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Defrauded Tort Claimants' Rights

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DAVID MATSUURA, individually and
dba Orchid Isle Nursery, and
STEPHEN MATSUURA, individually and
dba Hawaiian Dendrobium Farm,
Plaintiffs-counter
defendants-Appellants,

v.
                                                     No. 97-16400
ALSTON & BIRD, a Georgia
partnership including professional
                                                     D.C. No.
corporations,
                                                     CR-96-01180 DAE
Defendant,

and

E.I. duPONT de NEMOURS AND
COMPANY, INC., a Delaware
Corporation,
Defendant-counter
plaintiff-Appellee.

DAVID MATSUURA, individually dba
Orchid Isle Nursery; STEPHEN
                                                     No. 97-17033
MATSUURA, individually dba
Hawaiian Dendrobium Farm,
                                                     D.C. No.
Plaintiffs-Appellants,
                                                     CV-96-01180-DAE
v.
                                                     ORDER AND
E.I. duPONT de NEMOURS AND
                                                     AMENDED
COMPANY, INC., a Delaware
                                                     OPINION
Corporation,
Defendant-Appellee.

                               6849


Appeals from the United States District Court
for the District of Hawaii
David Alan Ezra, District Judge, Presiding

Argued and Submitted
June 9, 1998--San Francisco, California

Filed February 2, 1999
Amended June 25, 1999

Before: James R. Browning, Alfred T. Goodwin, and
Mary M. Schroeder, Circuit Judges.

Per Curiam Opinion


_________________________________________________________________


COUNSEL

Stephen T. Cox, Molligan, Cox & Moyer, San Francisco, Cal-
ifornia, for the plaintiffs-appellants.

                               6852


William H. Boice and A. Stephens Clay, Kilpatrick Stockon,
Atlanta, Georgia, for the defendant-appellee.

_________________________________________________________________

ORDER

The opinion filed February 2, 1999, is modified as follows:

Section II, second paragraph, first and second sentences:
delete first sentence and add the following footnote to end of
the second sentence:

      [FN] DuPont makes a bare assertion in a footnote
      that DiSabatino was wrongly decided, but devotes its
      argument to distinguishing the case.

The petition for rehearing en banc is denied. The request
for certification and the motion for a stay of proceedings are
denied.

_________________________________________________________________

OPINION

PER CURIAM:

After settling their product liability suits against E.I.
du Pont de Nemours and Company, Inc. (DuPont), David and
Stephen Matsuura allegedly discovered that DuPont had
fraudulently induced them to settle for less than the fair value
of their claims. They sued DuPont1 for fraud, but the district
court held the suit was barred by general releases in the settle-
ment agreements. We conclude that under Delaware law,
which governs, defrauded tort plaintiffs may stand by their
_________________________________________________________________
1 Alston & Bird, a law firm, is also named as a defendant in the fraud
action. Because the Matsuuras' claims against DuPont and Alston & Bird
are identical insofar as this appeal is concerned, for purposes of simplicity
we refer only to the claims against DuPont.

                               6853


settlement agreements and institute an independent action for
fraud, which the Matsuura-DuPont releases do not bar. We
therefore reverse.

I

The Matsuuras, commercial nurserymen, alleged in their
product liability suits that a DuPont fungicide, Benlate, was
contaminated with herbicides, which killed their plants.2
Many similar suits were filed by commercial growers across
the nation. In early trials, DuPont falsely represented that soil
tests had produced no evidence of contamination. During con-
solidated discovery proceedings in Hawaii, which included
the Matsuuras' suits, DuPont falsely denied withholding evi-
dence of Benlate contamination, and improperly invoked
work product protection to resist disclosure of testing data.
The Matsuuras allege DuPont took these steps to induce Ben-
late plaintiffs to settle their cases for less than their fair value.

After the Matsuuras settled, DuPont disclosed its testing
data in the Hawaii discovery proceedings. Contrary to
DuPont's prior representations, the tests confirmed that Ben-
late was contaminated. Additional evidence of Benlate con-
tamination was produced in other Benlate litigation. Two
district courts held that DuPont had intentionally engaged in
fraudulent conduct by withholding this evidence. See
Kawamata v. United Agri Prods., Civil No. 91-437, slip op.
at 48, 59 (Haw. Ct. App. Aug. 22, 1996) (imposing $1.5 mil-
lion punitive sanction for discovery abuse), aff'd, 948 P.2d
1055 (Haw. 1997); In re E.I. duPont de Nemours and Co. --
Benlate (R) Litig., 918 F. Supp. 1524, 1556-58 (M.D. Ga.
1995) (imposing sanctions potentially totaling $115 million),
rev'd on other grounds, 99 F.3d 363 (11th Cir. 1996).
_________________________________________________________________
2 This summary of facts is based on the allegations in the Matsuuras'
complaint, which we accept as true for purposes of reviewing an order
granting judgment on the pleadings. Doyle v. Raley's Inc., 158 F.3d 1012,
1014 (9th Cir. 1998).

                               6854


Although the Eleventh Circuit reversed the Georgia court on
the ground that the sanctions were punitive and the court had
not followed applicable criminal procedure, the court noted
the "serious nature of the allegations" and stated that it
assumed the U.S. Attorney would conduct an investigation, In
re E.I. duPont, 99 F.3d at 369 n.7. On remand, the district
court asked the United States Attorney to "investigate and
prosecute" DuPont for criminal contempt, In re E.I. duPont,
No. 4:95-CV-36 (HL) (M.D. Ga. Nov. 4, 1998) (order refer-
ring matter to U.S. Attorney), but the court ultimately
approved a civil settlement resolving the matter, which
required DuPont and Alston & Bird to make payments total-
ling $11.25 million, see In re E.I. duPont , No. 4:95-CV-36
(HL) (M.D. Ga. Dec. 31, 1998) (consent order and final judg-
ment).

In their present suit, the Matsuuras allege DuPont commit-
ted this fraud to induce them and other Benlate plaintiffs to
settle. The district court granted DuPont judgment on the
pleadings, ruling the suit was barred by releases signed by the
Matsuuras as part of the settlement agreements. The court
held the Matsuuras could have rescinded the settlement agree-
ments because of DuPont's fraud, but forfeited that remedy by
failing promptly to tender the settlement proceeds. The Mat-
suuras moved for reconsideration; the court denied the
motion. The Matsuuras appeal.

II

Under Delaware law,3 parties who have been fraudulently
_________________________________________________________________
3 The Matsuura-DuPont releases provide that they are to be "governed
and construed" according to Delaware law. We review a district court's
decision on an issue of state law de novo. Astaire v. Best Film & Video
Corp., 116 F.3d 1297, 1300 (9th Cir. 1997), amended in irrelevant part
by, 136 F.3d 1208 (1998), cert. denied, 119 S. Ct. 161 (1998). We apply
Delaware law as it appears the Supreme Court of Delaware would apply
it. Id. In the absence of a Supreme Court decision on point, we must pre-
dict how the Court will decide the issue, based on decisions of Delaware
courts, decisions from other jurisdictions, treatises and restatements. Id.

                               6855


induced to enter into a contract have a choice of remedies:
they may rescind the contract or they may affirm the contract
and sue for fraud. Hegarty v. American Commonwealths
Power Corp., 163 A. 616, 619 (Del. Ch. 1932). In DiSabatino
v. United States Fidelity & Guar. Co., 635 F. Supp. 350 (D.
Del. 1986), a federal district court sitting in Delaware held
that plaintiffs who have been fraudulently induced to settle
tort claims have the same choice of remedies under Delaware
law. DiSabatino, 635 F. Supp. at 352-53 (discussing Hegarty
and Eastern States Petroleum Co. v. Universal Oil Prods. Co.,
49 A.2d 612 (Del. Ch. 1946)). DiSabatino's analysis is
persuasive.4
_________________________________________________________________
4 The leading cases limiting defrauded tort plaintiffs to the remedy of
rescission, Mackley v. Allstate Ins. Co., 564 S.W.2d 634 (Mo. Ct. App.
1978), and Shallenberger v. Motorists Mut. Ins. Co., 150 N.E.2d 295
(Ohio 1958), rely on two grounds: (1) rescission provides an adequate
remedy for tort victims because they do not give up possession of anything
tangible when they settle their cases and thus incur no transaction costs if
they rescind the settlements and pursue their underlying tort claims,
Mackley, 564 S.W.2d at 636; Shallenberger , 150 N.E.2d at 300, and
(2) calculating damages for fraud is unduly speculative and essentially
requires litigation of the underlying tort claim. Mackley, 564 S.W.2d at
636; Shallenberger, 150 N.E.2d at 300-01. Because damages for fraud
would mirror damages for the underlying torts, for all practical purposes
the plaintiffs would be released from the settlement agreements, while
defendants would remain bound, an unjust result. Mackley, 564 S.W.2d at
636; Shallenberger, 150 N.E.2d at 301-02. We agree with DiSabatino that
these arguments are unpersuasive: (1) rescission is often an inadequate
remedy for tort plaintiffs, because they may be prejudiced by delay in pur-
suing their claims, DiSabatino, 635 F. Supp. at 353-54, and (2) damages
for fraud are conceptually different from damages for the underlying tort
claims and are not too speculative to calculate, id. at 354-55. We also
agree with DiSabatino that there is a compelling policy reason to permit
tort plaintiffs to stand by their settlement agreements and sue for fraud,
because many tort victims otherwise would be left with no practical rem-
edy. Id. at 355-56. We note that the weight of authority favors according
defrauded tort plaintiffs an election of remedies. See Slotkin v. Citizens
Cas. Co., 614 F.2d 301, 312-14 (2d Cir. 1979) (applying New York law);
Automobile Underwriters, Inc. v. Rich, 53 N.E.2d 775, 777 (Ind. 1944);
Ware v. State Farm Mut. Auto. Ins. Co., 311 P.2d 316, 320-21 (Kan.
1957); Mlnazek v. Libera, 86 N.W. 100, 101-02 (Minn. 1901); Bilotti v.

                               6856


DuPont claims DiSabatino applies only when a tort defen-
dant's insurer fraudulently induces a plaintiff to release claims
against its insured.5 DiSabatino cannot be read so narrowly.
Its policy and legal analysis6 apply regardless of who commits
the fraud.7
_________________________________________________________________
Accurate Forming Corp., 188 A.2d 24, 30-35 (N.J. 1963); Brown v. Ocean
Accident & Guar. Corp., Ltd., 140 N.W. 1112, 1115 (Wis. 1913). But see
Taylor v. Hopper, 276 P. 990, 991-92 (Cal. 1929) (holding that defrauded
tort plaintiffs may only rescind); Davis v. Hargett, 92 S.E.2d 782, 786
(N.C. 1956) (same). Michigan permits tort plaintiffs to sue defendants'
insurers for fraudulent inducement without rescinding the settlement,
Kordis v. Auto Owners Ins. Co., 18 N.W.2d 811, 812-13 (Mich. 1945), but
may not permit such suits against the defendants themselves, Dresden v.
Detroit Macomb Hosp. Corp., 553 N.W.2d 387, 391 (Mich. Ct. App.
1996); defrauded tort defendants cannot sue plaintiffs for fraud without
rescinding the settlement, Triplett v. St. Amour, 507 N.W.2d 194, 196-97
(Mich. 1993).
5 DuPont makes a bare assertion in a footnote that DiSabatino was
wrongly decided, but devotes its argument to distinguishing the case.
6 See note 4, supra,regarding DiSabatino's legal analysis. Withrespect
to policy considerations, DiSabatino explained:

      In such cases the company gambles that the deceit will not be
      uncovered. If the fraud is uncovered, then the company only
      faces litigation, or the costs of reimbursement, that it would have
      had to confront without a settlement. . . . Second, the opportuni-
      ties for overreaching and committing fraud in releases of tort
      claims may be greater than in typical cases of commercial con-
      tract fraud, where the parties are more often on an equal footing.
      Duress, coercion, and immediate need for liquid assets are ever
      present for the unfortunate tort claimant.

DiSabatino, 635 F. Supp. at 355-56. This argument has equal force if "the
defendant" is substituted for "the [insurance] company."
7 DuPont argues that insurance companies would not be sufficiently
deterred if rescission were the plaintiff's only remedy. Although the
insurer, not the insured, committed fraud, DuPont argues, the plaintiffs'
only remedy would be to rescind the settlement agreement and revive their
tort suit against the insured, rather than standing by the settlement agree-
ment and suing the insurer, the guilty party, for fraud. The fact that the
underlying tort action proceeds against the insured, however, does not
mean the insurer is freed from liability: the insurer may be required to pay
any judgment against the defendant, up to the limits of the insurance pol-
icy.

                               6857


DuPont also distinguishes DiSabatino because the court did
not discuss the effect of the general release included in the
DiSabatino settlement agreement. The district court agreed,
and concluded that the terms of the Matsuura-DuPont releases
precluded the Matsuuras from suing for fraud. The Matsuuras
argue they may affirm the settlement agreement and sue for
fraud without regard to the terms of the release. 8 We need not
decide whether the Matsuuras are correct, because we con-
clude that the Supreme Court of Delaware would not interpret
the Matsuura-DuPont releases to bar a claim of fraudulent
inducement of the releases themselves.

III

[1] We conclude the Supreme Court of Delaware would not
interpret the Matsuura-DuPont releases9  as barring the Matsu-
uras' fraud claims, for three reasons.
_________________________________________________________________
8 Although the DiSabatino court did not discuss the language of the
release in its opinion, the defendant in that case argued that the release
barred the plaintiff's action and the court ruled that the action could pro-
ceed. Other courts have suggested that the scope of the release might be
irrelevant to the plaintiff's remedies. See Bilotti, 188 A.2d at 33 (when a
plaintiff seeks to stand by a fraudulently-induced settlement agreement
and sue for fraud, "it is of no importance . . . what claims the release pur-
ported to discharge."); cf. Ware, 311 P.2d at 320 (defrauded tort plaintiff
may "waive his right to rescind and sue to recover any damages suffered
by reason of the fraud").
9 The relevant passages in the releases are:

      WHEREAS, Plaintiff has filed suit against Defendant . . . [assert-
      ing] various claims related to Plaintiff's purchase and/or use of
      Benlate fungicide; . . .

      WHEREAS, Plaintiff desires to terminate said litigation, to
      release and dispose of all claims against Defendant and all claims
      incident thereto against Defendant . . .

      NOW, THEREFORE, in consideration of good and valuable con-
      sideration, . . .

      1. . . . Plaintiff hereby releases Defendant from any and all
      causes of action, claims, demands, actions, obligations, damages,

                               6858


[2] First, Delaware principles of contract construction pre-
clude DuPont's broad reading of the release. The Supreme
Court of Delaware held in Adams v. Jankouskas , 452 A.2d
148 (Del. 1982), that when specific recitals in a release are
followed by general language, the general language is
restricted by the specific recital. Id. at 156. Applying this rule
to the release before it,10 the court held that general language
releasing "all actions . . . concerning the estate" did not
plainly bar an action against the estate unrelated to the partic-
ular items mentioned in the recital. Id. at 156. The Matsuura-
DuPont releases begin with a recital that Plaintiffs intended to
terminate their litigation of "claims related to[their] purchase
and/or use of Benlate fungicide . . . and all claims incident
thereto." Under Adams, the broad release language relied on
by DuPont is restricted by this specific recital -- only claims
related to the purchase or use of Benlate or incident to the
underlying litigation are released. "Claims related to" the
_________________________________________________________________
      or liability, whether known or unknown, that Plaintiff ever had,
      now has, or may hereafter have against Defendant, by reason of
      any fact or matter whatsoever, existing or occurring at any time
      up to and including the date this Release is signed (including, but
      not limited to, the claims asserted and sought to be asserted in the
      Action). . . .

      14. This document embodies the entire terms and conditions of
      the Release described herein. . . .
10 The relevant portions of the release provided:

      I JOHN JANN do hereby acknowledge to have received of and
      from CHARLOTTE ADAMS, Executrix of the estate of Stella
      Jankauski . . . the sum of $10,000.00, a 6.5 carat diamond ring,
      one Cadillac automobile, and all securities owned jointly with my
      wife in full payment and satisfaction of the bequest in Item Four
      of the will of Stella Jankauski . . . And I do hereby release and
      forever discharge the said executrix as aforesaid of and from all
      actions, suits, accounts and demands whatsoever, for or concern-
      ing the said bequest or for, or concerning the estate . . . or any
      part thereof from the beginning of the world to the date hereof.

Id. at 155 n.7.

                               6859


Matsuuras' purchase or use of Benlate suggests claims for
personal injury and property damage caused by the product or
the Matsuuras' decision to use the product; "claims incident
to" the claims or the litigation suggests claims likely to arise
or naturally arising from the product liability claims or the lit-
igation, which in common understanding would not encom-
pass claims for fraud. Of course, a claim that the settlement
agreements were fraudulently induced is "related " to the Mat-
suuras' use of Benlate and to the underlying litigation in the
sense that one would not have occurred but for the other, but
applying the phrase literally is "a project doomed to failure,
since, as many a curbstone philosopher has observed, every-
thing is related to everything else." California Div. of Labor
Standards Enforcement v. Dillingham Constr., N.A., Inc., 519
U.S. 316, 335 (1997) (Scalia, J., concurring). We cannot agree
with the district court that the Matsuuras' fraud claims
"clearly fall within the scope" of the general language of the
release.11
_________________________________________________________________
11 DuPont cites several cases to support its argument that Delaware
courts will enforce a "general release" of claims. In each of these cases,
however, the barred actions fell within a category of claims expressly dis-
charged in the settlement agreement. See Hob Tea Room, Inc. v. Miller,
89 A.2d 851, 854, 856 (Del. 1952); Shuttlesworth v. Abramo, No. CIV. A.
11650, 1997 WL 349131, at *3 (Del. Ch. June 13, 1997); Judge Trucking
Co., Inc. v. Estate of Cooper, Civ. A. No. 92C-03-041, 1994 WL 680039,
at *1 (Del. Super. Ct. Sept. 29, 1994); Nationwide Mut. Ins. Co. v.
Nacchia, 628 A.2d 48, 49 (Del. 1993); Hicks v. Soroka, 188 A.2d 133, 134
(Del. Super. Ct. 1963). The Matsuura-DuPont releases do not expressly
encompass fraud claims. The Supreme Court of Delaware has refused to
apply sweeping release language literally, and has found ambiguity in
apparently definitive all-inclusive language. In Chakov v. Outboard
Marine Corp., 429 A.2d 984 (Del. 1981), for example, the Court stated
that a general release of claims against particular defendants "and all other
persons, firms or corporations liable or who might be claimed to be liable"
created a "potential for confusion" about who was covered by the release.
Id. at 985; see also Shuttlesworth, 1997 WL 349131, at *4 (following
Chakov, court considered extrinsic evidence of the parties' intent to
resolve ambiguity despite fact that "the plain, literal meaning" of the
release barred the claims in question). Chakov  suggests that the Delaware
Court would find the Matsuura-DuPont release of "any and all claims"
ambiguous, and Adams and other authority indicate the Court would
resolve this ambiguity in the Matsuuras' favor.

                               6860


[3] Second, the Delaware Court is likely to impose a clear
statement requirement for release of fraudulent inducement
claims. Contract clauses purporting to relieve a party from
future liability for negligence are enforceable in Delaware
only if the language is "crystal clear and unequivocal." State
v. Interstate Amiesite Corp., 297 A.2d 41, 44 (Del. 1972); see
also J.A. Jones Constr. Co. v. City of Dover, 372 A.2d 540,
552-53 (Del. Super. Ct. 1977) (such provisions are enforce-
able only if "the parties specifically contemplated that the
contracting party would be relieved of its own defaults") (list-
ing cases applying rule). A release for fraudulent inducement
of a settlement contract is analogous: like a release for future
negligence, it relieves the defendant of liability for defen-
dant's own wrongdoing when it is still within defendant's
power to avoid the wrongdoing. A clear statement rule is par-
ticularly appropriate where, as in this case, the claim is one
that ordinarily would not be released knowingly.

[4] Third, Delaware courts are reluctant to enforce unin-
tended releases of fraud claims; express language in contracts
that seemed to bar such claims has been disregarded. The
Supreme Court of Delaware has repeatedly said that fraudu-
lent inducement claims based on representations made outside
a contract are not barred by contract language stating the par-
ties relied only on representations in the contract. See Norton
v. Poplos, 443 A.2d 1, 6 (Del. 1982); Omar Oil & Gas Co.
v. Mackenzie Oil Co., 138 A. 392, 398 (Del. 1926). The Court
reached this result because "the law is . . . diligent in discov-
ering fraud, and relieving against its consequences. " Omar
Oil, 138 A. at 398; see also Webster v. Palm Beach Ocean
Realty Co., 139 A. 457, 460 (Del. Ch. 1927) ("A perpetrator
of fraud cannot close the lips of his innocent victim by getting
him blindly to agree in advance not to complain against it.").12
_________________________________________________________________
12 See also 66 Am. Jur. 2d Release S 30 (1973) ("A person cannot
release a claim of which he has no knowledge, and of the existence of
which he has been fraudulently kept in ignorance."); 66 Am. Jur. 2d
Release S 32 (1973) (if the plaintiff is induced to sign a broadly worded
release "by the misconduct of the releasee, then the release, no matter how
comprehensively worded, is binding only to the extent actually intended
by the releasor").

                               6861


If a release of "any and all claims" were held to bar this fraud
action, DuPont, the alleged perpetrator of the fraud, would
have successfully silenced its victims by fraudulently induc-
ing them blindly to agree in advance not to complain.

[5] The Delaware Court is likely to interpret a release to bar
a claim for fraudulent inducement of that release, if ever, only
if the parties clearly and affirmatively expressed their intent
to do so. The Matsuura-DuPont releases do not mention
fraudulent inducement of the releases themselves. We do not
believe the Supreme Court of Delaware would interpret these
releases to discharge such claims.13
_________________________________________________________________
13 DuPont cites Conley v. Dan-Webforming Int'l A/S (Ltd.),
Civ. A. No. 91-401 MMS, 1992 WL 401628 (D. Del. Dec. 29, 1992), in
which a federal district court sitting in Delaware held that a general release
barred a fraud claim. Conley, however, does not discuss the election of
remedies rule for fraudulent inducement of a contract and does not hold
that the release encompassed claims for fraud. Id. at *9-10. Therefore, the
court did not squarely address the defendant's argument that it should
have been able to rescind the agreement based on fraud. DuPont also cites
cases from other jurisdictions, in which courts rejected claims for fraudu-
lent inducement of a settlement agreement. These cases are distinguishable
because they turn on principles of law not applicable in Delaware. In
Driscoll v. Schuttler, 697 F. Supp. 1195 (N.D. Ga. 1988), the court
rejected plaintiffs' fraudulent inducement claims because a contract is
voidable under Georgia law only if there was fraud in the procurement,
not the inducement, of the contract. Id. at 1201-02; see also Henslee v.
Houston, 566 F.2d 475, 479 (5th Cir. 1978). Delaware law provides a rem-
edy for fraudulent inducement of a contract. See Federal Land Bank v.
Pusey, No. C.A. 85L-MR4, 1986 WL 9041, at *2 (Del. Super. Ct. 1990).
Gray v. Petoseed Co., Inc., 985 F. Supp. 625 (D.S.C. 1996), aff'd, 129
F.3d 1259 (4th Cir. 1997), is distinguishable because the court relied on
South Carolina cases suggesting that the only remedy for fraudulent
inducement of a settlement is rescission. Gray , 985 F. Supp. at 629. We
have already concluded that defrauded tort plaintiffs have an election of
remedies in Delaware. In Jarrell v. Petoseed Co., Inc., 500 S.E.2d 793
(S.C. Ct. App. 1998), the court addressed a claim for civil contempt, not
a fraudulent inducement claim. In Dresden v. Detroit Macomb Hosp.
Corp., 553 N.W.2d 387, 390 (Mich. Ct. App. 1996), the court held that a
release of "any and all" causes of action arising out of the plaintiff's

                               6862


IV

Permitting the Matsuuras to affirm their settlement agree-
ments and sue DuPont for fraud will further Delaware's pol-
icy favoring voluntary settlement of legal disputes. Insistence
on the finality of settlements is based on the assumption that
the parties have freely bargained to exchange the costs, risks
and potential rewards of litigation for the certainty of a settle-
ment that seems fair in light of facts known at the time. In re
Enstar Corp., 593 A.2d 543, 548 (Del. Ch. 1991) (citing
cases), rev'd on other grounds, 604 A.2d 404 (Del. 1992).
Settlements induced by fraud are set aside, id.  at 549, how-
ever, because the defrauded party has not freely bargained,
but has been induced to settle by affirmative misrepresenta-
tions by the other party. Enforcing such a settlement would
undermine the policy of encouraging voluntary settlement of
disputes: if litigants cannot assume the disclosures and repre-
sentations of the opposing party are made in good faith, they
will be reluctant to settle. Assurance of an adversary's good
faith is particularly critical when parties are attempting to
resolve a dispute amicably. Because DuPont allegedly
breached this trust, the Matsuuras could not and did not freely
bargain for the settlement. Denying the Matsuuras any further
remedy would undermine rather than further Delaware's pol-
icy of encouraging voluntary settlement of claims.

REVERSED AND REMANDED.

_________________________________________________________________
underlying tort barred an action for fraudulent inducement of the release.
However, the court also cited two other grounds for rejecting the fraudu-
lent inducement claim: the merger clause in the settlement agreement
barred the claim and the only remedy for fraudulent inducement is rescis-
sion. Id. at 390-91. Neither of these legal principles has been adopted in
Delaware. Because Michigan takes a much more restrictive approach to
fraudulent inducement liability than Delaware does, Dresden is not a reli-
able predictor of Delaware law.
                               6863

*** Any law, statute, regulation or other precedent is subject to change at any time ***

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