You and your clients have just gone through a lengthy mediation. After hours of hard bargaining, a settlement finally is reached. How should you memorialize your agreement to assure that its terms will be enforced? Can you be confident that the settlement will not unravel because one or more of the parties has had a change of heart? These are questions that frequently concern parties who are thinking of using mediation. Fortunately, I have found as a mediator that it is not difficult to create and enforce a binding agreement if you follow a few simple rules.
First, and most importantly, everyone whose authority is necessary in order to settle should be present at the mediation. If any such persons are absent, their written authority or consent must be obtained, either by facsimile transmission or other available means before the mediation has been adjourned.
Once you are satisfied that due authorization has been obtained, all terms and conditions of settlement should be summarized in the presence of all participants. The terms should then be reduced to written form that is signed by all parties. I refer to this document, which is often handwritten, as a "Memorandum of Settlement."
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After all parties have executed the Memorandum of Settlement and the mediation has been adjourned, the attorneys may wish to have the parties sign releases of liability and sometimes a more formal settlement agreement. Where additional settlement documents are to be used, care should be taken to state expressly in the Memorandum of Settlement that it is intended to be a binding agreement and not a mere statement of intention to agree in the future. If the terms of settlement are not complex this second step can be eliminated if the attorneys bring to the mediation a standard form of release for all parties to sign.
Care should be taken not to run afoul of Evidence Code '1152.5, which provides that evidence of anything said in the course of a mediation is inadmissible in court and that all communications among the participants in a mediation are confidential. One court has held, under a broad interpretation of Section 1152.5, that the settlement agreement was inadmissible as a confidential communication. See Ryan v. Garcia (1994) 27 Cal.App. 4th 1006, 1011; but compare Regents of University of California v. Sumner (1996) 42 Cal.App. 4th 1209, holding that the terms of a settlement dictated into a tape recorder and later transcribed could be admitted into evidence and enforced through summary judgment since ". . . the parties concluded their mediation session, and then created a transcript of the settlement they had reached in order to memorialize the agreement . . .. The transcript of the settlement was not a part of the mediation session . . .. " (Id. at pg. 1213.) In order to avoid a Ryan-Garcia problem, the Memorandum of Settlement should specifically state that it shall be admissible in evidence in any action or legal proceeding to enforce its terms. I actually include a statement to that effect in the written agreement to mediate that I ask the parties to sign before the mediation begins.
Should a party refuse to comply with the terms of a written settlement agreement, and if the matter is already in litigation, then a motion for enforcement can be brought pursuant to Code of Civil Procedure '664.6. This section states that "If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, on motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement."
In cases where the dispute has not gone to litigation, the parties can appoint the mediator as an arbitrator for the sole purpose of rendering an award conforming to the terms of their written agreement. Either party would then be able to petition the court for the entry of a judgment confirming that award.
Enforcement of an agreement to settle that has not been properly documented is problematic. In addition to the obstacle of Evidence Code Section 1152.5, an oral agreement to settle made outside the presence of the court is not enforceable under C.C.P. '664.6. Murphy v. Padilla (1996) 42 Cal.App. 4th 707. Such an agreement may be enforceable by an action for damages, or perhaps even an action for specific performance, but those remedies are obviously unsatisfactory since the whole purpose of mediation is to avoid further litigation.
MICHAEL P. CARBONE is a senior mediator who has also served as an arbitrator and court-appointed referee. His dispute resolution practice has been built over a period of more than 25 years and covers a wide range of fields. His exceptional combination of transactional and litigation experience enables him to handle complex litigation and other challenging cases.
Michael resolves business and commercial cases, real estate disputes, employment claims, construction claims and defect cases, estate and trust matters, insurance issues, legal malpractice, corporate and partnership disputes, and personal injury cases. In his capacity as a court-appointed referee he has undertaken a wide variety of responsibilities, including sales and appraisals of real property, and the adjudication of trust accounting and administration matters.
He is a member of numerous dispute resolution panels, including the National Panel of Arbitrators of the American Arbitration Association. He is also listed on the mediation and discovery facilitation panels of several Superior Courts.
He is a founder and past president of The Mediation Society, and a member of many other professional organizations, including the Academy of Court-Appointed Masters, the Dispute Resolution Section of the American Bar Association, and the Association of Business Trial Lawyers.
Michael is a frequent author and speaker on alternative dispute resolution issues. He publishes a monthly newsletter entitled "Resolving It" which provides timely advice on strategies for successful mediation and discusses current issues, such as reforming the commercial arbitration process and mediating e-discovery.