2.8Settlements and Settlement Negotiations

“Evidence of the following is not admissible to either prove or disprove the liability for or the validity or amount of a disputed claim: (1) furnishing, promising, or offering — or accepting, promising to accept, or offering to accept — a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or a statement made during compromise negotiations.” MRE 408(a). “If this evidence is otherwise discoverable, it need not be excluded merely because it is presented during compromise negotiations. And it need not be excluded if admitted for another purpose, such as proving a witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.” MRE 408(b).

Defense counsel’s “comment that ‘the hospital’s been dismissed’ did not violate MRE 408” because the “observation that [the hospital] had been dismissed was accurate and, on its face, was not a statement about the existence or terms of a settlement–the hospital could have been ‘dismissed’ by stipulation or through summary disposition—or about any conduct related to the settlement. For the same reasons, the statement did not violate the trial court’s prohibition in the settlement order against ‘disclosure of the terms of the settlement to any person other than the parties, their attorneys, and appropriate court officials.’” Carlsen Estate v Southwestern Mich Emergency Servs, PC, 338 Mich App 678, 695 (2021) (noting “[t]here [was] simply . . . no merit to plaintiffs’ allegation that the hospital’s comment violated either MRE 408 or the trial court’s order”).

“Statements made by judges, attorneys, and witnesses during the course of judicial proceedings are absolutely privileged if they are relevant, material, or pertinent to the issue being tried”; that privilege extends to statements made during the course of settlement negotiations where the statement is made after the commencement of and in context of the present litigation. Oesterle v Wallace, 272 Mich App 260, 264, 268 (2006).¹

Although not expressly addressed by MRE 408, evidence of a settlement made by a party with a nonparty is inadmissible to prove liability. Windemuller Electric Co v Blodgett Mem Med Ctr, 130 Mich App 17, 23 (1983). In Windemuller, the Court found that admitting evidence of a settlement between the plaintiff and a third party constituted prejudicial error where the evidence went to a substantive issue in the case (the plaintiff’s liability). Id. at 24. However, where a defendant-insurance agency “was not a party to the settlement or any part of the settlement process and was involved only to the extent of giving its approval pursuant to plaintiffs’ policy, which explicitly excluded . . . coverage ‘to any person who settles a bodily injury claim without [defendant’s] written consent,’” evidence of its consent is not barred by MRE 408. Chouman v Home-Owners Ins Co, 293 Mich App 434, 439 (2011) (alteration in original; finding that the defendant’s consent “was [not], itself, a compromise of a dispute defendant had with any party or nonparty” and thus, was not subject to exclusion under MRE 408²).

MRE 408 is not limited to precluding evidence of settlements and settlement negotiations only in the present litigation; it can also act to preclude such evidence from other cases when the evidence is relevant to the present litigation. See Alpha Capital Mgt, Inc v Rentenbach, 287 Mich App 589, 621 (2010) (“the trial court incorrectly determined that MRE 408 lacks applicability to settlements ‘in another case,’ because the rule plainly does not take into account a ‘prior action’ exception”).