Virginia’s new codified Rules of Evidence became effective on July 1, 2012. In an article in Virginia Lawyers Weekly, five of the rules were highlighted. One of those highlighted rules was Rule 2:408, “Compromise and Offers to Compromise.” The terms of this rule differ from the terms of the Federal Rule of Evidence 408, but those differences will not be explored in this post. Instead, this blog post will review Virginia Rule of Evidence 2:408, and its possible implications for settlement discussions and mediation.
Counsel routinely put in settlement letters some type of verbiage such as “This letter is in the scope and nature of settlement discussions and shall not be used to the prejudice of either party.” Furthermore, during the course of negotiations, whether amongst counsel or in mediation, one party may make a concession in order to obtain a benefit from the other party. Do the new codified Rules of Evidence change that practice?
Rule 2:408 reads as follows:
COMPROMISE AND OFFERS TO COMPROMISE
Evidence of offers and responses concerning settlement or compromise of any claim which is disputed as to liability or amount is inadmissible regarding such issues. However, an express admission of liability, or an admission concerning an independent fact pertinent to a question in issue, is admissible even if made during settlement negotiations. Otherwise admissible evidence is not excludable merely because it was presented in the course of compromise negotiations. Nor is it required that evidence of settlement or compromise negotiations be excluded if the evidence is offered for another purpose, such as proving bias or prejudice of a witness or negating a contention of undue delay.
Is this a change in Virginia law? Actually, the answer is “No,” although the Rule may provide an example where the everyday practice of law does not match exactly with the black letter common law.
The highlighted section of Rule 2:408 above was stated specifically by the Virginia Supreme Court in the case of Lyle, Siegel, Croshaw, & Beale, P.C. v. Tidewater Capital Corporation. In that legal malpractice case, one of the attorneys for the defendant law firm testified that, after a settlement agreement was reached between the clients, the law firm’s client wanted to discuss settlement of the malpractice claim. During those settlement negotiations, the law firm agreed to “admit to its negligence malpractice insurance carrier that it had made a mistake and would assert that position to its malpractice carrier. In consideration of that, [the client] agreed that the damages that he suffered would be capped.”
At trial, that evidence was admitted, over the law firm’s objection, as an admission of negligence. On appeal, the Virginia Supreme Court noted that:
Generally, on public policy grounds, an offer to settle or compromise a disputed claim is inadmissible in evidence. Citations omitted. However, an admission during settlement negotiations of an independent fact pertinent to a question in issue is admissible. Similarly, an express admission of liability made during settlement negotiations is admissible. Citation omitted.
In that case, the issue of admissibility revolved around whether the statement “constituted both an admission of an independent fact pertinent to the question in issue and an express admission of liability.” The Virginia Supreme Court held that the statement was NOT admissible because it was made in “an effort to settle the controversy. . . . This was not an express admission of liability or the admission of an independent, pertinent fact.”
Therefore, in the end, Rule 2:408 codifies existing Virginia common law, and does not change anything. However, this exercise does highlight a possible trap for the unwary. We need to be careful during settlement negotiations and mediations to ensure that offers are qualified as efforts to settle the controversy, so that they cannot be used as admissions of liability or facts.
Tarley Robinson, PLC, Attorneys and Counsellors at Law, Williamsburg, VA
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