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MSJ Granted to Enforce Settlement Agreement Entered at Conclusion of Mediation, Where the Agreement Was Not Signed Personally by all parties.

by Paul Fisher

Summary

A settlement agreement entered into at the conclusion of a mediation was deemed enforceable against the plaintiff even though the settlement agreement was not signed personally by the defendants. When plaintiff refused to accept defendants’ settlement check, defendants moved to enforce the settlement pursuant to Cal. Code of Civil Proc. section 664.6 and moved for summary judgment pursuant to section 437c. The California Court of Appeal held “the requirement in section 1123 that the written settlement agreement be ‘signed by the settling parties’ does not require that an effective mediation-confidentiality waiver be signed by each of the parties litigant, so long as that written waiver is signed by each of the settling parties or their respective counsel. The court below . . . properly held that the agreement did not meet the requirements of Code of Civil Procedure section 664.6. But it correctly held that the agreement could be considered in connection with defendants’ alternative motion for summary judgment. The settlement agreement itself demonstrated each element of the contract, had a lawful object of resolving litigation, and contained mutual promises. Further, execution of the agreement by defense counsel was authorized by defendants’ insurer.

Darren Stewart v. Preston Pipeline Inc., 2005 Cal.App. LEXIS 1947; 2005 Daily Journal DAR 14681, December 20, 2005, Court of Appeal of California, Sixth Appellate Dist.

What follows is an excerpt of the opinion.

At the conclusion of the mediation, a document – signed by plaintiff, plaintiff’s attorney, and defendants’ attorney – purported to memorialize a settlement and recited that the parties intended the settlement to be enforceable and exempt from certain confidentiality provisions of the Evidence Code. Plaintiff thereafter refused to accept the settlement check. Defendants brought alternative motions to enforce the settlement and for summary judgment under Code of Civil Procedure sections 664.6 and 437c, respectively. The trial court granted the latter motion and entered judgment in defendants’ favor.

On appeal, Plaintiff contends that the settlement agreement that was the basis for the court’s summary judgment order was both inadmissible under section 1119 and unenforceable because it was not signed by all of the parties litigant. [3]

The parties participated in a mediation proceeding. The mediation was attended by plaintiff, plaintiff’s then attorney, defendants’ attorney and a claims adjuster for defendants insurer. At the conclusion of the mediation, a document captioned “Confirmation of Settlement As A Result of Mediation” was signed by plaintiff, his attorney, and defendants’ attorney. The concluding paragraph read “The parties intend that this settlement is enforceable pursuant to the provisions of Code of Civil Procedure Section 664.6; the parties agree that this Confirmation of Settlement is exempt from the confidentiality provisions of Evidence Code Section 1152, et seq.” [4]

After plaintiff refused to accept the settlement check tendered by defendants, defendants moved to confirm the settlement under code of Civil Procedure section 664.6; and in the alternative defendants moved for summary judgment pursuant to Code of Civil Procedure section 437c. Plaintiff opposed both motions contending that the settlement agreement was inadmissible under section 1119 and was unenforceable. The trial court overruled plaintiff’s evidentiary objection, denied the motion to enforce settlement, and granted the motion for summary judgment. [6]

Section 1119 provides: “Except as otherwise provided in this chapter: (a) no evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given. (b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, . . . (c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.” [11]

Did the parties waive mediation confidentiality? [23]

Defendants contend that the court below correctly determined the agreement was admissible under section 1123, an exception to section 1119. Section 1123 provides: “A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if the agreement is signed by the settling parties and any of the following conditions are 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, to its disclosure. (d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute.”

1. Waiver language in settlement agreement

On its face, the settlement agreement here met at least two of the alternative requirements of the section 1123 exception to mediation confidentiality. The agreement provided that “the parties agree that this Confirmation of Settlement is exempt from the confidentiality provisions of Evidence Code Section 1152, et seq.” This language satisfied the requirement that the agreement provide “that it is admissible or subject to disclosure, or words to that effect.” We interpret the plain meaning of the statute’s language (“or words to that effect”) as contemplating that the parties need not precisely state that the agreement is admissible or subject to disclosure so long as the same import can be inferred from the words used. (Citation omitted). For the same reason, the parties’ reference in the agreement to “the confidentiality provisions of Evidence Code Section 1152, et seq.” presents no impediment to concluding that the parties intended to make the agreement “admissible or subject to disclosure” We do not deem the reference to “Section 1152, et seq.” to be words of limitation, such that the agreement should be construed as confidential in one context but nonconfidential in others. [25]

In addition, the settlement agreement stated that it was “a full and final settlement of all claims” and that “the parties intend that this settlement is enforceable pursuant to the provisions of Code of Civil Procedure section 664.6.” It therefore satisfied the requirement that “the agreement provide that it is enforceable or binding or words to that effect.” Again, the fact that the parties stated that the agreement was “enforceable pursuant to the provisions of Code of Civil Procedure section 664.6 ” should not be construed as words of limitation; it would make little sense that the parties wished their agreement to be enforceable under Code of Civil Procedure section 664.6 only, but that it would otherwise be unenforceable. [27]

2. Section 1123′s “signed by the parties” requirement

Plaintiff’s chief contention is that because the settlement agreement was not signed by the defendants themselves or by their insurance carrier – but instead was signed only by defense counsel – it did not meet the requirements of section 1123 that the waiver be “signed by the settling parties”. [28] Plaintiff relies principally on Levy v. Superior Court (1995) 10 Cal.4th 578 [41 Cal. Rptr. 2d 878, 896 P.2d 171].

In Levy, supra, the Supreme Court considered whether Code of Civil section 664.6 requiring that the “parties” enter into a stipulation for an out-of-court settlement – meant that the litigants themselves [emphasis here, and all subsequent italics, is that of the court] were required to sign the stipulation. After extended analysis, the court held that, in the context of motions to enforce settlements brought under Code of Civil Procedure section 664.6,[1] because a settlement stipulation affects the client’s substantial rights, “in providing for an enforcement mechanism for settlements by ‘parties,’ the Legislature intended the term to literally mean the litigants personally.”

Levy is distinguishable on at least three grounds. First, the case was decided under Code of Civil Procedure section 664.6 , not under the mediation statutes. [30]

Second, in Levy, it was the nonsignatory party litigant who challenged his attorney’s authority to sign the stipulation as a prerequisite to enforcing the settlement under Code of Civil Procedure section 664.6. Here, plaintiff did personally sign the settlement agreement; he claims that the agreement is unenforceable because defendants and their insurer did not personally sign the agreement. This distinction is of some consequence because neither defendants nor their insurer challenged defense counsel’s authority to sign the stipulation on their behalf. Third, and perhaps most importantly, Levy’s holding was based upon the fact that the client’s right affected by his attorney’s stipulation (ie. the settlement of a dispute) was substantial.

We conclude from a review of the foregoing authorities that a stipulation waiving mediation confidentiality is not one that impacts the substantial rights of the party litigant. The circumstances before us bear little resemblance to those represented in Levy. Such a mediation-confidentiality waiver – as contrasted with a settlement stipulation as addressed in Levy – is clearly procedural in nature; it is a strategic stipulation allowing for admissibility of certain evidence. (Citation omitted).

To hold otherwise would exalt form over substance and would allow mediation confidentiality to nullify otherwise valid settlements agreed upon through mediation. We must not lose sight of the fact that “California has a strong policy encouraging settlements” (Levy) and that mediation provides a process to assist litigants “in reaching a mutually acceptable agreement” resolving their dispute (section 1115). [39]

We therefore hold that the requirement in section 1123 that the written settlement agreement be “signed by the settling parties” does not require that an effective mediation-confidentiality waiver be signed by each of the parties litigant, so long as that written waiver is signed by each of the settling parties or their respective counsel. [40]

Whether The Settlement Agreement Was Enforceable

Plaintiff contends that even if the settlement agreement was admissible (notwithstanding the mediation confidentiality provisions of section 1119), it was nonetheless unenforceable because it was not signed by each of the parties litigant.
Levy does not stand for the proposition that a settlement agreement is unenforceable per se, simply because it is executed by fewer than all of the parties litigant. Instead, that case held merely that, in order for an out-of-court settlement agreement to be enforceable through a Code of Civil Procedure section 664.6 motion, the agreement necessarily must be signed personally by each of the settling parties. [42]

The fact that the settlement agreement here was not signed personally by defendants does not render it per se unenforceable. The court below, rather than concluding that the agreement was “deficient,” as plaintiff claims, properly held that the agreement did not meet the requirements of Code of Civil Procedure section 664.6. But it correctly held that the agreement could be considered in connection with defendants’ alternative motion for summary judgment.

The Propriety of Granting Summary Judgment

“A settlement agreement is a contract, and the legal principles [that] apply to contracts generally apply to settlement contracts.” (Weddington Productions, Inc. V. FlicK, 60 Cal.App.4TH 793, 810) Its validity is thus “judged by the same legal principles applicable to contracts generally.” (Citation omitted). [45]

Here, the settlement agreement itself demonstrated each element of the contract, had a lawful object of resolving litigation, and contained mutual promises. Further, execution of the agreement by defense counsel was authorized by defendants’ insurer. [45]

Defendants’ motion established from the face of the agreement that there was mutual assent. It was signed by both plaintiff and his attorney; and there was no indication from the document that it was conditional or that plaintiff did not intend to be bound by its terms. (Citation omitted). Plaintiff’s opposition – based upon nothing more than his claim that he had not read or understood the agreement before signing it – raised no triable issue on the question of mutual assent. (Citations omitted). [49]

Plaintiff raised no triable issue of material fact concerning possible rescission of the settlement agreement. “It is well established, in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.” (Citations omitted).

Endnote:

  • 1. If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” Code Civ. Proc., sec 664.6.