On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Morris County, Docket Number FM-14-913-02.
The opinion of the court was delivered by: Fall, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, Fall and Grall.
In this matrimonial action, defendant John Afflitto appeals from a decision issued by the Family Part on July 9, 2004, enforcing a purported settlement reached during a court-ordered mediation session, after a plenary hearing conducted in accordance with Harrington v. Harrington, 281 N.J. Super. 39 (App. Div.), certif. denied, 142 N.J. 455 (1995),*fn1 pursuant to our remand in Lehr v. Afflitto, A-6412-02T2 (May 7, 2004).
After reviewing the record in the light of the written and oral arguments advanced by the parties, we conclude that the trial court erred in permitting the mediator to testify as he did during the plenary hearing. We also determine that the credible evidence adduced at the hearing does not support the trial court's conclusion that the parties had reached an agreement and settlement of the issues in their matrimonial litigation. Therefore, we reverse and remand the matter for trial. The following informs our decision.
Plaintiff Karin E. Lehr and defendant were married on March 29, 1980. Two children were born of their marriage: Justin, on April 15, 1986; and Sara, on June 11, 1991. On January 10, 2002, plaintiff filed a complaint for divorce against defendant. Defendant filed an answer and counterclaim for divorce on May 21, 2002.
On December 18, 2002, the parties appeared before the matrimonial Early Settlement Panel, see R. 5:5-5, and were ordered to attend mediation through the Morris County Economic Mediation Pilot Program pursuant to R. 1:40-4(a) with mediator Sanford Kahan, an attorney. See Pressler, Current N.J. Court Rules, Appendix XIX, "Guidelines For Pilot Program Mediation Of Economic Aspects Of Family Actions" (2006). The December 18 order provided, inter alia, that:
5. Upon termination of the mediation process, the mediator shall promptly report to the Court in writing whether or not the case is settled. If the case is not fully settled, then the mediator shall provide to the Court a written summary of which issues are settled and which issues remain open within 14 days.
6. Unless otherwise agreed by the parties, and subject to R. 1:40-4(b) and paragraph 5 of the within Order, all mediation proceedings shall be confidential and nonevidential. No verbatim record shall be made thereof. [Emphasis added.]
On February 10, 2003, the parties attended their first mediation session with Kahan; no settlement was reached. After two scheduled court appearances and subsequent adjournments, the matter was ultimately scheduled for a case management conference in the Family Part for July 1, 2003.
Prior to the scheduled conference, the parties attended their second mediation session with Kahan on June 17, 2003. Counsel for both parties attended the first two hours of mediation, but left before the last hour of the session. The dispute between the parties here is whether a binding settlement agreement was reached as a result of the mediation process.
Following the second mediation session, Kahan wrote a letter to counsel for both parties dated June 19, 2003, stating the following:
As you are aware, subsequent to our meeting on June 17, 2003 I met briefly with your respective clients in order to finalize an agreement in this matter.
As a result of our meeting, the vast majority of this case [is] now resolved. Unfortunately, time constraints did not permit me to "tweak" several remaining items. However, I believe that the remaining items can be resolved either by discussion of counsel, or if necessary, a short meeting between myself and your respective clients.
Below is an outline of the resolution of this case. My understanding is that [plaintiff's attorney] will prepare a Property Settlement Agreement incorporating this outline. Once the Agreement is drafted, I leave it to counsel to determine if you wish to tweak the remaining items or if you wish for the clients to return to me for that purpose.
Kahan then listed the thirteen items that "the parties have agreed" upon. Kahan's letter went on to state:
As I previously indicated, my time with the parties was short. We did spend quite a bit of time quibbling over various credits and payments. Therefore, there are three items that have been left open which I discuss below. In my discussions, I have made "recommendations" as to how the parties may wish to resolve these issues.
Kahan then listed the three disputed items along with his recommendations for resolution. The unresolved matters were the amount of defendant's child support obligation; the parties' financial responsibility for their children's college education expenses; and the allocation between the parties of interim marital expenses up until entry of the judgment of divorce.
Kahan did not contact the court following the mediation session to report "whether or not the case is settled," as provided by paragraph 5 of the December 18, 2002 order.
Believing that the mediation session had resulted in a settlement, plaintiff's counsel wrote to the court by letter dated June 30, 2003, and advised that the parties have successfully completed mediation, which has resulted in the settlement of this matter. A Memorandum of Understanding is in the process of being circulated to all parties for final review and consideration. I anticipate being able to prepare a Property Settlement Agreement in accordance with the terms specifically set forth in the Memorandum of Understanding within the next few weeks.
Plaintiff's counsel further requested "that the matter be rescheduled as an Uncontested hearing in August 2003." Defendant's attorney received a copy of the letter but did not respond. Accordingly, the scheduled July 1, 2003 case management conference was adjourned, and the matter was scheduled for an uncontested divorce hearing on July 17, 2003. Again, there was no response from defendant's attorney.
Several days after the June 17, 2003 mediation session, defendant verbally informed plaintiff "that he [had] changed his mind" in regard to the settlement agreement. According to defendant, "after reviewing and considering the proposed settlement terms . . . [he] determined that the terms set forth [in the mediator's June 19, 2003 letter] were not agreeable to him as he considered them unfair and not in his best interests." Defendant contended he had the right to reject the proposed settlement terms according to the rules set forth by Kahan that there would be no binding settlement between the parties until there was a signed property settlement agreement.
On July 8, 2003, defendant's attorney wrote to counsel for plaintiff and advised that defendant "does not accept the terms and conditions set forth in the letter from Sanford Kahan, Esquire dated June 19, 2003 regarding possible settlement terms of this matter . . . . Accordingly, this matter is no longer uncontested." The letter also advised that defendant was "willing to return to mediation" to settle the matter. Although the letter notes a copy thereof was sent to defendant and Kahan, unfortunately, a copy was not sent to the court.
By letter to the court dated July 15, 2003, plaintiff's attorney requested that a case management conference be scheduled, stating that defendant "no longer accepts the terms he previously agreed to." Counsel advised that the divorce was now contested and that plaintiff was "no longer comfortable with the mediation process and does not wish to incur additional legal fees to re-mediate an agreement in the hopes that the defendant will not again rescind his agreement[.]" Defendant's attorney did not respond to that letter.
On July 17, 2003, plaintiff, her attorney and defendant's attorney appeared in the Family Part. Defendant did not appear, believing, as did his attorney, that the court event scheduled for July 17 was a case management conference that did not require his appearance.
The judge stated that since the court had been advised by plaintiff's counsel that the matter had been settled, the divorce was going to be put through as an uncontested matter, regardless of any subsequent changes. Although the judge had received the July 15, 2003 letter from plaintiff's counsel stating that the matter was no longer uncontested, the judge ruled it had been the defendant's responsibility to inform the court that there was no settlement in the matter. The court denied the request of defendant's attorney for a Harrington hearing to determine whether the parties had entered into a binding agreement.
Defendant's counsel argued that the parties had been advised by Kahan that there would be no binding agreement "until a full property settlement agreement was written by counsel . . . with the understanding that we were going to review it with our clients and both parties had the ability to make a final decision whether this preliminary understanding was going to be accepted by the parties." Counsel advised the court that "[u]pon review of the memorandum of understanding my client cannot and does not and will not accept the terms of that preliminary decision." Furthermore, defendant's attorney argued that the terms of mediation are to be confidential and non-evidentiary. [The] memorandum was written up during . . . the course of mediation and was for mediation purposes only. So requiring the parties to move forward on an uncontested divorce hearing based on this memorandum of understanding is a violation of the court ordered mediation.
Defendant asserted that his privacy and due process rights were being violated, since he was not being given "ample notice to defend" or the "appropriate opportunity to be heard."
Over the objection of defendant's attorney, the trial court entered a judgment of divorce, incorporating the terms of Kahan's letter dated June 19, 2003, and dismissed defendant's counterclaim due to his failure to appear. The Judgment stated in part:
IT IS . . . ORDERED AND ADJUGED that the Memorandum of Understanding marked as P-1 in evidence constitutes the agreement of the parties. The Court did not take testimony on the agreement but plaintiff testified that she entered into the agreement voluntarily and believed the agreement was fair and equitable. The Court directs the parties to comply with the terms of their settlement as reflected in this document.
On July 31, 2003, defendant filed a notice of appeal from the final judgment of divorce, arguing (1) that the trial court had erred in determining that the letter to the parties from the mediator dated June 19, 2003 constituted the parties' agreement, as it was not an enforceable contract, (2) that the judge had improperly denied his request for a Harrington hearing, and (3) that public policy considerations of confidentiality underpinning the mediation process prohibited the enforcement of the purported agreement, requiring that the judgment be reversed.
In our opinion issued on May 7, 2004, we found a "legitimate question as to whether there was an agreement made between the parties, particularly given defendant's understanding of the nature of the mediation process and the understandable belief that all proceedings would be confidential and non-evidential, and that the attorneys would draft the ultimate Property Settlement Agreement." Lehr, supra, slip op. at 9. Accordingly, we remanded the matter for a Harrington hearing to establish whether the parties agreed on the essential terms of the settlement. Ibid.
On June 17, 2004, the Family Part conducted a plenary hearing to determine whether the parties had a meeting of the minds regarding the settlement terms during mediation. Defendant called Kahan as his first witness, prompting the following colloquy between the court, William M. Laufer as counsel for plaintiff, and Rebecca Grather as counsel for defendant:
MR. LAUFER: Your Honor, I'm going to object to Mr. Kahan testifying in this matter based upon Rule 1:40-4, setting forth the general rules governing the mediation process. I think for Mr. Kahan's point, if no one else's, he should be concerned about testifying in these proceedings, unless certain requirements are met.
THE COURT: Okay. And what about that rule would prohibit the mediator --
MR. LAUFER: Well, it's the issue of confidentiality of the process. And that rule specifically says that no mediator may participate in any subsequent hearing or trial of a mediated matter, or appear as a witness or counsel for any person in the same or any related matters. Now, there are exceptions to that rule.
THE COURT: Okay. And . . . can you make a proffer of the kinds of questions you will be asking Mr. Kahan?
MS. GRATHER: Yes, Your Honor. First of all, Mr. Kahan is here under subpoena, he's not here on behalf of Mr. Afflitto. I issued a subpoena which was duly served and a copy was forwarded to Mr. Laufer. If Your Honor would ...