Attention Mediators: Be sure to finalize your settlement agreement in writing
A colleague of mine, Noah Schwartz, assisted me in writing and researching the following blog. Together, we want to alert mediators of the potential risks they could encounter according to a recently published Appellate Division case.
Mediators face yeoman’s work- bringing battling litigants together and assisting them to resolve their dispute without further resort to the judicial process is by no measure an easy task. However, mediators should always be careful to heed the lessons of a recently published Appellate Division case, Willingboro Mall, Ltd. V. 240/242 Franklin Avenue, L.L.C., __ N.J. Super. ___ (App. Div. 2011), and ensure that the mediated settlement is quickly reduced to writing or run the risk of being brought into the fray as a witness when a party seeks to enforce the terms of the unwritten settlement.
In Willingboro Mall, the parties engaged a retired judge who mediated the dispute and precipitated a resolution among the parties. That resolution was communicated to the General Equity judge by counsel for the defendants 3 days after the mediation and in the days that followed, defense counsel placed settlement funds into escrow. However, plaintiff refused to consummate the settlement. The defendants filed a motion to enforce the settlement and after discovery and a plenary hearing lasting four days, the General Equity judge, relying heavily on the testimony of the mediator, ruled that the oral settlement agreement was enforceable.
On appeal, relying on R. 1:40-4(i), plaintiff advocated the position that the Rule mandates that a settlement be reduced to writing during the mediation. Writing for the appellate panel, Judge Cuff found plaintiff’s arguments unpersuasive and found that hewing so rigidly to the Rule becomes an “impediment to resolution of the matter through mediation.” Focusing on the reason for mediation, which “is utilized to afford the parties an opportunity to present their position before an experienced professional with the goal of resolving some or all of the differences between the parties,” Judge Cuff held that the writings prepared in the days following the mediation, stating the terms of the settlement and informing plaintiff that settlement funds had been placed in escrow, sufficed under the Rule.
The careful mediator ensures that the terms of the settlement reached by the parties is reduced to a writing as quickly as possible after the successful mediation. This diligence helps ensure that memories do not fade and that no party has time to develop a case of “buyer’s remorse.” Moreover, this practice helps ensure that significant sums are not expended by the parties in litigating the enforceability of an oral settlement and keeps the mediator on the sidelines where he belongs, not in the middle of the dispute as a witness.
