The Bright Blue Line

Well, you’ve mediated your case and you reached a deal.  Now what?

Is your case over?  Is the deal enforceable?

The New Jersey Superior Court is shining a new light on the end of mediation. Through the new Bright Line Rule, it has ordered that all agreements reached during mediation, be in writing and signed by each party involved. If such a requirement is not fulfilled, mediation agreements will not be upheld by the NJ courts.

NJSC has made this proclamation in the hopes of eliminating court cases that should have been resolved through ADR. The decision was presented after a mediation case turned to litigation due to a dispute over the mediation agreement which was not consolidated in writing. In, Willingboro Mall LTD v. 240/242 Franklin Ave LLC, both Willingboro Mall and Franklin Ave participated in mediation after Franklin defaulted on penalty fees it had agreed to pay during the purchase of the Willingboro Mall. During mediation a $100,000 settlement agreement was reached. Franklin placed the $100,000 in escrow and sent a confirmation letter to Willingboro advising that he would release the money once the mortgage was discharged and the foreclosure case brought against Franklin for the missed penalty payments, was dropped. Surprisingly, Willingboro rejected the settlement and when Franklin moved to enforce the mediation agreement in court, Willingboro did not move to strike or motion to dismiss on grounds of breaking the mediation privilege, but rather Willingboro asked for discovery and a hearing.

This move did not end well for Willingboro. At the end of trial Chancery Division Judge Michael Hogan, upheld the mediation agreement and confirmed it as binding. The Appellate and Supreme Court agreed with Judge Hogan’s decision, however the Supreme Court found that for all future mediation processes written and signed agreements would be necessary. Furthermore, as to the confidentiality of mediation, both parties waived this right by pursuing litigation, especially Willingboro by not moving for dismissal at the first sight of Franklin’s confidentiality break.

In all, it is always important to clearly draw out what each party hopes to gain, and accomplish during mediation. When any mediated agreement is reached it is even more important to draw out these terms in writing. While this might entail spending a bit more time in the mediation process, it ensures a binding agreement that will keep you out of the courts in the long run.

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Rausch Mediation & Arbitration Services
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