The answer, as found by the Second California District Court of Appeal in the case of Estate of Thottam, is that it depends upon the agreements of the parties and the plain meaning of the applicable statute.

Evidence Code Section 1123 provides that:

A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if the agreement is signed by the settling parties and any of the following conditions are satisfied:

(a) The agreement provides that it is admissible or subject to disclosure, or words to that effect.

(b) The agreement provides that it is enforceable or binding or words to that effect.

(c) All parties to the agreement expressly agree in writing, or orally in accordance with Section 1118, to its disclosure.

(d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute.

In other words, a settlement agreement is not made inadmissible if the agreement provides that it is admissible, the agreement provides that it is enforceable, the parties to the agreement agree to its disclosure, or the agreement is used to show fraud, duress, or illegality.

The importance of these distinctions was made clear in Estate of Thottam, which involved a dispute among siblings regarding the distribution of assets from their deceased mother’s estate. Before the mediation of this dispute, all three siblings and the mediator signed a “mediation and facilitation confidentiality agreement.”

During mediation, a chart was prepared showing assets along the left margin and including three columns, one for each sibling. The chart was filled in to designate specific allocations of the listed assets, and each sibling signed and dated their respective column at the top of the chart and initialed each entry in their column.  (No other “settlement” language was contained on the chart.)

After mediation, one of the siblings, Peter, prepared two agreements concerning the estate assets, both of which included the chart prepared in mediation, and neither of which would be signed by the other siblings. The other siblings, Elizabeth and Jameson, took the position that no agreement was reached in mediation.

Litigation ensued. Elizabeth refused to answer Peter’s deposition questions concerning the chart prepared during mediation or discussions about the chart during mediation. Elizabeth sought a protective order and Peter sought to compel Elizabeth’s testimony.

Peter’s motion to compel was granted, based upon the fact that the “mediation and facilitation confidentiality agreement” between the parties stated that:

“all matter discussed, agreed to, admitted to, or resulting from” the mediation would “(1) be kept confidential and not disclosed to any outside person (excluding spouses), (2) shall not be used in any current or future litigation between us (except as may be necessary to enforce any agreement resulting from the Meeting), and (3) shall be considered privileged and, as a settlement conference, non-admissible under the California Evidence Code in any current or future litigation between us.”

The judge granting the motion to compel deposition testimony decided that the exception to the mediation privilege found in Evidence Code 1123(c) was satisfied by the parties’ agreement highlighted above. In other words, the court found that parties can agree to disclosure of a written settlement agreement before reaching or even discussing a written settlement agreement.

The chart was in.

The trial judge disagreed, taking the position that the Evidence Code 1123(c) could only be satisfied by a disclosure agreement executed after the parties had reached their settlement agreement.

The chart was out, and with it Peter’s evidence that the siblings had reached any agreement in mediation.

The Court of Appeal, however, disagreed with the trial court, holding that there is no requirement that a section 1123(c) agreement concerning disclosure be made “at or after the time of settlement.” The court further found that the chart was a written settlement agreement for purposes of Evidence Code 1123(c), and remanded the case for a new trial.

The chart was back in.

So, yes, a settlement agreement is confidential (“inadmissible”), unless (1) the agreement provides that it is admissible, or (2) the agreement provides that it is enforceable, or (3) the parties to the agreement agree to its disclosure before, at, or after the time of settlement, or (4) the agreement is used to show fraud, duress, or illegality.

Mediators are advised to review their mediation and confidentiality agreements in light of this decision.

Copyright © 2008 by Kevin K. Forrester. All rights reserved.

Strengthing Peacemakers Around the World

Everyone is entitled to their own opinion,
but not their own facts.

Senator Daniel Patrick Moynihan (1927-2003)

Durable settlements rest on a foundation of facts.

Your opinion of the opposing party will get you into court, and mediation, but remember that the quality of your facts will ensure the quality of your settlement, and plan accordingly.

By: Lieutenant Colonel John McCrae, MD (1872-1918)
Canadian Army

IN FLANDERS FIELDS the poppies blow
Between the crosses row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.

Hat Tip to Matthew J. Franck

In mediation, I consider carefully the words of your mediation brief and the meaning you wish to convey by the words you choose. Similar attention is paid to the words of any agreement or applicable statute you are construing. Our Constitution deserves no less attention than that from our courts and elected representatives.

 War is not an independent phenomenon, but the continuation of politics by different means.

 Karl (Carl) von Clausewitz (1780-1831) 

The statement that ‘war is a continuation of politics by other means’ is important not because Clausewitz said it but because it reflects a fundamental reality.

Christopher Bassford, Clausewitz in English: The Reception of Clausewitz in Britain and America, 1815-1945, Chapter 4 (New York: Oxford University Press, 1994).

The fundamental reality of litigation, mediation, arbitration and trial is that each is a continuation of the other, and the best results in mediation are achieved by those best prepared for war.  Parties who attend mediation knowing the facts of their case, their likelihood of proving the facts that matter, their litigation budget, and their closing argument are more likely than not to settle.  Your ability to secure a durable settlement increases in direct proportion to your readiness, willingness, and ability to fight.  Mediation is not a place to find out the value of your case, it’s a place to find out if you’re going to settle the case you have.

To secure peace is to prepare for war.

Karl (Carl) von Clausewitz

Ten minutes well spent, remembering the house we live in.

Hat Tip to Mia Farrow, October 8, 2008.

No man is an island, entire of itself; every man is a piece of the continent, a part of the main.  If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend’s or of thine own were; any man’s death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bell tolls; it tolls for thee.

“The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant’s offer to be half a loaf when in fact it is an entire loaf or more,” said Randall L. Kiser, a co-author of the study and principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions.

Defendants made the wrong decision by proceeding to trial far less often, in 24 percent of cases, according to the study; plaintiffs were wrong in 61 percent of cases. In just 15 percent of cases, both sides were right to go to trial - meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered.

Read the entire article here.