Is Your Mediated Settlement Agreement Enforceable?

A decision by the Second District of the California Court of Appeal illustrates how mediation confidentiality can create a trap for unwary litigants who reach a settlement.

In Rael v. Davis, 166 Cal. App. 4th 1608 (2008), the court found that a settlement agreement signed at a mediation was inadmissible pursuant to Evidence Code § 1119 and therefore unenforceable. Evidence Code §1119, sometimes referred to as the mediation privilege, protects from disclosure all oral and written communications made in connection with a mediation proceeding. Although there is an exemption to mediation confidentiality for written settlement agreements under Evidence Code § 1123, the court concluded that the agreement failed to satisfy the requirements of the exemption because it had not been personally signed by one of several parties--despite being signed by the party's counsel. The court went on to hold that "because the agreement was inadmissible, it was unenforceable in whole or in part."

How can you ensure that the settlement you reach through mediation is enforceable?

• Include language in the agreement stating that it is admissible pursuant to Evidence Code § 1123 to the extent necessary to enforce its terms.
• Include language stating that the parties intend for the agreement to be binding and that it may be enforced pursuant to the expedited procedures in C.C.P. § 664.6.
• Make sure the agreement is personally signed by all the parties.

As previously noted, personal execution by the parties is a requirement of admissibility under Evidence Code § 1123. Personal execution by the parties is also required for enforcement pursuant to C.C.P. § 664.6. Levy v. Superior Court, 10 Cal. 4th 578 (1995).  This requirement is often overlooked, particularly in class action litigation, where it is common for plaintiffs' counsel to sign a memorandum of understanding at the mediation on behalf of absent named plaintiffs. If one of the parties is not physically present at the negotiations, have the party sign a facsimile or PDF of the agreement before concluding the mediation.