Is a settlement agreement signed by less than all parties at the conclusion of a mediation enforceable? Every once in awhile, this question arises because one of the parties has attended by telephone and is not near a fax machine or other means of communication to sign the agreement and send it back. Up until now, I have been under the impression that all parties must sign for it to be enforceable.
One of the appellate courts in California has now ruled that this is not necessarily so. In Provost v. Regents of the University of California, Case No. G043523 (filed 12/14/11), (Provost v Regents ) Division Three of the Fourth Appellate District (sitting in Orange County) ruled, among other things, that the Code of Civil Procedure section 664.6 which allows for enforcement of settlement agreements “…does not require that the agreement be executed by every party to the action who benefits from it… .” (Id. at 10). Thus, while these non-signing parties may not enforce the agreement since they did not sign it, the agreement may still be enforced by those who did sign it. (Id. at 10).
Plaintiff Glenn Provost was an anesthesiologist at the University of California Irvine Medical Center who sued both the Regents and two individual doctors for wrongful termination after he reported alleged illegal conduct by defendants.
The parties attended mediation which, after several sessions, resulted in a stipulation to settle. Shortly thereafter, his counsel filed a notice of settlement of the entire case.
But then, plaintiff began having second thoughts and refused to execute the final settlement documents. So, the Regents filed a motion to enforce the settlement pursuant to Code of Civil Procedure section 664.6. Initially, the trial court denied the motion, agreeing with plaintiff that Regents had not actually signed the agreement since it was an in-house lawyer, rather than an “authorized corporate representative” that signed the agreement. But, in response to a writ application, the appellate court issued an order to the trial court to vacate its order of denial and reconsider. Upon reconsideration, the trial court granted the motion and entered a judgment enforcing the settlement.
Plaintiff appealed on several grounds, all of which were rejected by the appellate court. First, he argued that Regents did not actually sign the agreement because it was signed by in-house counsel Carolyn Yee. The appellate court disagreed concluding that at all times Ms. Yee was acting as the party representative and not as an attorney, and was, in fact, represented by outside counsel. She had, in essence, been appointed as the “authorized party representative” of the corporation (i.e. Regents) and so was the duly authorized agent of Regents to execute the settlement agreement. The fact that she was in-house counsel was not relevant; nor was it relevant whether she was an officer. As long as she was a duly designated and qualified employee, she could sign the agreement. As the court noted:
One can hardly expect an officer of Ford Motor Company or Wal-Mart Stores to participate in every settlement of every case, down to the smallest personal injury action, to be eligible to take advantage of the mechanism provided by Section 664.6.
(Id. at 8). The appellate court next rejected Plaintiff’s argument that the agreement was not enforceable because the individual defendants did not sign it. Noting that the individual defendants were not seeking to enforce the agreement, the appellate court found these parties simply to be third party beneficiaries, holding that the settlement may be enforced by those signing it. (Id. at 10).
Plaintiff next argued that the settlement agreement was not enforceable because it was conditional upon the approval by Regents, and he revoked his acceptance before the Board of Regents actually approved it. The court found otherwise; that the Board approved it before plaintiff changed his mind. Thus, the court rejected this argument. (Id. at 11-12).
Plaintiff also claimed duress and that he was coerced into signing the settlement because the mediator told him that Regents would have criminal charges filed against him if he did not sign then and there. Further, he alleged his own attorneys told him that he had little chance of winning at trial and if he did, he would recover only a minimal amount.
The trial court refused to consider these assertions due to the mediation privilege found in Evidence Code section 1119 subdivision (a). That is, mediation confidentiality precluded any consideration of these allegations. The appellate court agreed, noting that “[t]here is no exception for “good cause”. (Id. at 16 citing Cassel v. Superior Court (2011) 51 Cal. 4th 113, 136).
This part of the opinion bothers me because the California Rules of Professional Conduct provides that it is unethical for an attorney to threaten present criminal charges to obtain an advantage in a civil dispute. (See Rule 5-100). Notably, most states have a similar rule. I also question the ethics of the mediator in relaying this alleged threat. Thus, due to mediation confidentiality, the alleged unethical conduct of the Regent’s counsel (and the mediator whether as a mediator or as an attorney) will never be revealed or acted upon. The alleged violation if true, will go uninvestigated and unpunished. Perhaps, this is why some states have created an exception to mediation confidentiality for claims of professional misconduct or malpractice. (See Section 6 of Uniform Mediation Act adopted by 10 states and District of Columbia).
But back to the opinion. Plaintiff also claimed that Regents fraudulently concealed evidence. Finding that plaintiff failed to provide evidence to support such claims, the appellate court rejected this contention. (Id. at 17-18).
Contrary to plaintiff’s final two arguments, the appellate court found that the settlement agreement was entire and complete—that is, not missing anything and wholly admissible. Reviewing the agreement itself, the appellate court found it contained the language required by Evidence Code section 1123 to render it admissible.
The decision is interesting due to its several holdings:
(1) in-house counsel can execute settlement agreements as long as she is the duly authorized corporate representative;
(2) not all parties must sign the agreement in order for those signing it to enforce it; and
(3) arguments of coercion and duress (amounting to possible unethical conduct) are shielded by mediation confidentiality.
This decision provides much to mull over!