Here, plaintiff moved to increase defendant's child support obligations.  At the initial hearing, defendant stated his annual gross income, based on his "usual work schedule," was $41,458.56.  After plaintiff's objections and a subsequent Friend of the Court determination, defendant admitted that he failed to mention overtime earnings would bring his annual salary to approximately $80,000.  Defendant stated his failure to clarify his salary at the initial hearing was due to the uncertainty surrounding overtime hours in today's current economy.

The parties eventually settled the matter and defendant agreed to increase his support obligations.  Subsequently, plaintiff argued that sanctions in the form of attorney fees and costs were due because of defendant's frivolous defense.

MCL 600.2591(1) grants a court authority to award sanctions to a "prevailing party" if an action or defense is deemed frivolous.  Plaintiff argued she was a prevailing party because the parties' settlement resulted in a higher support award.  Defendant argued that Michigan Rule of Evidence 408 precluded consideration of the settlement negotiations.

Settlement negotiations are generally not admissible to prove the validity of a claim or liability.  The policy reasoning behind this rule encourages settlement negotiations and understands that parties may settle for a number of reasons, not just pending liability.

However, settlement negotiations may be admitted when offered for another purpose.  Here, the court held that the evidence was admissible because it was not offered to prove defendant's liability, but rather, to prove whether plaintiff was a prevailing party.

While settlements are usually confidential matter and receive substantial protections, they may be used for other purposes.  It is critical that municipalities understand the implication of settlement agreements and their extended shelf life.