Brief - Syester v. Banta PDF

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Misrepresentation and Nondisclosure

Madden Syester v. Banta (1965) FACTS

Substantive facts: - ∏ Syester was a widow, lived alone, and was in her mid 60s when she began taking dance lessons at Arthur Murray Studio, owned by Mr. Theiss and others (∆). - The studio offered dance instructions in private studios by dance instructors. - The private studios were wired for sound so that the manager of the studio could monitor conversations and provide sales techniques to the instructors. - The instructors were provided lessons in and were closely supervised for salesmanship. - They were provided an exhaustive set of instructions regarding sales techniques, which included preventing a client from consulting legal advice, preventing a client from thinking it over, telling a client that she has natural ability and other flattery, and using emotional selling. - Syester purchased lessons in advance in packages that included varying hours of instruction and lifetime memberships to the studio’s weekly dances. - For all lesson hours, Syester was charged approximately $10/hour. - Syester was instructed by Carey, with whom she quickly became enamored. - Syester was awarded a succession of medals for her dancing – a bronze, silver, and gold – the effect of which was that she purchased a higher skill-level dance packages after each medal. - Systester was awarded these medals all in one year. The manager of the studio admitted that it typically takes two-four years to earn a bronze medal, five to seven years to earn a silver medal, and approximately 1200 hours of instruction to earn a gold medal. - After Syester was awarded the gold medal, the representatives of the studio showed her a video to entice her to buy more classes. - They had studied the video 15-20 times to determine what parts of it they should stress to get Syester to purchase more classes. - After seeing the video, Syester purchased the Gold Star course, which consisted of an additional 625 hours of instruction with an instructor who was “faking it.” - Carey stated that it would have taken only 200-400 hours of instruction to each her to dance at that level at which she was dancing in 1960. - By that time, however, Syester had purchased 3425 hours of instructions, which included three lifetime memberships to the weekly dances. - According to Carey, she was overcharged for over 3000 hours of instruction, which equals over $20, 000. - Carey was discharged in 1960. - Syester quit the studio shortly thereafter. - At that time she had 1750 hours of unused instruction. Procedural facts: - In 1961, Syester hired counsel and filed a lawsuit against the owners of the studio. - The owners offered Carey his job back, as well as other enticements, if he would convince Syester to drop the lawsuit. - After Carey and other representatives of the studio visited Syester several times, she dropped her lawsuit. - Representatives of the studio also convinced her to discharge her counsel. - The owners’ counsel refused to be involved in reaching a settlement agreement with Syester. - Syester signed a settlement and release with the owners, and received a refund of about $6,000 for lessons previously purchased.

Misrepresentation and Nondisclosure Madden - Syester participated in the studio for approximately two more months. - She shortly thereafter quit again, with almost 900 hours of unused lessons outstanding. - She filed suit again. She alleged fraud and misrepresentation in connection with the settlement and release and dismissal of the previous lawsuit. - The owners moved for directed verdict. - The trial court denied the motion. - ∆s denied any fraud or misrepresentation and urged the releases as a complete defense. - A jury returned a verdict for Syester in the amount of $14,300 in actual damages and $40,000 in punitive - The owners appealed to the Iowa Supreme Court.

ISSUE ON APPEAL: Was there overreaching or fraud in the settlement agreement? Were all of the elements of fraud established? TREATMENT:

∆’s Argument: - Challenge the sufficiency of the evidence to generate a jury question but not the accuracy of the instructions. - ∆s argue in the absence of fraud the execution of a valid release bars a future action based on the rights relinquished. - In an action based upon fraud, certain universally recognized elements must be alleged and shown, and the failure ot establish any one or more of such elements is fatal to such action. SETTLEMENT.

Rule(s): Where a settlement has been had between competent parties, and a release as been fairly entered into, without fraud or overreaching, it becomes binding and effectual, and will be upheld and enforced. It is undoubtedly the law that an instrument of this character can be impeached for fraud in procuring the same or where the same was executed by a party who was mentally incompetent to legally execute such an instrument. The burden of proof is on the party seeking to impeach such written instrument. Application/Rationale: - The evidence was such that the jury could find that there was such a concerted effort, lacking in propriety, to obtain the releases as to constitute fraudulent overreaching. The jury obviously concluded that there was a predatory play on the vanity and credulity of an old lady. We find no reason for interfering with that conclusion. Conclusion: Affirmed in favor of ∏. FRAUD.

Misrepresentation and Nondisclosure

Madden

Rule(s): The burden is on the ∏ to establish by clear, satisfactory and convincing evidence each of the following propositions: - The ∆s made one or more of the representations claimed by the ∏ - That said statements, or one or more of them, were false. - That said false statements or representations were as to material matters with reference to the entering into the lesson contracts. - That the ∆s knew the said representations, or one or more of them, were false. - That said representations were made with intent to deceive and defraud the ∏ - That the ∏ believed and relied upon said false representations and would not have entered into the lesson contracts, except for believing and relying upon said misrepresentations. - That the ∏ was damaged in some amount through relying on said representations. A statement of opinion or puffing as opposed to a statement of fact, cannot be the basis for a claim of fraud. Application/Rationale: - Regarding the jury’s award, there appears to be sufficient evidence to support the jury’s award. - The studio’s manage testified that Syester had almost 900 hours of unused lessons. - Mr. Carey testified that Syester was overcharged for over 3,000 hours, which equals over $20,000. - It is not possible to know exactly how the jury calculated its award. - However, based upon the facts, it is clear that the award of $14,000 fell within the range of the value of unused lessons and the amount that Syester was overcharged. - Because the award is not beyond the scope of evidence, it was appropriate and will not be overturned. Conclusion: Affirmed in favor of ∏....