Mediation & Confidentiality

Mediators usually view “settlement” as their objective, conducting negotiations in a variety of styles to achieve that goal. Although one of the principle justifications of mediation is to avoid litigation, particularly of settlements, disgruntled parties continue to resort to the courts when a dispute arises over its consummation or its terms. The amount of time taken to produce an enforceable settlement pales in comparison to litigation occuring when one party objects to its enforcement.

Everyone agrees that creating an enforceable settlement agreement requires the written consent of the parties and their counsel. In Simmons v. Ghaderi, 143 Cal.App.4th 410 (2006) the defendant in a medical malpractice case had signed an written agreement with her insurance carrier to pay the plaintiff a specific amount prior to commencement of mediation. The plaintiff accepted, but while the mediator and counsel were drafting the settlement agreement, defendant revoked consent and departed. The plaintiff, counsel and the mediator all signed the agreement.

Plaintiff filed motion to enforce the settlement (CCP 644.6). The defendant argued the court could not enforce the settlement agreement in the absence of defendant’s written consent; the plaintiff replied that an oral contract was enforceable under standard contract law without the necessity of CCP 644.6 (valid offer and acceptance; Civ.Code. 1550). When litigation ensued, the defendant eventually argued the Evidence Code prohibited any evidence of communications or writings during the course of a mediation.

The court held the contract was enforceable, in part, because defendant was represented by an insurance company who had presented the settlement to the mediator. In professional negligence cases, or in any case covered by insurance, the insurance company controls the litigation-not the insured. In this case, the insurance company presented the offer signed by defendant and the plaintiff accepted. The defendant’s role was irrelevant.

The court also held the plaintiff had subsequently taken different positions throughout the litigation and was estopped from arguing the Evidence Code at the last moment.

The dissent discussed the Evidence Code sections prohibiting disclosure of communications or writings during mediation in the event of subsequent litigation; Evid. Code 1119; 1124; 1118. Although conceding the defendant’s conduct was deplorable, the dissenting Justice concluded the confidentiality of mediation trumped any evidence of censorious conduct.

Although the facts of this case are unique, the dissent extensively discusses the Evidence Code provisions on confidentiality of mediation and is a primer on the statutory law-despite the fact the majority disagreed with its analysis.

The Simmons case also reflects the tension between questionable conduct by those involved in mediation (although counsel conducted the proceedings in an entirely professional manner) and the legislative preference for confidentiality. Foxgate HOA, Inc. v. Bramlaea California, Inc., 26 Cal.4th1 (2001), the leading case in California, is an illustration of this dilemma. More...