ADR Case Updates
Mediated Settlement Agreements Must Be Signed By All Settling Parties To Be Admissible and, Therefore, Enforceable, 10/08/08
In case you have not seen them, two recent California Court of Appeal cases are relevant to settlement agreements reached in mediation. Although the cases reach different results � one settlement agreement was admissible, the other was not - both stand for the proposition that all writings made in mediation are inadmissible, unless one or more of the statutory exceptions to mediation confidentiality are met.
In Rael v. Davis (Sept. 24, 2008, Second District, Div. Four), ___Cal. Rptr. 3d ___, 2008 WL 4335179, Plaintiff sought to enforce the terms of a written settlement agreement signed by her and her late husband, Tony. The settling parties also included Tony�s three adult children. However, one of the children, Mark, had not signed the settlement agreement. As a result, the trial court found the purported agreement unenforceable, and further refused to award Defendant, the executor of Tony�s estate, attorney fees as the prevailing party against Plaintiff.
Affirmed. Under Evidence Code § 1123 a written settlement agreement is admissible if it is signed by all settling parties, and includes language that it is �admissible � subject to disclosure � enforceable � binding �� or words to that effect. Plaintiff argued that the agreement was severable, and enforceable against the parties who signed it. However, for an agreement to be severable, it first must be admissible. Here, it was not admissible and, therefore, not severable nor enforceable.
Moreover, Defendant was unable to recover attorney fees based upon an attorney fee provision in the settlement agreement, even though Civil Code §1717 permits recovery of fees whenever the opposing party would have been entitled to fees under the contract had they prevailed. The mediated settlement agreement was not simply unenforceable � it was inadmissible. Evidence Code § 1123 contains no admissibility exception to permit application of Civil Code §1717. Resolution of these competing policies must come from legislative, not judicial, action.
In Estate of Thottam (Aug. 13, 2008, Second District, Div. Four), 165 Cal. App. 4th 1331, a dispute arose between decedent�s three adult children, Peter, Elizabeth, and Jameson, who were co-trustees and beneficiaries of her trust. The co-trustees mediated the dispute. At the outset of the mediation they signed a �mediation and facilitation confidentiality agreement� under which matters discussed would not be used in future litigation �except as necessary to enforce any agreements resulting from� the mediation. They reached an agreement during mediation, and initialed a chart that distributed various pieces of real estate to them.
The �Pearblossom� property was allocated 100% to Peter, who sought specific performance of a contract incorporating the chart. Elizabeth sought to remove Peter as co-trustee, and return of the Pearblossom property to the trust. The trial court held that the chart was inadmissible during trial, and ruled against Peter.
Reversed and remanded. The chart was admissible as an exception to mediation confidentiality under Evidence Code § 1123(c), which authorizes admissibility if �[a]ll parties to the agreement expressly agree in writing � to its disclosure.�
Peter�s civil action for specific performance was precisely the exception to mediation confidentiality envisioned in the confidentiality agreement as �necessary to enforce any agreements resulting from� the mediation. Because exclusion of the chart prejudiced Peter, the judgments in both the civil and trust actions were reversed.
Both opinions may be viewed at: http://www.courts.ca.gov/opinions.htm.
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