Mediation Agreements – Mistakes Can Be Costly

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The old adage reads, “Beware of the fine print,” and it applies to all types of written documents – mortgages, car purchases, insurance contracts, school applications and mediation agreements. Yet, font size is not the only villain lurking in the shadows.

We, lawyers, know the simple truth that a mediated settlement agreement is a contract, but often overlook the importance of that truth. A common scenario involves a mediation conference where one or both parties expect impasse, yet find unexpected progress until, after a lengthy series of caucuses, a basic agreement is reached. The parties and counsel thereafter rush through the final stages for a variety of reasons, including mental fatigue, haste toward closure, or even hunger for a belated meal. Too frequently, minimal attention is paid to perhaps the most important activity in a mediation conference – sufficiently documenting the agreement.

The law will generally not look beyond the four corners of a contract to determine the parties’ intent. Furthermore, the provisions of Rule 10.360(a) and Florida Statute Section 44.102(3) insulate as privileged and confidential all communications made during a mediation conference, except “an executed settlement agreement.” Only under rare circumstances can the substance of communications leading up to the agreement be subject to disclosure.

In DR Lakes, Inc. et.al. v. Brandsmart USA of West Palm Beach, 819 So. 2d 971 (Fla. 4th DCA 2002), an executed mediation agreement was challenged based on an alleged $600,000 clerical error. The trial court denied the motion without taking evidence, relying on the above-referenced statutory privilege. The DCA reversed and remanded, due to the allegation of mutual mistake. “Relief should be given where, through a mistake of the scrivener, the instrument contains a clerical error or fails to define the terms as agreed on by the parties. Jacobs v. Parodi, 50 Fla. 541, 39 So. 833 (1905). …Seller cannot obtain relief if this is a unilateral mistake because of the change in position of the parties resulting from the closing of the transaction. Md. Cas. Co. v. Krasnek, 174 So. 2d 541 (Fla. 1965).”

Indeed, mutual mistake is a basis to rescind a contract. In the mediation context, alleging mutual mistake may overcome the privilege against disclosing mediation communications. However, as the prior discussed case shows, proving such allegation is nearly impossible when contested.

In Feldman v. Kritch, 824 So. 2d 274 (Fla. 4th DCA 2002), the defendant challenged the executed mediation agreement on the basis of an alleged $40,000 mutual mistake. Naturally, and as in the DR Lakes case, the nonmoving party vehemently opposed the motion. Based on the “mutual mistake” allegation, the trial court heard evidence of the mediation communications and ultimately granted the defendant’s motion. The DCA reversed, stating that there was insufficient evidence of the mutuality of mistake to justify striking the agreement. “A party’s performance under a contract is not excused on the basis of unilateral mistake when the mistake is the result of the party’s own negligence and lack of foresight, or the other party has relied upon his performance so that rescission would be inequitable.”

So, what’s the point? It is unlikely that an opposing party would ever concede an alleged five- or six-figure “mistake” at mediation and the courts rarely find such to be the product of scrivener error or fine print. Do not put your clients in such a position. Do your part to eliminate such mistakes.

Realize that the task of drafting the agreement is the single most important task of a successful mediation. It cannot be delayed, deferred or diminished. Take a few minutes to refresh yourself. Drink a caffeinated beverage. Bring a packaged snack to help quell the distraction of a hungry stomach. Do not give into time constraint pressures. Have someone else read, out loud, the written agreement so you can hear what is actually written and not be tricked by your eyes seeing what you intended to write (and not seeing the actual words themselves).

Golf Expert Witness

A rushed, sloppy mediation settlement agreement is often worth less than the cost of the paper on which it is written. Counsel should diligently recall prior interim agreements and closely review the written terms of the proposed mediation agreement – even as to the placement of commas and decimal points.

While alleging mutual mistake may overcome the statutory privilege against disclosure, the burden of proof is still quite high to rescind an executed mediation agreement. Perhaps the adage is better stated as, “Beware of the standard sized, handwritten, barely legible, attorney/Mediator’s print.” Mistakes can be costly. Blane McCarthy

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