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A California Court of Appeal held that a mediation confidentiality provision in California’s Evidence Code did not bar evidence of an oral settlement agreement reached at mediation because application of the confidentiality provision would not have aided its purpose.
In Simmons v. Ghaderi, No. B180735, 2006 WL 2787408 (Cal. Ct. App. Sep. 27, 2006), Simmons sued Dr. Ghaderi for medical malpractice. In an attempt to settle the dispute, the parties attended a mediation session with a retired judge acting as mediator.
Prior to mediation, Dr. Ghaderi signed a form agreeing that her insurance carrier could pay up to $125,000 to settle the claim. The form provided that any revocation of consent had to be in writing.
At mediation, the insurance carrier offered to settle the case for $125,000. Simmons accepted the offer. While the mediator was preparing a document memorializing the settlement, a claims specialist from the insurance carrier went to inform Dr. Ghaderi that a settlement had been reached. Upon being informed of the settlement, Dr. Ghaderi replied, “Good, because I am revoking my consent.” Sometime thereafter, Simmons signed the written agreement prepared by the mediator, but no one signed on behalf of Dr. Ghaderi or the insurance carrier.
After Dr. Ghaderi backed out of the settlement agreement, Simmons added a claim for breach of contract. In her trial brief, Dr. Ghaderi argued for the first time that the mediation confidentiality provisions of the California Evidence Code barred any evidence of discussions that took place at mediation. The trial court allowed evidence of the discussions and found that Dr. Ghaderi was liable for breach of contract.
On appeal, Dr. Ghaderi cited Section 1119 of the California Evidence Code in arguing that the trial court erred by allowing evidence of discussions that took place at mediation. Under Section 1119, “[n]o evidence of anything said in the course of . . . mediation . . . is admissible.” As the Court observed, Section 1119 is meant “to ensure open communication in mediation.”
The Court rejected Dr. Ghaderi’s argument because allowing her to “assert mediation confidentiality [would be] an impermissible exaltation of form over substance.” Moreover, as the Court observed, applying Section 1119 in the case “would not help to ensure open communication in mediation.” Instead, “it would allow a disgruntled litigant to use the shield of mediation confidentiality as a place behind which to hide facts, although indisputably true, she no longer believes are favorable.”
This case represents an exception to the general rule that statements made during mediation may not be used as evidence in a judicial proceeding. Here, the statements related to the enforcement of a settlement agreement and not to the merits of the underlying case. And this California court concluded those statements ought to be admissible in an action to enforce the settlement agreement.
Mediation confidentiality promotes open discussion not as an end unto itself but as a means of facilitating settlement. See, e.g., Stewart v. Preston Pipeline Inc., 36 Cal. Rptr. 3d 901, 908 (Cal. Ct. App. 2005). In this case, rigid application of the mediation confidentiality provision would have undermined the ultimate objective by undoing the parties’ settlement agreement.
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