the settlement.

We don’t know if the trustee was ordered to personally pay Anastasi’s attorney’s fees or whether the fees were to be paid from the trust.  If the latter, we have to wonder what exposure might the trustee have to the beneficiaries for incurring that expense to the trust.