## Facts

- Sheila and Robert Roth were plaintiffs in litigation arising from a 1993 medical-transport helicopter crash that killed others and seriously injured Sheila Roth.
- The Roths sued, among others, the helicopter engine manufacturer and related entities and insurers.
- During discovery in the underlying tort case, the manufacturer stated in interrogatory responses that its maximum insurance coverage was approximately $50 million.
- The Roths alleged the true available insurance coverage was about $1 billion.
- Believing coverage was limited and might be insufficient to satisfy all claims, the Roths settled before trial for a portion of the purported $50 million and voluntarily dismissed their claims pursuant to the settlement.
- Approximately one month after the settlement was funded, the Roths learned of the alleged disparity between the represented and actual coverage limits.
- The Roths did not seek to set aside the settlement in the underlying case; they enforced the settlement and filed a separate action alleging fraud and related claims based on the insurance-limit misrepresentation.
- The trial court dismissed the suit on the theory that a fraudulently induced settlement is void and the plaintiffs’ sole remedy was to rescind and pursue the original tort claims.

## Issues

1. Whether a settlement agreement allegedly induced by fraudulent misrepresentation is void, limiting the plaintiff to rescission and revival of the underlying tort action.
2. Whether such a settlement is voidable at the plaintiff’s election, permitting the plaintiff to affirm/enforce the settlement and bring an independent action for damages caused by the fraud.
3. Whether affirming the settlement while suing for fraud constitutes an impermissible election of inconsistent remedies or a prohibited double recovery.

## Decision

- The appellate court reversed the dismissal to the extent it rested on the “only remedy is rescission” theory.
- The court held that a settlement induced by fraud is voidable, not automatically void.
- The court ruled the defrauded party may choose either to rescind the settlement or to affirm/enforce it and pursue an independent tort action for fraud damages.
- The court rejected the argument that enforcing the settlement and suing for fraud are inherently inconsistent remedies.
- Prior Missouri decisions treating fraudulently induced settlements as void and limiting relief to rescission were overruled to the extent they imposed that limitation.
- The case was permitted to proceed on the independent tort theory, subject to defenses not dependent on the void-versus-voidable characterization.

## Legal Principles

- Fraud in the inducement renders a settlement or release voidable at the election of the defrauded party, not void ab initio.
- A defrauded plaintiff may either: (a) rescind the settlement and litigate the original claim, or (b) affirm the settlement and sue separately for damages caused by the fraud.
- Affirmance plus fraud damages is not necessarily an inconsistent election of remedies because the fraud action seeks compensation for incremental harm attributable to the misrepresentation rather than undoing the settlement.
- In a fraud action based on misrepresentation of insurance limits, damages may include the amount by which the settlement value was reduced by the misrepresentation and, where legally supported, additional consequential and punitive damages.

## Conclusion

The court held that a settlement allegedly induced by a misrepresentation of available insurance coverage is voidable at the plaintiff’s option, allowing the plaintiff to keep and enforce the settlement while pursuing an independent fraud claim for the loss caused by the misrepresentation.


Roth v. La Société Anonyme Turbomeca Fr., 120 S.W.3d 764 (Mo. Ct. App. 2003)