Forrester on Real Estate Law : San Diego Real Estate Lawyer & Attorney : Kevin Forrester Law Firm : California, Carlsbad, La Jolla, Escondido

We have learned that mediation confidentially is protected in California by contract law, by the plain meaning of statutory law, and by our highest state court’s confirmation that our statutory law means what it says. But what about our settlement agreements; what about the anticipated results of our mediations, are they confidential too?

The answer, as found by the Second California District Court of Appeal in the case of In re Estate of Thottam (2008) (PDF) 165 Cal.App.4th 1331, 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" (is not confidential) 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.”

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The November 2007 "confidential means confidential" post on this site includes a link to attorney Michael Young's "Mediation Gone Wild" web page, which chronicles the consequences of breaching mediation confidentiality in the Florida case of Doe, et al vs. Joseph R. Francis et al.. "Girls Gone Wild" founder and defendant Joseph Francis has now filed suit in Los Angeles Superior Court to set aside the mediated settlement of that now almost 5-year-old case, and the CPR @ ADR Blog picks up the story with the rhetorical flourish:  "Travesty of Justice"?

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On July 21, 2008, the California Supreme Court confirmed for the third time that, in matters within the jurisdiction of California state courts, mediated in accordance with California law, confidential means confidential.

Simmons v. Ghaderi (2008) (PDF) 44 Cal.4th 570, concerned mediation of a medical malpractice suit. During mediation, the defendant’s medical malpractice insurance provider arrived at settlement terms with plaintiffs that were placed in a written settlement agreement for the parties to sign. The settlement terms were accepted by the plaintiffs both orally and in writing.  The defendant, however, revoked her consent to settle and left mediation without signing the agreement.

Plaintiff moved under Code of Civil Procedure section 664.6 to enforce what they contended was an oral settlement reached in mediation. The defendant argued that no enforceable settlement was reached because she had not signed the written settlement agreement and had withdrawn her consent to settlement. But she did not object to consideration of the evidence of what had occurred in mediation. The trial court denied plaintiffs’ motion to enforce settlement, finding that the requirements of CCP section 664.6 had not been met, and suggested that, alternatively, an enforceable oral contract may have been reached during mediation.

At trial of what was limited to the defendant’s alleged breach of a mediated oral settlement agreement, the defendant did object that California's mediation confidentiality statutes precluded plaintiffs from proving the existence of an oral settlement agreement. But plaintiffs’ evidence of what had occurred at mediation was admitted over the defendant’s objection and the trial court concluded that plaintiffs and defendant’s agent had, indeed, entered into a valid, enforceable oral contract before the defendant withdrew her consent. The Court of Appeal affirmed the trial court’s judgment, finding that the defendant was estopped from asserting mediation confidentiality by her own failure to object and her use in pretrial motions of the evidence of what had occurred during mediation.

In reversing this decision, the California Supreme Court unanimously found that the Court of Appeal had improperly relied on the doctrine of estoppel to create a judicial exception to the statutory requirements of confidentiality in mediation proceedings. Agreeing with the Court of Appeal’s dissenting opinion that this case is more accurately described as an implied waiver by conduct case, than an estoppel case, and finding that implied waiver does not apply to mediation confidentiality, the Supreme Court held, unambiguously, that:

"Here, the mediation confidentially statutes made inadmissible all evidence of an oral contract between plaintiffs and defendant during mediation."

Simmons v. Ghaderi (PDF) 44 Cal.4th at 588, emphasis added.

In California, confidential means confidential.

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

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In matters within the jurisdiction of California state courts, mediated in accordance with California law, confidential means confidential.

California mediation confidentiality is defined by contract law, statutory law, and common law.

Contract law, because most mediators require parties, their attorneys and others in mediation to sign an agreement before mediation commences that includes words to the effect that:

All statements made in preparation of or during the course of this mediation are privileged settlement discussions, are made without prejudice to any party's legal position, and are undiscoverable and inadmissible for any purpose in any legal, administrative, or other proceeding.

Statutory law, because section 1119 of the California Evidence Code states that:

Except as otherwise provided in this chapter:

(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

(b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.

(See also Evidence Code Sections 1115 - 1128.)

And common law, because California appellate courts have held that the California Evidence Code means what it says.

Foxgate Homeowners’ Association, Inc. vs. Bramalea California, Inc. (2001) 26 Cal.4th 1, and Genoveva Rojas vs. Superior Court (2004) 33 Cal.4th 407, for example, are both early California Supreme Court opinions supporting the Legislature’s definition of mediation confidentiality. In the words of the court:

One of the fundamental ways the Legislature has sought to encourage mediation is by enacting several mediation confidentiality provisions. (Foxgate at 14.) As we have explained, confidentiality is essential to effective mediation because it promotes a candid and informal exchange regarding events in the past. This frank exchange is achieved only if participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory processes. To carry out the purpose of encouraging mediation by ensuring confidentiality, our statutory scheme . . . unqualifiedly bars disclosure of specified communications and writings associated with a mediation absent an express statutory exception. (Foxgate at 15.) Rojas at 415-416 (internal quotation marks omitted, emphasis added).

There are, however, and will continue to be, efforts to define, or redefine, or construe, or limit mediation confidentiality. In the recent case of William Wimsatt vs. Superior Court (2007) (PDF) 152 Cal.App.4th 137, the Court of Appeal upheld the broad standards of mediation confidentiality enacted by the California Legislature and protected by the California Supreme Court even though doing so, the court believed, may have prevented a party to the mediation from pursuing a legal malpractice lawsuit against his own attorneys. Accordingly, the Wimsatt opinion includes this comment by the Court of Appeal:

Given the number of cases in which the fair and equitable administration of justice has been thwarted, perhaps it is time for the legislature to reconsider California’s broad and expansive mediation confidentiality statutes and to craft ones that would permit countervailing public policies be considered.

Until that day comes, or until the California Supreme Court permits the crafting of judicial exceptions to California’s statutory mediation confidentiality scheme, confidential means confidential.

(I commend to you the fine article by attorney Michael Young entitled "Mediation Gone Wild" chronicling the consequences of breaching mediation confidentiality in another jurisdiction.)

Copyright © 2007 by Kevin K. Forrester. All rights reserved.

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