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Mediation Settlement Agreements: Sign Now or Pay Later (NJ)

August 21, 2013

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We previously posted about <a href="http://blog.wcmlaw.com/2011/08/mediation-agreements-are-binding-in-nj/" target="_blank" rel="noopener"><i>Willingboro Mall LTD v. 240/242 Franklin Ave</i></a>, and now the Supreme Court of New Jersey has weighed in with the final word.
In many jurisdictions, the majority of cases in civil litigation proceed at some point to mediation, whether mandated by the court or agreed by the parties in an attempt to resolve matters more efficiently in terms of both time and money.  With the assistance of an experienced non-party neutral, many cases are successfully resolved without the time and expense of a jury trial.
While generally less contentious than a courtroom trial, mediation is not without its formalities.  In <a href="http://www.judiciary.state.nj.us/opinions/supreme/A6211WillingboroMallvFranklinAve.pdf" target="_blank" rel="noopener"><i>Willingboro Mall LTD v. 240/242 Franklin Ave. LLC</i></a>, the parties resolved a real estate dispute at mediation with the assistance of a retired judge. The settlement terms were negotiated and agreed upon, but not put to writing.  Shortly after reaching the oral agreement, the plaintiff rejected the settlement, giving rise to the defendant’s motion to enforce the settlement and related litigation. Although the New Jersey Supreme Court agreed to enforce this specific agreement, it upheld the Appellate Division ruling that -- going forward -- matters resolved at mediation will not be enforced absent a written agreement setting forth the terms of the resolution, signed by all parties, prior to the conclusion of the mediation.
In addition to this new bright line rule, the Supreme Court also took the opportunity to further refine issues of confidentiality during the mediation process.  An essential tenet in the mediation process is the (statutorily required) assurance that all discussions during the mediation will remain confidential and not subject to exposure during court proceedings.  In attempting to enforce the settlement, the court found that the defendant violated this privilege by disclosing the terms of the settlement.  However, instead of addressing this violation, the plaintiff responded to the defendant’s revelations with additional confidential details.  This, the court held, amounted to a mutual waiver of the privilege.
Taken with the conduct of the parties during the mediation process, the court determined that the mutual disclosure of material discussed during the confidential mediation was not fatal to enforcement of the oral agreement.  While the primary take-away from this decision is the requirement that settlements reached during mediation must be signed at the time that the agreement is reached, it is also important to bear in mind that the better response to disclosure of confidential information is a motion to strike/preclude rather than an attack with contrary confidential information.
Thanks to Emily Kidder for her contribution to this post.  If you would like further information, please write to <a href="mailto:mbono@wcmlaw.com">Mike Bono</a>.

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