Then, in December 2006, the California Supreme Court issued another important opinion concerning the impact of the mediation confidentiality rules. In Fair v. Bakhtiari, 2006 Cal. LEXIS 14727, the Court held that parties to a mediated settlement agreement must include an express provision that they intend to be bound by any written term sheet which memorializes the settlement. This ruling was a further extension of the Court’s determination in Rojas to scrupulously protect the confidentiality of parties in a mediated process. The Fair case involved a one page settlement memorandum signed at the end of a two day mediation, which stated: “Any and all disputes subject to JAMS arbitration rules.” When disputes arose over the final provisions of a formal agreement and one of the parties sought court assistance to enforce the settlement, the trial court was faced with the provisions of Evidence Code Section 1119 (b) (discussed at length in Rojas), which deems documents prepared during the course of a mediation to be confidential and thus inadmissible. The Court in Fair stated that, to avoid this bar, parties must look to the guidance within Evidence Code Section 1123, which provides that a written settlement agreement will not be made inadmissible if certain conditions are met. The Court concluded that “to satisfy section 1123(b), a settlement agreement must include a statement that is ‘enforceable’ or ‘binding,’ or a declaration in other terms with the same meaning.”
As a result, the safest course to take in preparing any written settlement memorandum signed at the conclusion of a mediation is to include specific language which states that “pursuant to Evidence Code Section 1123 (b) this settlement agreement [or term sheet or memorandum of settlement] is enforceable, binding and admissible in any court proceeding.”
So, next time you prepare and sign one of those brief settlement memorandum at the end of a long mediation, don’t forget to include this language. Otherwise, all of the time and effort spent at the mediation may be of no value if one party decides to change their mind later on. If that occurs and without this language included, the court will be unable to provide any assistance in enforcing your settlement.