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Negotiation News: Volume 1, Issue 2

Sean JudgeIN THIS ISSUE:
  • Overcoming Mediation Confidentiality and Getting the Agreement Enforced

This article addresses some of the confidentiality issues that may arise in enforcing civil agreements that arise from a mediation in addition to those of straightforward enforcement under CCP section 664.6 or 664.7.  I know it's not the most scintillating read, but it is important.  'Would love to hear back from you and hear what you think. 

Overcoming Mediation Confidentiality and Getting the Agreement Enforced

From time to time settlement agreements are not performed. When that happens, the aggrieved party or parties, in most situations in civil cases, brings a motion to enforce the agreement under CCP section 664.6. 

Section 664.6 states that for a court enter judgment pursuant to the terms of the settlement agreement, the parties (in cases that are in active litigation) must present to the court an agreement that stipulates that the court will retain such authority, (a) either by a writing signed by the parties, or (b) that is entered into by the parties orally before the court. (Note: In construction defect cases involving claims against developers, designers, contractors, material suppliers or subcontractors relating to the construction of residential dwelling units, the requirement of a party’s actual participation may be substituted by counsel when the party’s settlement contribution is paid by an insurance carrier.) Importantly, the parties must also request in the settlement agreement that the court retain jurisdiction over the case for the purposes of enforcement. If the case is dismissed without the specific request that the court retain such jurisdiction, the court loses subject matter jurisdiction to enforce the settlement.  Viejo Bancorp, Inc. v. Wood, (1989) 217 Cal. App. 3d 200, 206. 

If the settlement is the product of a mediation with a mediator, additional consideration must be given to Evidence Code sections 1115-1128. These sections address the confidential portions of mediations, whether they are comprised of communications or writings made in the course of the mediation, or the actual agreement that is the result of the mediation. 

A case resolved between parties and/or counsel outside of mediation, whether put on the record before the court, or agreed upon in a writing signed by the parties, should not be affected by the Evidence Code sections stated above. Nevertheless, it is careful practice to include a clause in such an agreement that for the purposes of enforcement, the agreement shall not be made inadmissible or confidential.

That said, there are a number of confidentiality and admissibility requirements to observe if the settlement agreement the product of a mediation with a mediator. Navigating them carefully should help to avoid problems in enforcing the Settlement Agreement.

Evidence Code section 1119(a) provides:

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.

Subsection (b) makes this section applicable to writings “prepared for the purpose of, in the course of, or pursuant to a mediation or mediation consultation”. Subsection (c) states rather comprehensively that “All communications, negotiations or settlement discussions by and between participants in the course of a mediation or mediation consultation shall remain confidential”. Likewise, Section 1126 provides that anything said, any admission made or any writing that is inadmissible, protected from disclosure and confidential before a mediation ends, shall remain so after a mediation ends.

There are a few exceptions to Section 1119 in civil cases:

It does not apply to mandatory settlement conferences pursuant to California Rules of Court 3.1380. (Evidence Code section 1117)

It does not apply to an agreement to mediate, an agreement not to take a default or an extension of time in a pending civil action, or a disclosure that a mediator is serving, will serve or was contacted about serving as a mediator (Evidence Code section 1120).

Additionally, the parties may agree to allow certain communications and reports made during the mediation to become admissible or non-confidential, despite Sections 1119 and 1126. Section 1121 allows the parties to agree that the mediator’s “report, assessment, evaluation, recommendation or finding of any kind” by the mediator concerning the mediation may be submitted to a court or adjudicative body. Such an agreement must be made by all the parties to the mediation in writing, or orally pursuant to Evidence Code section 1118.

Section 1122 (a) also allows for communications or writings “prepared for the purpose of, or in the course of, or pursuant to a mediation or mediation consultation” to be admissible or unprotected from disclosure if either (1) all participants agree in writing or all participants agree orally, pursuant to Section 1118 or (2) if the communication, document or writing was prepared by fewer than all the participants and those participants agree to its disclosure in writing or pursuant to Evidence Code section 1118. Subsection (b) allows a neutral who conducts the mediation to agree to such disclosure and such agreement is binding on all persons who assist the mediator in conducting the mediation.
But Evidence Code sections 1123 and 1124 are specific as to what those agreements must contain for them to be admitted.

Section 1123 provides that an agreement must be signed by the settling parties, and (a) the agreement provides that it is admissible or subject to disclosure or (b) the agreement provides that it is enforceable or (c) all parties expressly agree to its disclosure in writing (or orally pursuant to Evidence Code section 1118 or (d) the agreement is used to show fraud, duress or other illegality relevant to an issue in dispute.

Section 1124 outlines the conditions for disclosure and admissibility or oral agreements, basically reiterating the requirements of Section 1123, except noting that as to any oral agreements, they must also comply with subsections (a) (b) and (d) of Section 1118.

So to beg the obvious question, (drum roll, please) “What does Section 1118 require?

Evidence Code section 1118 provides for certain enumerated requirements for mediation disclosure of an agreement that is placed on the record, orally before the court. These requirements are different than those for enforcing a settlement under CCP section 664.6. 

Section 1118 defines an “oral agreement” as one (a) to be recorded by a court reporter or reliable means of audio recording, (b) recited on the record in the presence of the parties and the mediator, and the parties express their agreement to the terms, (c) the parties expressly state on the record that the terms are enforceable and binding and (d) the recording is reduced to writing and signed by the parties within 72 hours after it is recorded.

Section 1118 presents a few logistical problems. These problems primarily those outlined in subsections (b) and (d), namely, that the settlement must be put on the record in the presence in the presence of the mediator, and that it must be reduced to writing and signed within 72 hours after recording. In most mediations, this simply isn't a problem. However, the situation is most likely to arise in a complex or multi-party scenario under CCP section 664.7 where tentative agreements are arrived at with parties or groups of parties, only to have a global agreement arrived at thereafter. Rather than circulating dozens of pages for counterpart signatures, the lead parties will simply arrange a time with the court to have counsel put the agreement on the record. However, before doing so if the agreement on the record is intended to be the final recitation of the agreement for enforcement purposes, then counsel should be quite clear on obtaining an explicit waiver and stipulation from all parties (or counsel, if the agreement would be enforced under 664.7), that the mediator’s presence is not required and the agreement is not required to be reduced to writing within 72 hours. Failing to do so could subject any such oral agreement sought to be enforced to well taken objections of confidentiality and admissibility later.

Conclusion

The takeaway from all of this is that counsel should read and be aware of the confidentiality and admissibility requirements of Evidence Code sections 1115 to 1128 as those sections apply to settlement agreements produced as a result of mediation. For written agreements, which is virtually all of the agreements arrived at by mediation, the approach is the fairly straightforward compliance with CCP section 664.6 (or 664.7 in construction defect cases in which the settlement is being paid by insurance) and compliance with Evidence Code section 1123. However, as to oral agreements placed on the record before the court and assented to by the parties, not only must counsel and the parties be sure to comply with CCP section 664.6 (or 664.7), but they must be careful to either comply with Evidence Code 1118 or obtaining express waivers or stipulations of the mediator’s presence before the court, and of the requirement that the agreement being placed on the record shall be reduced to writing within 72 hours after recitation. To do otherwise might subject the parties to an agreement that cannot be enforced since it is either inadmissible, confidential or both.

Sean E. Judge is a mediator with offices in Woodland Hills, CA. In his 21 years as a litigator, he has represented corporate and institutional clients, and individual litigants and small businesses, both as Plaintiffs and Defendants. He can be reached via telephone at (818) 610-8799, at www.judgemediation.com or via email at sean@judgemediation.com.

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