Conflict Resolution|Courts|Mediation

New Jersey Halts Litigating Mediated Settlements

Readers of this blog know that the author has a warm place in his heart for the cottage industry of Monday-Morning Quarterback-ing mediated settlement agreements.  These are the motions or newly initiated suits contesting whether one party to a mediation is actually bound by the terms of an agreement they made (or perhaps did not make) in mediation.

The grandpappy of them all was a New Jersey dispute in which the refusal by one party to honor an alleged mediated agreement was answered by a motion by the other party — accompanied by a certification of the mediator!!  The trial court’s hearings, the Appellate Division’s consternation, the questions of breach of mediator confidentiality, the effectiveness of party waiver of mediator privilege — all these concerns and more stretched the litigation out (the mediation was conducted on November 6, 2007).  I don’t remember reading that the attorneys refused their fees during the nearly 6 additional years of subsequent litigation.  The case was described in a prior blog post, located here.

Well, on August 15, 2013, the New Jersey Supreme Court turned off the ventilator, not only on this suit but on the entire game.  In a unanimous opinion, the court affirmed the trial court and the Appellate Division’s holding that the agreement reached at mediation was in fact binding and enforceable.

The court cited two exceptions to the privilege provisions in the Uniform Mediation Act (N.J.S.A. 2A:23C-2).  One exception is that a writing signed at the mediation is admissible to prove the existence of that writing in an action to enforce it.  The other is waiver — that a party that has clearly and unmistakably waived the privilege cannot thereafter seek to enforce it.  Here a writing did not exist, but Willingboro’s failure to object to admission of the mediator’s certification — and its participation in deposing the mediator and questioning him in open hearing — deprived it of any basis to object.

The court then went a step beyond — a welcome one to those of us who understand mediation to be a reliable means of terminating litigation.  It held that, going forward, if the parties to mediation reach an agreement to resolve their dispute, the terms of that settlement must be reduced to writing and signed by the parties before the mediation comes to a close in order for that agreement to bind the parties.  “To be clear, going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.”

Experienced mediators have known for years that best practices require the drafting of the essential terms of an agreement at the time of the mediation, on a piece of paper drafted by counsel (not the mediator), signed by the parties, and including the magic words: “While further documentation, releases, notices and agreements may follow, the parties intend to be bound by the terms above.”  And now best practices have become law in the State of New Jersey.

Now, doesn’t that feel better?

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