Mediation Message No. 21

ENFORCEMENT OF MEDIATION SETTLEMENT AGREEMENTS

(A hearing was granted in Fair v. Bakhtiari. My discussion of the Supreme Court’s opinion in the matter is at Message no. 37.)

Mediation messages 11 and 17, in combination, discussed the legal principle that all oral and written mediation communications, including settlement discussions, are confidential, pursuant to Evidence Code section 1119, Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 and Rojas v. Superior Court (2004) 33 Cal.4th 407.

Nonetheless, there are exceptions to this umbrella of confidentiality. One is provided in Evidence Code section 1123 which states that written settlement agreements prepared during or pursuant to mediation are admissible in court if signed by the “settling parties” and any one of the following is satisfied: “(a) The agreement provides that it is admissible or subject to disclosure, or words to that effect;” “(b) The agreement provides that it is enforceable or binding or words to that effect;” “(c) All parties to the agreement expressly agree in writing, or orally in accordance with Section 1118 (which defines “oral agreement), to its disclosure;” or “(d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute.”

The recent case of Fair v. Bakhtiari (2004) 122 Cal.4th 1457 looks at the situation where a mediation settlement agreement did not expressly contain one of conditions (a) through (d), above, but did provide that all disputes regarding the agreement were subject to arbitration. Assisted by its consideration of the Law Revision Commission Comments to section 1123 and the phrase “or words to that effect,” which is found in both conditions (a) and (b), Fair applies a commonsense interpretation to section 1123 and holds that the settlement agreement at issue was admissible because “inclusion of the arbitration agreement demonstrates that the parties necessarily intended the settlement terms document to be ‘enforceable or binding.’” (At p.1465.) Accordingly, it reversed the trial court’s denial of a motion to compel arbitration for the purpose of resolving a conflict in the agreement.

The lesson of Fair is that if parties want a mediation settlement agreement to be enforceable, they should make certain that it is signed by all of them and that it contains language consistent with at least one of the enumerated conditions in section 1123. While, in their absence, Fair empowers a trial court to look at the entire language of the agreement to find an intent to enforce it, it is far easier, in the first place, to include at least one of the four conditions to ensure the agreement’s admissibility.

Copyright, Michael D. Marcus December 2004

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