Mediation Message No. 25

SOMETIMES A CLIENT NEED NOT SIGN THE SETTLEMENT

Defense lawyers in accident cases often appear at mediations without their clients or adjusters. While this practice technically violates rules requiring the attendance at court-ordered mediations of both the client and a person with full authority to settle the case (see Rule of Court 1634 and Los Angeles Superior Court Rule 12.15), an equally significant issue is whether the client’s or adjuster’s absence has frustrated the opportunity to execute a settlement at the mediation. Fiege v. Cooke, et al. (2005) 125 Cal.App.4th 1350 says that the answer to that question lies within the scope of the defendant’s insurance policy.

In Fiege, the plaintiff attempted to back out of a settlement of traffic accident litigation, arguing that only the defendants’ lawyers had appeared at a mandatory settlement conference (MSC) at which the terms were agreed to. In response, the defendants moved successfully under Code of Civil Procedure section 664.6 to enforce the settlement. In affirming the trial court’s judgment consistent with the settlement terms, Fiege distinguished Levy v. Superior Court (1995) 10 Cal.4th 578, which had held a settlement unenforceable because a party litigant had not signed the settlement, from the facts at hand because the insurers in the instant matter, unlike in Levy, had “fully cover(ed) the settlement under a policy that gives them the right to settle without the insured’s consent.” Accordingly, Fiege relied on dicta in Robertson v. Chen (1996) 44 Cal.App.4th 1290, which similarly had distinguished Levy and had found that a client’s consent to a settlement was “superfluous” where the client was insured under a liability policy that contains no reservations.

The plaintiff in Fiege also argued that the settlement was unenforceable because the record failed to show that the insurers’ representatives had agreed to the settlement. This contention was also rejected because section 664.6 no longer requires that a settlement be “orally on the record” and, additionally, the representatives had been in court and had discussed the matter with the court before the record was made.

Fiege, although arising from a MSC, has application to mediations because the difference in setting is not critical; the important question is whether the defendant is covered fully under an insurance policy that gives the insurers the right to settle without the insured’s consent. The only distinction between a court and mediation settlement on this point is that whereas the insurer’s assent to the settlement terms at the MSC can be inferred from all of the circumstances before the trial court, such an inference can not be made from the written mediation agreement. Instead, to achieve an enforceable mediation settlement, both the lawyer and the insurer’s representative must sign the document.

Editors note: After I sent out Mediation Message no. 21, which discussed Fair v. Bakhtiari (2004) 122 Cal.App.4th 1457, the Supreme Court granted review as to this decision. In substance, Fair holds that a mediation settlement, to be enforceable, should satisfy at least one of the four enumerated conditions in Evidence Code section 1123 but that, in their absence, the trial court can look at the entire language of the settlement agreement for the purpose of finding an intent to enforce it. While we wait to see if the Supreme Court will give a trial court such authority, it is much easier, to ensure a settlement’s admissibility at a motion to enforce the settlement, that all parties to the agreement expressly agree that it is admissible at such a motion.

Copyright, Michael D. Marcus, April 2005

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