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A California appellate court has affirmed a trial court's refusal to admit and enforce a settlement agreement reached during a confidential mediation session, finding that all parties to the session had not waived confidentiality as required by statute.
In Rael v. Davis, Nos. B197971, B200217, 2008 WL 4335179 (Cal. Ct. App. Sept. 24, 2008), Cruz Rael, her husband Tony Rael, and Tony Rael's children participated in a mediation session regarding the distribution of Tony Rael's assets after his death. After Tony Rael died, Cruz Rael sought to enforce an alleged written settlement reached during this mediation session. The children opposed enforcement, noting that one of them, Tony's son Mark, did not sign the settlement agreement and that Tony Rael did not intend to enforce the agreement without all parties' assent.
The executor of Tony Rael's estate, Davis, refused to recognize the formation and enforceability of the settlement agreement. Cruz Rael then petitioned the trial court to enforce the agreement. Davis opposed, objecting to the agreement's discovery or introduction as evidence under California's mediation confidentiality statutes, because confidentiality had not been waived by all parties. See Cal. Evid. Code § 1119.
On appeal, the Court found that Cruz Rael's construction of the settlement agreement "depend[ed] upon a severable, independently enforceable agreement." According to the Court, this "put the cart before the horse," because the agreement as a whole must be admissible before any term may be severed and enforced. See, e.g., Fair v. Bakhtiari, 40 Cal.4th 189, 199 (Cal. 2006).
The Court also observed that the mediation statute required signatures of all the settling parties to waive confidentiality under Cal. Evid. Code § 1123, "not the relevant settling parties." Because one of Tony Rael's children did not sign the settlement agreement, mediation confidentiality was not waived and the agreement could not be separately enforced against the signatories.
The Court acknowledged that Stewart v. Preston Pipeline, Inc., 134 Cal.App.4th 1565, 1580 (Cal. Ct. App. 2005), seemed to support Cruz Rael's position, but the Court found it distinguishable. Unlike the party seeking to avoid admission and enforcement of a settlement agreement in Stewart, Mark Rael was not seeking to exclude the agreement after he or an authorized agent had in fact signed the agreement.
Because the Court found no error in the trial court's factual findings, and discerned no legal basis on which to find mediation confidentiality waived, the Court affirmed the trial court's refusal to admit or enforce the alleged settlement agreement.
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