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The Colorado Supreme Court has held that the Colorado Dispute Resolution Act only provides confidentiality for mediation communications made "for the purposes of, in the course of, or pursuant to specific mediation proceedings," and that mediated settlement agreements may be enforced on common law contract grounds outside the Act's statutory confidentiality exception for written, signed agreements.
In Yaekle v. Andrews, No. 07SC420, 07SC874, 2008 WL 4616772 ( Colo. Oct. 20, 2008), the Court considered whether Colorado's Dispute Resolution Act "establishes the exclusive method by which parties can arrive at a binding agreement through mediation." Colo. Rev. Stat. § 13-22-307, -308.
The Court observed that Colorado's intermediate appellate court had come to the conclusion in 2003 that compliance with § 13-22-308 provided the only method for reaching a binding settlement agreement in mediation. Nat'l Union Fire Ins. Co. v. Price, 78 P.3d 1138, 1142 (Colo. Ct. App. 2003).
However, the Court disagreed with the interpretation of the statute in Price, noting that the opinion failed to address whether the legislature intended to abrogate common law methods of arriving at a binding mediated settlement agreement. According to the Court, this reading of the statute "abandons the long-standing common law rule that a settlement agreement can be governed by and found enforceable under common law contract principles."
The Court decided that the legislature had not intended to abrogate common law contract methods in providing a statutory mechanism for mediated settlement agreement enforcement. The Court found the use of "if" and "may" in § 13-22-308 indicated that the statutory procedure was voluntary, strongly suggesting to the Court that the legislature anticipated that common law methods of enforcement would remain valid.
Furthermore, the Court interpreted § 13-22-308 as providing only the method "for directly converting an agreement into one that is 'enforceable as an order of court.'" Therefore, statutory interpretation led the court to find that the statute "does not prevent parties from reaching a binding [mediated] agreement in the absence of court enforcement" through an agreement that complied with § 13-22-308. As such, the Court expressly abrogated the rule in Price.
The Court then held that the confidentiality accorded to "mediation communications" in § 13-22-307 was to be interpreted narrowly and only included "communications expressed 'for the purposes of, in the course of, or pursuant to' specific mediation proceedings." Colo. Rev. Stat. § 13-22-302(2.5). Refusing to extend this confidentiality outside the proceedings, the Court interpreted this definition to limit protection for mediation communications "to those made in the presence or at the behest of the mediator," and not those that "concern the dispute but are not connected to specific mediation services proceedings."
Yaekle unquestionably restricts the scope of mediation communications, but expands the methods by which communications can be used to form settlement agreements. In fact, four days before the Yaekle opinion was issued, Colorado's intermediate appellate court upheld the prior interpretation of the statute suggested by Price, where mediation communications could not be enforced in a court without strict compliance with the statutory method of enforcement provided in § 13-22-308. GLN Compliance Group, Inc. v. Aviation Manual Solutions, LLC, No. 07CA1563, 2008 WL 4592371 ( Colo. Ct. App. Oct. 16, 2008).
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