Mediation Agreements Overview
A mediation agreement is a written agreement entered into at a mediation to resolve a dispute. Mediation agreements may also be referred to as settlement agreements, consent decrees, or another phrase specifically designed to apply to the context of the dispute itself, such as a "separation agreement," or "settlement and release agreement." This Article uses the phrase "mediation agreement" to describe agreements reached at a mediation session.
The purpose of mediation agreements is to resolve disputes before they require adjudication, which is often lengthy, expensive and unpredictable. The mediation process is voluntary, and parties enter into mediation with the goal of achieving a resolution to their dispute outside of litigation. A mediation agreement accomplishes this goal, and memorializes the parties’ commitment to ultimately end the dispute. A mediation agreement is not merely for the benefit of the parties. The mediator prepares the mediation agreement with all parties based on their input , and the mediator memorializes the terms to achieve neutrality. The mediator prepares a single document for the parties to sign for ease of negotiation, comprehension, and implementation. However, it is important to remember that each party must be comfortable with the language included, and ask questions if anything is unclear.
The particular context of the dispute determines what issues are addressed in a mediation agreement. For example, in a family dispute over custody and parenting time, the mediator prepares an agreement concerning those disputed issues, and if there are any outstanding financial issues, they will be addressed as well. In an employment dispute, the mediator prepares an agreement concerning the relevant employment terms, such as salary, commissions, and benefits. The parties ultimately determine what issues will be addressed in the mediation agreement.
Legal Implications and Expiration of Mediation Agreements
The legal validity and expiration of mediation agreements are crucial considerations when determining their enforceability. Unlike time-limited contracts that have specific expiration dates, most mediation agreements do not inherently expire. Courts have generally held that a mediation agreement may be enforceable until the underlying responsibilities or commitments subject to the dispute have been fully discharged or executed by the parties.
The enforceability of such agreements often turns on whether the drafting parties intended the agreement to remain binding over time, which is usually reflected upon the face of the contract or within the provision itself. This highlights the importance of carefully reviewing the language of a mediation agreement to see if it provides any explicit indication regarding its expiration or continued operability.
For instance, common refers to a stipulation into a mediation agreement that for violation of any provision or if there is a failure to comply with the agreement, the aggrieved party shall be entitled to recover all of the costs in having to enforce and defend the mediation agreement. These provisions expressly set forth an expiration of the agreement in the circumstance that it has not been adhered to.
Legal precedents from the United States Court of Appeals for the Eleventh Circuit demonstrate this reasoning. In a 1998 decision, this Court explained that a settlement agreement may be enforceable "until the occurring of a potentially damaging contingency or the occurrence of a specifically agreed future date." Sec. Nat’l Ins. Co. v. Ashry, 130 F.3d 610, 613 (11th Cir. 1997). Likewise, in a 2000 case, the Court reiterated that a settlement agreement "becomes binding and enforceable and does not expire." Shuffler v. Heritage Bank, 720 F.2d 1197, 1207 (11th Cir. 2000).
Even so, there are circumstances in which a mediation agreement may become unenforceable over time after a "case pending" has expired. This often occurs when there is a stipulated agreement to dismiss a case with a condition that the cause may be reinstated after a certain period of time or upon a specific contingency – this is often referred to as a "conditional dismissal."
In this context, the applicability of a Judicial Policy regarding such dismissal provisions can have a significant effect on these types of mediation agreements. A Judicial Policy that applies to conditional dismissal provisions within mediation agreements, typically provides that a case that is dismissed upon a conditional dismissal will be restored to the docket "only by motion on cause shown." In other circumstances, states have allowed a party to move to reopen a case under a conditional dismissal provision if "the interests of justice so require."
For instance, in Lefever v. City of Toledo, No. 3:08-cv-0140, 2009 WL 364408 (N.D. Ohio Feb. 11, 2009), an Ohio district court denied a plaintiff’s motion to reinstate a case that had been dismissed pursuant to a settlement agreement. Specifically, the court explained that a general exception to a conditional dismissal "does not apply to mediation agreements," and that "[m]ediation agreements are the product of a voluntary decision of the parties to enter an agreement and voluntarily dismiss the action," as stipulated by the parties.
At the same time, many courts have also declined to enforce these conditional dismissal provisions, and do not interpret their Judicial Policy as precluding a party from moving to reinstate a case in this situation. Compare Horton v. City of South Bend, No. 4:89cv270, 2006 WL 2957896 (N.D. Ind. Oct. 12, 2006) (conditionally dismissing a case, but granting a motion to reinstate).
Circumstances That May Result in Expiration
Many agreements contain specific clauses that state the agreement shall terminate after a certain period of time from the date it is signed. These clauses are easy to interpret and one dispute that we often see is whether the time limitation has been met. If an agreement provides that it will expire in one year, then the agreement will expire one year from when it was signed.
A common timeframe that is seen is that the agreement expires at midnight on a certain date. For example, an agreement may state that the agreement will expire at midnight on December 31st, 2016. This leaves no room for interpretation as to when the agreement expires. Expiry can also occur some time after the agreement is signed. One example is when there is a limit on how long the agreement will last, which could be referred to as a sunset clause or a "best before date." For example, an agreement might provide that it will expire after two years’ time has passed or after a specific event has occurred, such as the birth of a child. When the time has passed or that event has occurred, the agreement will expire. This gives both parties a sense of security and allows them to plan their lives, knowing that if there is a lapse of time, then the agreement will be null and void.
Another type of limitation may be related to the modification of circumstances. An example of this is the limbo period of discovery in a divorce when, if an agreement is signed, an agreement is made that the agreement will remain valid so long as the spouse does not discover certain information. In that case, the contract would not expire unless new information comes to light. One factor is whether a provision that makes an agreement no longer binding is satisfied. In some cases, parties may agree that the support payment should cease upon the occurrence of a certain event (e.g., the recipient remarrys) or that it will cease if the circumstances under which it was agreed upon changes. An example is when parents agree that child support will dissipate once the child has reached the age of majority. In that example, the agreement would not expire until the child has no longer reached the age of majority.
An agreement may expire when one party has reneged on his or her part of the agreement. For example, a party may agree that they will pay a certain amount of spousal support per month. However, if that party stops complying as soon as an agreement is signed or fails to pay the required amount, that party may be in breach. One party may argue that the agreement expires because the other party has not complied with it. To that end, an agreement might state that it will expire if the other party is in default (e.g., where they stop paying child or spousal support). Obviously, agreements that allow for expiry upon breaching do not apply to terms of the agreements that survive a breach.
Another way an agreement can expire is if the terms of the agreement have been fully completed. An example of this is an agreement stating that certain entitlements will cease upon one party moving out. A frequent example of this is in Guardian ad litem reports and their recommendations for contact times. If the recommendations are that contact shall cease once the child is twelve years old, and the parties implement the recommendation, the contact ends at the age of twelve, pursuant to the report.
Extending or Amending a Mediation Agreement
When a mediation agreement is set to expire or has expired, the parties have options for renewal or modification. The process for renewal or modification depends largely on the type of agreement that was originally entered into and whether the parties wish to continue under the existing terms or under amended terms.
If the mediation agreement was executed in conjunction with a lawsuit, it may be appropriate for the parties to file a request for a court order to extend the mediation deadline in the underlying action if the litigation remains pending.
For mediation agreements that are stand-alone agreements and not in conjunction with active litigation , the parties can determine by legal counsel whether they wish to have the mediator involved in renewing or rehashing terms of the agreement or whether the parties wish to update terms without involving the mediator. Certain types of mediation agreements may involve trigger deadlines based on the timing of a future event, at which time the parties’ obligations under the agreement will terminate. As with the resolution of many disputes, a negotiated resolution under amended terms is often preferable to either allowing the mediation agreement to expire or requiring further litigation.
Parties to a mediation agreement must be careful to allow sufficient time to receive any necessary court orders before the expiration of the mediation agreement or else they risk having to reopen the subject issue for resolution in litigation in the absence of an extension of time.
Enforcement Issues and Expired Agreements
The question of whether mediation agreements expire is sometimes not adequately considered in the rush to put pen to paper and sign on the dotted line. If the answer is yes, then how long do mediation agreements last? When can they be enforced? And what happens if you have an expired mediation agreement?
If you have an expired mediation agreement, you may face challenges in the following circumstances, with potentially devastating results:
In each of the above circumstances, a party may seek to enforce the parties’ obligations under the expired mediation agreement. If a judge agrees with the party bringing the motion that, despite this expiration, the mediation agreement provides it with the right to enforce the mediation agreement, the judge can give the other party the right to choose between performance of the mediation agreement (potentially in defiance of the other party’s express wishes) and damages for the late completion of performances or some other redress. (See Brewer v. Hughes, 2016 ONSC 2694.)
However, the party whose express wishes have just been defied might not be obligated to wait for the damages to be assessed and is certainly entitled to sue for breach of contract. Parties proceeding with litigation might argue that trial or some other delay was only necessary because the mediation failed and perhaps even allege that the mediation process was used as a tool to delay the inevitable.
Litigants should take care to add something like the following as the final provision of their mediation agreement:
"We all agree that if we do not complete and sign our lawsuit-moving Memorandum of Understanding" ("MOU") before ____ (the "MOU Deadline"), it becomes a binding Mediation Settlement Agreement" ("MSA"). By its terms, the MSA will expire and will no longer be in force or effect. We all agree that any MOU signed during the next ____ (the "Extension Period") will automatically replace it and be an MSA. The Extension Period will automatically end and our MSA will become valid and binding on all the parties if the very first Extension Period is not [completed after] by the close of business on _____ (the "Mediation Deadline"). Our Extension Period will also terminate if we do not all sign within [3 days factor possible further delay].
The parties are able to contractually agree to the time limits of their mediation and/or a contractual mechanism to extend it at minimal cost. The goal of mediating a dispute with the least cost and delay should trump efforts to preserve the legally enforceable aspects of mediation agreements.
Precautionary Measures to Prevent Expiration
Nevertheless, careful planning and attention to detail can help avoid potential pitfalls. One effective strategy is to build in expiration dates into the mediation agreement themselves. This means if the terms of the agreement have not been fulfilled within a specified period, the parties must consider alternative options for dispute resolution.
One approach to be considered and agreed upon by the parties is to require periodic updates of the payments. For instance, parties might agree on a set amount of time between updates so that if the payment schedule is not met, the parties will convene with the mediator again to discuss how the matter can be settled without further legal proceedings or in front of the court .
Another approach is to have the parties determine what can happen to portions of the case not covered by the mediation. Typically, when a mediation succeeds in resolving a case, remaining issues can be settled so both parties receive a benefit from the mediation. The same concept can be applied to unsuccessful mediations. If the mediation fails, the parties can again come to the mediator to work out remaining issues or select another party or process entirely, such as arbitration.