Diane Schmidt—who suffered from fibromyalgia—was a political science professor at California State University in Chico who sued the university for, among other things, disability discrimination, harassment and retaliation. After filing seven grievances with the university and complaints of discrimination with government agencies, she entered into a settlement and release agreement with the university in February of 2010.
Schmidt filed a lawsuit two months later, and in response, the university asserted that Schmidt's release of claims barred her lawsuit. Schmidt claimed that the settlement was void because she understood that the release agreement withdrew only two of her pending grievances in exchange for removal of certain discipline from her personnel file, but did not preclude her from filing a lawsuit. The trial court granted the university's motion to dismiss the claims, finding that the settlement agreement was unambiguous and that evidence outside of the agreement itself could not be used to interpret the document.
A California Court of Appeal agreed with the trial court that outside evidence could not be used to interpret the unambiguous agreement. However, the court also determined that Schmidt's claim that the university made false representations during negotiations of the release to induce her to sign it raised an issue of fraudulent inducement that should be resolved by a jury. The court found that there were enough disputed facts concerning the issue of whether the university misled Schmidt concerning the scope and effect of the release language, including the facts that the university knew Schmidt was under a time pressure due to upcoming hearings on her grievances and deadline for her discrimination complaint, that the university represented the release would only include the resolution of three grievances (rather than a broader, "global" release) and that Schmidt did not have an attorney available to review the final release.
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