In Beim v. Sawyer (N.J. App. Div. A-2816-10T1, decided on February 29, 2012), defendant, in her 70s, filed for a divorce from plaintiff, in his 80s. After the complaint and answer were filed and discovery completed, the parties made repeated efforts to settle their dispute through multiple alternative dispute resolution events held over an extended period. They attended an “Early Settlement Panel,” two “Economic Mediation” sessions, a “Mandatory Economic Mediation” session, and an “Intensive Settlement Conference.” The mediation efforts resulted in a settlement. The settlement was reduced to a 4-page written agreement at the mediation, 2 pages of which were drafted by the mediator, 1 page was drafted by plaintiff’s attorney, and 1 page was photocopied from one of defendant’s prior submissions.  The agreement also contained handwritten paragraphs and numerous deletions. The written agreement was signed by both parties and their lawyers. In addition, the parties signed each page of the settlement agreement and initialed the handwritten changes.

A year later, plaintiff filed a motion to enforce the agreement, and defendant cross-moved, asking the court to declare the agreement unenforceable.  The trial judge granted plaintiff’s motion, enforced the settlement agreement, granted a final judgment of divorce, and awarded attorneys fees to plaintiff.

On appeal, defendant asserted several grounds for reversal: (1) Defendant alleged that she did not believe the written agreement was binding in reliance upon the mediator’s retainer agreement which stated that, in the event of a settlement, the mediator would “prepare a memorandum of understanding reflecting the agreements you have reached. This memorandum is not to be signed and is not to be regarded as binding until the agreements therein are incorporated in a Property Settlement Agreement prepared by your attorneys and signed by you.” (2) Defendant did not intend to commit herself to a final settlement agreement on the date of the mediation because her primary counsel was not present, although an associate of the law firm was present. (3) The mediator exceeded her authority by drafting a final and binding settlement agreement which she asked the parties to sign.

The appeals court rejected defendant’s arguments, and affirmed the trial court’s decision in all respects. The court held that public policy favored the settlement of litigation, and that mediation advanced this public policy:

A settlement is essentially a contract which is to be enforced, as written, … absent unconscionability, fraud, or overreaching in the negotiations…. N.H. v. H.H., 418 N.J. Super. 262, 282 (App. Div. 2011) (quoting Miller v. Miller, 160 N.J. 408, 419 (1999)); Honeywell v. Bubb, 130 N.J. Super. 130, 136 (App. Div. 1974) … Mediation is also not intended or designed as a meaningless and impotent detour on the way to judgment. The very purpose of the [mediation] process is to resolve the dispute.  Willingboro Mall, Ltd. v. 240/242 Franklin Ave., L.L.C., 421 N.J. Super. 445, 451-52 (App. Div. 2011), certif. granted, ___ N.J. ___ (2012).

The appeals court went on to hold that neither unconscionability, fraud, nor overreaching was present in this case. Rather, the court held that “the parties knowingly and voluntarily entered into settlement negotiations with the purpose of distributing their marital property. The parties were represented by counsel and had ample time to discuss the agreed upon provisions with their lawyers. … [N]otwithstanding the language in the mediator’s retainer agreement, ‘the parties and their counsel [had] the ability to decide, throughout the course of negotiations, that they would contract to make the agreement binding.’ … Moreover, defendant failed to produce any evidence supporting her claim that she was forced or coerced to sign the settlement agreement. A change of heart after accepting a settlement is not a basis to set aside the agreement.”

The case is annexed here –  Beim v. Sawyer

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