Mediator Roy Paul Reflects on Settlement Agreements in Recent Cases

by Roy Paul, Esq.

While mediation normally is viewed as a means of avoiding or putting an efficient end to litigation, we are reminded that mediation can simply lead to additional litigation if the parties are not careful to create a clear binding agreement at mediation. The recent case of American Acad. of Gen. Physicians, Inc. et. al. v. LaPlante, 340 Ga.App. 527, 798 S.E.2d 64 (2017) shows what can happen even when the mediated agreement is read into the record in the presence of the trial judge, the parties and their counsel. Despite these measures, an appeal was taken in which the appellants argued that the trial court erred in enforcing the mediated agreement because the appellants’ agents allegedly exceeded their authority in entering into the agreement, an essential term of the agreement was void as against public policy and there was no meeting of the minds between the parties. The Court of Appeals affirmed the trial court’s enforcement of the mediated agreement finding that there existed a sufficient meeting of the minds to validate and enforce the agreement, but not without lengthy discussion and reference to the transcript of discussions that occurred between the trial court and counsel for the parties clarifying certain of the terms of the settlement.

The Court in LaPlante noted that in Georgia, settlement agreements are highly favored under the law and will be upheld whenever possible. The Court recognized, however, that:

An agreement between two parties will occur only when the minds of the parties meet at the same time, upon the same subject-matter, and in the same sense.” Cox Broad. Corp. v. Nat’l Collegiate Athletic Ass ’n, 250 Ga. 391, 395, 297 S.E.2d 733 (1982) (citations omitted). “In determining if parties had the mutual assent or meeting of the minds necessary to reach agreement, courts apply an objective theory of intent whereby one party’s intention is deemed to be that meaning a reasonable man in the position of the other contracting party would ascribe to the first party’s manifestation of assent.” Id. “When parties to a contract … know that they have different intents with respect to certain language before they enter into the contract, there can be no meeting of the minds upon the same subject matter and in the same sense and no agreement on that issue.” Id. 340 Ga.App. at 532; 798 S.E.2d at 69-70.

Parties to a mediated agreement should be mindful that a settlement agreement is no different than any other contract and should be very careful to make sure that there is a meeting of the minds on all of the essential terms. A mediated settlement agreement must meet the same requirements of formation and enforceability as any contract. If essential terms are left for additional negotiation or are not clearly stated, the opportunity to attack the enforceability of the agreement is created. While the law favors compromise, it is up to the parties to enter into a definite, certain and unambiguous agreement.

If the parties are careful to enter into an enforceable agreement, the Court of Appeals has also recently emphasized that trial courts are generally required to accept the agreement. In Olmstead Homeowners Association, Inc. v. Washington, 341 Ga.App. 524, 801 S.E.2d 320 (2017) the Court of Appeals was presented with a situation where the trial court’s final order and judgment allegedly differed from the terms of a mediated agreement. The case was remanded because it was not clear whether the trial court impermissibly modified the terms of the mediated agreement instead of enforcing it as written. On remand, the Court of Appeals left it to the trial court to determine whether the parties’ agreement was sufficiently definite, certain and unambiguous as to all material terms to be enforceable as to the parties’ final settlement.

On the arbitration side, the recent ruling in Bibb County School District v. Dallemand, 2017 WL 4126996 (9/18/2017) discussed again how the threshold issue of arbitrability is to be addressed. The Court recognized that the parties may show their clear and unmistakable intent to submit to an arbitrator the threshold issue of arbitrability by including a delegation clause in their arbitration agreement. See Rent-A-Center, West, Inc. v. Jackson, 561 U.S.63, 68-69 (2010). The Court in Dallemand emphasized that the intent must be “clear and unmistakable.” The Georgia appellate Courts have made it clear under the Georgia Arbitration Code the even claims that the underlying contract containing the arbitration clause was subject to rescission can be submitted to an arbitration with a broad arbitration clause. 

Mediator Roy PaulRoy Paul, Esq. is a mediator and arbitrator with Miles in Savannah. He has 30+ years of  combined litigation, mediation and arbitration experience. He specializes in business dissolution and business disputes, as well as estate & probate, construction, and personal injury cases. To book Roy for a mediation or arbitration, please call 912-417-2879 or click here.