Lee D. Froehlich - Page 17

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          petitioner are within the ambit of rule 408 of the Federal Rules            
          of Evidence.  Petitioner primarily relies on the second sentence            
          of rule 408 of the Federal Rules of Evidence, which states                  
          "Evidence of conduct or statements made in compromise                       
          negotiations is likewise not admissible."  The exception                    
          contained within rule 408 of the Federal Rules of Evidence for              
          "evidence otherwise discoverable" mitigates the general rule                
          where evidence is discoverable from a source independent of the             
          settlement negotiations.  See Hulter v. Commissioner, supra, at             
          665-666.  The purpose of this exception is to prevent parties               
          from insulating evidence that is obviously damaging to them by              
          incorporating the evidence in settlement discussions and/or                 
          offers.                                                                     
               In general, rule 408 of the Federal Rules of Evidence states           
          a broad proscription excluding statements made during settlement            
          negotiations when offered to prove the validity or amount of a              
          claim.  Specifically, this rule does not distinguish between                
          offers to settle and admissions of fact made during settlement              
          negotiations.  See Fiberglass Insulators, Inc. v. Dupuy, 856 F.2d           
          652 (4th Cir. 1988).  Accordingly, the issue here is not whether            
          the statement was one that was made as an offer to settle, but              
          whether it was made during settlement negotiations.                         
               Thus, we must inquire here, as a factual matter, whether               
          petitioner's admissions were made during a settlement conference.           





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