October 15, 2012
VINCENT RUTIGLIANO, PLAINTIFF-APPELLANT,
JAMES P. RUTIGLIANO, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-3822-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 3, 2012
Before Judges Axelrad and Haas.
Plaintiff Vincent Rutigliano appeals from an order enforcing a settlement reached at the conclusion of a mediation session. He argues the judge erred by permitting defendant James Rutigliano to disclose the terms of the settlement for the court's review. Guided by our recent decision in Willingboro Mall, Ltd. v. 240/242 Franklin Ave., L.L.C., 421 N.J. Super. 445 (App. Div. 2011), certif. granted, 209 N.J. 97 (2012), we hold that the trial judge properly enforced the settlement and considered defendant's testimony because the parties waived the confidentiality provisions of the Uniform Mediation Act, N.J.S.A. 2A:23C-1 to -13 (Act), specifically N.J.S.A. 2A:23C-4, and Rule 1:40-4(d). We, therefore, affirm.
Plaintiff and defendant are brothers and beneficiaries of their mother's will. After her death, plaintiff filed a complaint against defendant in which he asserted that defendant had fraudulently induced their mother to change her will to leave property she owned to defendant's two children. Defendant denied the allegations.
The court ordered the parties to attend non-binding mediation pursuant to Rule 1:40-4(a). A six-and-a-half hour mediation session was held on July 21, 2011 at plaintiff's attorney's office. Both parties attended, together with their attorneys and the mediator. After the mediation session was completed, the mediator advised the court that a settlement had been reached.*fn1 In accordance with that notification, the court's docket was marked to indicate that the matter had been settled.*fn2
On or about July 28, 2011, however, plaintiff's attorney sent defendant's attorney a letter stating that plaintiff "does not believe that there was a final or binding meeting of the minds at mediation of this matter." Plaintiff's attorney then offered to settle the matter on new and different terms. Defendant's attorney responded by letter dated July 29, 2011. Defense counsel asserted that, at the conclusion of the mediation, the mediator brought the parties together "in the large conference room, at which time all of the terms and conditions were fully discussed. After full disclosure, the parties agreed on the terms . . . before the mediator, and the parties shook hands and departed." The letter sets forth the terms of the settlement discussed by the parties on July 21, 2011.
Defendant filed a motion to enforce the settlement. Plaintiff opposed the motion, arguing that the parties had never entered into a written settlement agreement and neither party should be able to present testimony concerning what happened during the mediation session.
On December 12, 2011, Judge Craig Wellerson held a plenary hearing to consider defendant's motion.*fn3 The judge determined not to consider testimony or certifications from either party's attorney or from the mediator. However, he gave each party the opportunity, if they wished, to give limited testimony concerning what happened when the settlement was discussed by the parties.
The judge reasoned that such testimony did not violate the confidentiality requirements of N.J.S.A. 2A:23C-4 and Rule 1:40-4(d) because those provisions only apply to matters that are discussed during the actual mediation, where the parties advise the mediator of their respective positions and supporting rationales. Here, on the other hand, the parties had completed the mediation process and the mediator brought them together in a conference room to set forth the terms of the settlement. Thus, the judge ruled that neither party would be permitted to testify as to what happened while the case was actually being mediated. However, the parties could testify concerning what took place when the terms of the settlement were discussed and finalized at the conclusion of the mediation.
Defendant agreed to testify at the hearing. Plaintiff, however, did not. Plaintiff's attorney advised the judge that plaintiff would not testify because, if he did so, this might be construed as a waiver of his right to maintain the confidentiality of what occurred during the mediation.
Defendant testified that "[a]t the conclusion of the mediation process[, the mediator] called all of the parties together in a conference room and went over the terms and conditions of the settlement agreement." Defendant testified as to the terms of the settlement, but not to the negotiations.
Defendant testified that both parties agreed to these terms and plaintiff never questioned any of the provisions of the settlement. The agreement was not reduced to writing because plaintiff "indicated he had a previous obligation, he had to leave and would not have time to have the terms and conditions of the settlement agreement reduced to writing at that time."
When questioned whether the mediator asked the parties whether "it was okay for him to report the fact of the settlement to this court?," defendant replied, "[y]es, and we told him it would be fine." According to defendant, plaintiff and both parties' attorneys were also present when the mediator asked if he could report the settlement to the court. Plaintiff did not object to this disclosure.
The mediator then "ended the settlement conference" and the parties dispersed. Defendant testified he was in the vestibule speaking to his attorney when plaintiff "returned to the building" and expressed a concern about the time frame for payment. Defendant's attorney told plaintiff that "if he had that concern he should share it with" his attorney. Plaintiff's attorney declined the opportunity to cross-examine defendant.
Judge Wellerson found defendant's testimony credible and that he had testified "clearly and convincingly" concerning the terms of the settlement. On the basis of this testimony, the judge determined that plaintiff had authorized the settlement, its terms were "clear and definite," there "was a meeting of the minds between the parties," and "there was certain consideration that was being transferred between the parties to confirm that agreement." The judge further found the "absence of a written agreement at the time the parties left the mediation session is not a fatal flaw." Therefore, the judge entered an order enforcing the terms of the settlement.
On appeal, plaintiff argues the judge erred by permitting defendant to apprise the court of the terms of the settlement so it could determine whether the parties had reached an enforceable settlement. We disagree.
In Willingboro Mall, we recently considered a similar factual situation. There, the parties were involved in a foreclosure action. Supra, 421 N.J. Super. at 449. The trial court referred them to mediation in an effort to resolve their dispute. Ibid. After several hours of mediation, the parties agreed to a settlement and counsel for the defendants sent a letter to the court advising the parties had resolved the case. Ibid. The letter also disclosed the terms of the settlement. Id. at 449-50. The defendant later sent a follow-up letter to the court. Id. at 450.
As here, the plaintiff refused to consummate the settlement and the defendant filed a motion to enforce it. Ibid. A plenary hearing was conducted at which the mediator, the plaintiff's attorney, and other individuals who participated at the mediation, testified. Id. at 451. Based upon this testimony, the trial court held that a valid settlement had been reached at the conclusion of the mediation and it should be enforced. Ibid.
In Willingboro Mall, we noted that both the Act and Rule 1:40 are designed "to assist parties to a litigated matter to resolve their dispute short of trial." Id. at 452. Further explaining the mediation process, we stated:
The purpose of mediation is to assist the parties to resolve their dispute without further resort to the judicial process. Accordingly, the ultimate goal of any mediation is settlement of some or all of the issues in dispute. When the parties have reached a settlement, the terms of the settlement are to be reduced to writing and a copy of the writing is provided to all parties. R. 1:40-4(i). The mediator is not required to send the written agreement to the judge referring the matter to mediation or report the settlement to the court, unless the case has been stayed pending mediation. [Id. at 452-53.]
To foster negotiations, N.J.S.A. 2A:23C-4 and Rule 1:40-4d provide that the mediator, the parties, or any other participant in a mediation may not disclose any mediation communication to anyone other than a participant in the mediation session. However, both the statute and the rule recognize that the privilege may be waived by the parties. N.J.S.A. 2A:23C-5a; R. 1:40-4(d). No express form of waiver is required by either the statute or the rule. In order to be effective, however, the mediation privilege must be "expressly waived by all parties to the mediation." Ibid.
Applying these principles in Willingboro Mall, we found that the parties had waived the mediation privilege. Supra, 421 N.J. Super. at 455. The waiver first occurred when the defendants included a certification from the mediator with their motion to enforce the settlement and when the mediator testified at the plenary hearing. The extent of the waiver was the subject of several rulings by the trial judge and, significantly, the plaintiff never objected to the testimony presented. Ibid. Because the confidentiality of the mediation had been waived, we held the terms of the settlement that resulted from the mediation could be disclosed to the court and the trial judge could determine whether a binding settlement had been reached. Ibid.
A similar result is required in this case. Defendant obviously acknowledges that he waived his privilege. Plaintiff correctly argues that he objected to defendant, the mediator or the parties' attorneys testifying at the hearing concerning the terms of the settlement; he refused to testify; and he declined the opportunity to cross-examine defendant. However, plaintiff overlooks the fact that both he and defendant authorized the mediator to contact the court to advise that the matter had been concluded with a settlement. Acting on this information, the court marked the matter as settled on its docket.*fn4
Thus, both parties waived the mediation privilege prior to the plenary hearing when they each consented to permit the mediator to notify the court the case had been settled. Because each disclosed there was a settlement, there was no bar to either party disclosing the terms of that settlement or, if necessary, going to court to enforce that settlement.
Adopting plaintiff's contrary view would mean that a party could complete the mediation; agree to all the terms of a settlement, authorize the mediator to notify the court of same, and then use the mediation privilege to prevent enforcement of the settlement. As we held in Willingboro Mall, such a position "is at odds with established precedent regarding the enforcement of settlement agreements." Id. at 453. The purpose of mediation is to resolve the parties' dispute. Id. at 454. Once that purpose is achieved and a final resolution occurs, as happened in this case, the court is authorized to determine the terms of the agreement and, if appropriate, enforce those terms. Ibid. To rule otherwise would be contrary to New Jersey's "strong public policy in favor of settlements." Bistricer v. Bistricer, 231 N.J. Super. 143, 147 (Ch. Div. 1987). Thus, the judge correctly found the parties had entered into a final settlement agreement and properly permitted defendant to testify concerning the terms of that agreement.
We review the judge's factual findings concerning the terms of the settlement to determine whether they are supported by substantial credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1976). That standard is plainly met here. The judge heard defendant's testimony and found him credible. Defendant provided all the terms of the parties' agreement and confirmed that both parties had agreed to those terms and to the disclosure of the settlement to the court by the mediator. Thus, there is ample evidence in the record to support the judge's conclusion that a settlement had occurred and the specific provisions thereof.
As we noted in Willingboro Mall, both the Act and Rule 1:40-4(d) "present obstacles to enforcement of an oral agreement reached through mediation when the parties do not waive the confidentiality conferred on the proceeding." Supra, 421 N.J. Super. at 455 (citing Beazer East, Inc. v. The Mead Corp., 412 F.3d 429, 436 (3d Cir. 2005), cert. denied, 546 U.S. 1091, 126 S. Ct. 1040, 163 L. Ed. 2d 857 (2006) (where the court stated that a settlement agreement achieved through mediation under the federal rules "is not binding unless it is reduced to writing")). Here, however, the parties waived the mediation privilege. It is well-established that, so long as settlement terms are clear, a writing is not required to settle a litigated matter. Bistricer, supra, 231 N.J. Super. at 148. Plaintiff had the opportunity to obtain a writing setting forth the settlement terms, but he left his attorney's office to attend to a personal matter. Despite the lack of a written agreement, both parties knew the settlement terms and they agreed to all of them. There is substantial credible evidence in the record to support the judge's finding that a writing was not required to finalize the parties' settlement and that the parties' oral agreement should be enforced.