Mediation Message No. 37

Enforcing Mediation Agreements (Part IV)

Not surprisingly, the California Supreme Court held on December 15, 2006 in Fair v. Bakhtiari, no. S129220, 2006 DJDAR 16184, 2006 WL 3627208, that a settlement agreement reached through mediation is enforceable and not confidential if it incorporates the language of Evidence Code section 1123(b). (I predicted this result November 2005 in message no. 28.)

In Fair, the parties concluded a mediation with a document captioned “Settlement Terms.” The final paragraph of that agreement provided that “Any and all disputes (are)subject to JAMS arbitration rules.” When the parties were unable to finalize the settlement, the plaintiff moved to compel arbitration, contending that he and the defendants had agreed to be bound by the settlement document. The appellate court held that the memorandum was admissible because the above quoted arbitration provision constituted “words to [the] effect” that the settlement terms were “enforceable or binding” under section 1123(b).

The Supreme Court, noting a conflict between the legislature’s desire to provide some flexibility to the enforcement of mediation settlements and the importance of maintaining mediation confidentiality (see Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 and Rojas v Superior Court (2004) 33 Cal.4th 407), opted for the latter policy and reversed the appellate court, finding that its reading was “unduly expansive” since the settlement language did not “include a direct statement to the effect that it is enforceable or binding.” The Court also held that the use of such language negates the need for the trial court to examine extrinsic language to rule on the admissibility of a settlement agreement.

Those whom I have mediated with know that I already provide the parties with a stipulation for settlement that includes enforcement language more specific and broader than that required by Fair because it not only unambiguously states that the agreement “shall be enforceable and binding” but also refers to Code of Civil Procedure section 664.6, which permits the parties to stipulate in writing that the trial court may enter judgment pursuant to the settlement terms. I shall continue to recommend that language because of its specificity and breadth.

Copyright, Michael D. Marcus, December 2006

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