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Failure to Memorialize Mediated Settlement in Writing Fatal to Motion to Enforce Settlement

May 17, 2024

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In Napolitano v. European Construction Professionals LLC, et al., the Appellate Court granted two Plaintiffs’ appeals: one from a motion to enforce a settlement filed on behalf of Defendants, and one denying Plaintiffs’ motion for reconsideration. Plaintiffs hired Defendant European Construction Professionals to build a home on their vacant lot in Bayonne, New Jersey. The parties signed a construction contract, and European began work on the new construction in June 2014. By the fall of 2014, Plaintiffs noticed a significant delay in the progress the parties had agreed upon in their contract. In 2015, the City of Bayonne took notice that the house had failed multiple inspections and ordered Defendants to cease all work on the home. European was given a deadline of May 1, 2015 to remedy all deficiencies in the house, which they were unable to do. Plaintiffs filed suit, alleging breach of contract, breach of warranty, fraudulent misrepresentation, unjust enrichment, negligence, and multiple statutory violations.

The parties attended a mediation in November 2022, which resulted in the mediator providing both parties a letter suggesting a settlement amount of $840,000. Plaintiffs’ and Defendants’ counsel initially expressed a willingness to discuss with their clients, but conversations tapered off when Defendants’ counsel had surgery. The parties never executed a formal settlement agreement and no release was circulated. Nonetheless, Defendants filed a motion to enforce the settlement, which Plaintiffs opposed. The trial judge found that the mediator’s 2022 letter constituted a “meeting of the minds” to which Plaintiffs were bound. On appeal, the Appellate Court found that the trial judge was mistaken in her conclusion. New Jersey’s prior case law holds that a settlement reached at mediation is not enforceable without a written agreement signed by each party. This case law applies regardless of whether the mediation was voluntary or court-ordered.

While mediation can lead to early settlements prior to trial, it is imperative that lawyers follow the court rules properly and stay diligent with their deadlines regardless of any personal problems or difficulties.

Napolitano v. European Construction Professionals LLC
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