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MEDIATION SETTLEMENTS
To be admissible, any agreement reached in Mediation must be signed by the parties, and include a direct statement to the effect that it is enforceable or binding.
The recently decided case of Fair v. Bakhtiari (Case No. S129220, filed 12/14/06) could present problems enforcing settlements that are negotiated at Mediation, where a signed memorandum of settlement is drafted, but a formal Settlement Agreement and Release are to be drafted later. In Fair, the parties concluded a Mediation session by signing a handwritten, single-page memorandum entitled “Settlement Terms,” the final provision of which provided: “Any and all disputes subject to JAMS arbitration rules.” The parties were never able to agree on a final Settlement Agreement and the defendants filed a motion to compel arbitration of the dispute and offered the signed memorandum in support.
The trial court held that the memorandum signed at the Mediation was inadmissible, and denied the motion. The Court of Appeal reversed, holding that the memorandum was admissible because the arbitration provision constituted “words to [the] effect” that the settlement terms were “enforceable or binding.”
The California Supreme Court reversed concluding that the terms of a settlement agreement reached at Mediation must make clear that it is an agreement that the parties intend as binding, and not simply a memorandum of terms for inclusion in a future agreement. Generally, documents prepared for or during mediation are inadmissible in civil proceedings. However, a signed settlement agreement reached during Mediation is admissible under Evidence Code § 1123(b) if it “provides that it is enforceable or binding or words to that effect.” Therefor, to be admissible, any agreement must be signed by the parties, and include a direct statement to the effect that it is enforceable or binding. The memorandum in Fair failed to satisfy that standard.
Reference to arbitration clauses, forum selection clauses, choice of law provisions, and the like that are commonly negotiated in settlement discussions do not meet the requirements of § 1123(b) for admissibility.
To avoid any question regarding this issue, in California, the following clause should be included in any settlement agreement drafted at Mediation:
“Notwithstanding the provisions of Evidence Code §§ 1119 and 1123, this Agreement will be binding and admissible into evidence for the limited purpose of enforcing the terms of the settlement under Code of Civil Procedure § 664.6.”
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Related Attorney(s):
Johnna J. Hansen
Related Practice Area(s):
General Litigation
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LOS ANGELES ORANGE COUNTY VENTURA/OXNARD CENTRAL COAST
BAY AREA SACRAMENTO LAS VEGAS RENO PHOENIX
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