Mediation Confidentiality Agreements

John Amis sued his lawyers Greenberg Traurig, LLP (GT) for malpractice. Amis claimed that they failed to inform him of how his corporation’s liabilities could be turned into personal liability. During mediation over a breach of contract, Amis and his shareholders were required to become jointly and severally liable for a settlement payment. When the company defaulted on the payments, Amis became personally liable and soon declared bankruptcy to avoid liability. In his lawsuit against his lawyers, Amis says they should have advised him of the consequences of executing an agreement with his shareholders.

GreenBerg Traurig, LLP argued that all communications between them and Amis on this issue were made during mediation. They said that since both parties had signed a mediation confidentiality contract, neither side would be able to prove or rebut Amis’s claims. On this basis, GT asked for a summary judgment. Amis opposed the motion with several documents, but the trial court granted GT’s summary judgment motion because the “mediation confidentiality statutes effectively barred GT from defending itself against such an inference.” However, many legal experts and attorneys were not happy with this ruling.

An emerging body of case law thinks the trial court could have presumed, even without the proper evidence, that the law firm properly advised Amis about the consequences of the agreement he made during mediation. In making the ruling, the Appellate Court cited the California Supreme Court by saying, “… broadly applied the mediation confidentiality statutes and all but categorically prohibited judicially crafted exceptions, even in situations where justice seems to call for a different result.… Judicial constructions, and judicially crafted exceptions, are permitted only where due process is implicated, or where literal construction would produce absurd results thus clearly violating the Legislature’s presumed intent.” Both the Appellate and Supreme Courts in California have stated that any change to the mediation confidentiality privilege must come from the Legislature. We will have to wait and see if the Legislature decides to act in this matter and whether any laws will make a real difference in the mediation confidentiality privilege.

Sources referenced:

  1. Amis v. Greenberg Traurig LLP (2015) 235 Cal. App. 4th 331
  2. Long and Levit LLP

About rauschmediation

Rausch Mediation & Arbitration Services
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