GUEST-POST PART IV | Questions Clients Have about Mediation: The Mediation Settlement

By Kent B. Scott and Cody W. Wilson

Will a Settlement in Mediation Be Enforceable?

The answer is “yes” if the settlement is memorialized in a written settlement document that is signed by all parties and their counsel. The settlement agreement is not confidential and can be enforced in court just like any other contract.

However, if called upon to enforce a mediation settlement, the court will look only at the face of the document because, as we have previously said, mediation documents and conversations with the mediator remain confidential (excepting documents and information exchanged by the parties).

Do Some Mediations Fail to Settle? If So, Why?

Not all disputes settle in mediation, but the failure rate is low. The reasons why particular disputes do not settle vary. It could be that one or more of the ingredients for a successful mediation listed above may be missing. Or it could be that a party added new demands late in the game. Sometimes, one side is emotionally stuck and cannot see how both parties’ interests and needs can be fulfilled by a settlement. Or one side may have a policy reason why it does not want to settle even if it would be in its economic interest to do so. It is also possible that one party never intended to settle when it agreed to mediate. In addition, a mediation might not end the dispute because the mediator may not have been the right person to get the job done.

A mediation could also fail as the result of being scheduled too early. This often happens when the parties’ contract requires mediation prior to the commencement of arbitration or a lawsuit. Often at that point, there is insufficient information known about the dispute to make a realistic assessment of the parties’ positions.

A mediator who realizes that mediation is premature may suggest that the mediation be recessed until more information about the dispute is gathered and exchanged. Take this example. The owners of a subdivision brought claims against the developer, the water district and certain contractors for damages resulting from the rupture of a water main. The owners claimed, among other things, that the re-sale value of their property was diminished as a result of the flooding. At the mediation the subdivision owners were not able to provide any appraisals or other data that would support or quantify their diminished value theory. Consequently, the mediation was recessed until a later date. The owners were required to provide the defending parties with an appraisal report that validated the extent of their diminished value claim.

Many mediations that do not settle in mediation do so soon thereafter, based, in part, on the work accomplished in the mediation. Those that don’t would have benefitted from the mediation effort if the reduced the number of issues or facts in dispute or can now better plan their need for discovery, motions or other matters preparatory to trial or arbitration.

What Would Happen if My Mediation Fails?

After an unsuccessful mediation, the client has several options. It can agree with the adversary to take a break from the dispute or resume negotiations at a later date. Or it can agree with the adversary to resume mediation a short time later. Alternatively, the client could decide to arbitrate or litigate. If the failed mediation is court-connected, the next step would probably be litigation. If that route is taken, the lawsuit would probably settle before trial, as happens in most cases.

Part V of this series will discuss things to do prior to mediating. Stay tuned.

[Ed. note: the contents of this post were first published on a different form in the May/July 2008 Edition of the AAA Dispute Resolution Journal.]

Kent B. Scott is a shareholder in the law firm of Babcock Scott & Babcock in Salt Lake City whose practice focuses on the prevention and resolution of construction disputes. As a mediator and arbitrator, Mr. Scott currently serves on the AAA’s panel of mediators and the AAA’s Large Complex Construction Case Panel. He also serves on the arbitration and mediation panels for the U.S. District Courts (District of Utah), State District Court (Utah) and Utah Dispute Resolution. Mr. Scott is a founding member of the Dispute Resolution Section of the Utah Bar and a Trustee for the Utah Council on Conflict Resolution.

Cody W. Wilson is an associate in the law firm of Babcock Scott & Babcock, concentrating his practice in the area of construction law, is licensed in all courts in the State of Utah, the U.S. District Court of Utah, the 10th Circuit Court of Appeals, the U.S. Court of Federal Claims and is a member of the ABA Forum on the Construction Industry. They can be reached at kent@babcockscott.com and cody@babcockscott.com.