United States: If A Settlement Happens In The Woods Or At Mediation, Can Any Body Hear It?

Last Updated: August 16 2013
Article by Eric S. Solotoff

As divorce attorneys, we all have had this happen to us.  We go to a mediation, spend all day negotiation, finally come to a settlement, and leave thinking that the matter is resolved, but for the formalities.  Then a few days or weeks later, one or both sides backs away from the deal.  You want to enforce the agreement, because, after all, we know that we can enforce agreements, even if they have not been reduced to writing.  In fact, we know from the Brawer case (a case I was involved in the the appeal), that the unexpressed intention not to be bound by the terms of a settlement that your seemingly reached is irrelevant – i.e. you can be bound to the deal even if you didn't intend to be if you didn't tell anyone in advance that you didn't intend to be bound.

When this happens at mediation, we want the mediator to not only confirm that there was a deal, but what the terms were.  Makes sense right, because who knows what the settlement was better than the mediatior and she/he is impartial.  Can a mediator dislose the most basic and fundamental thing when someone tries to renege?  Sadly, the answer is no.

Okay then but is all lost?  Can you still try to enforce your agreement?  Not anymore as the Supreme Court told us today (8/15/13) in the case of Willingboro Mall, LTD. v. 240/242 Franklin Avenue, L.L.C.  While this was not a divorce case, the holding is equally applicable to divorce mediation.

In this case, the parties went to mediation and reached an oral settlement of the issues.  However, the terms of the settlement were not reduced to writing before the end of the mediation session.  One side backed out of the deal and the other side  filed a motion to enforce the settlement agreement and attached certifications from its attorney and the mediator that revealed communications made between the parties during the mediation. The other party did not move to dismiss the motion, or strike the certifications. but rather opposed it and a hearing ensued.

The parties agreed that they were "waiv[ing] any issues of confidentiality with regard to the mediation process" and agreed that the testimony could be used for purposes of the motion to enforce the settlement agreement only and not for purposes of the underlying action. Despite the waiver, the mediator refused to testify regarding the mediation in the absence of an order from Court.  The trial judge correctly advised the parties that under Rule 1:40-4(d), "unless the participants in a mediation agree, no mediator may disclose any mediation communication to anyone who was not a participant in the mediation." Both parties agreed.  Later, however, during the hearing, one party tried to revoke that agreement.  The trial judge ruled that the mediation privilege had been waived and ultimately enforced the agreement.   An appeal ensued, the Appellate Division affirmed and the matter found its way up to the Supreme Court. 

 The Supreme Court affirmed as well, but with a twist.  As to the waiver issue, the Supreme Court agreed that mediation privileged was waived and could not be revoked.  In addition, the oral settlement agreement reached by the parties was upheld.

However, here's the twist.  The court held that going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.

Why then was this the result? The court noted that public policy favors the settlement of disputes, and the court system encourages mediation as an important means of achieving that goal.  The success of mediation as a means of encouraging parties to compromise and settle relies on confidentiality. The court noted that confidentiality promotes candid and unrestrained discussion which is a necessary part of any mediation intended to result in a settlement. To this end, court and evidence rules and the Mediation Act confer a privilege on mediation communications, ensuring that words spoken at mediation will not be used against a party in a later proceeding.  The privilege is not absolute however.  First, there can be a waiver, as noted in this case.  There can also be a signed writing evidencing the settlement.

The court noted that requiring a signed writing to enforce an agreement reached at mediation will greatly minimize the potential for litigation.

What is the take away from this?  If you think that there is a chance that the other side will walk from the deal, make sure to write down all material terms of the deal before the close of mediation and have the parties sign them noting an intention to be bound.  Otherwise, you may very well have wasted a day and set the parties even further apart.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Eric S. Solotoff
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