SIMMONS v. GHADERI

Filed 9/27/06

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

Story continue from Part I ...

In this case, the mediation took place on July 9, 2003. The next day, counsel appeared before the trial court, set forth the facts that had taken place, and sought guidance on how to proceed. Thereafter, for fifteen months, the parties litigated the legal effect of the events which had taken place at the mediation. Indeed, the relevant facts -- Dr. Ghaderi’s written consent to settlement, the offer, its acceptance, and Dr. Ghaderi’s subsequent revocation of consent -- were and are undisputed; the sole dispute was as to their legal effect. Until her October 6, 2004 trial brief in this action, Dr. Ghaderi never challenged the admissibility of these facts or the trial court’s authority to receive such evidence and to determine its legal effect. Indeed, Dr. Ghaderi stated those facts in a declaration, argued them in her motion, and asserted they were undisputed in her separate statement. Her attorney went so far as to stipulate to some of these facts at her deposition, stating that Dr. Ghaderi was “not disputing” the offer or its acceptance. These circumstances clearly demonstrate that this evidence was not “compelled” in violation of Evidence Code, section 1119. Nor would any purpose or rationale of the mediation statute be served by applying it in this case.

Moreover, under these facts, for Dr. Ghaderi to now assert mediation confidentiality is an impermissible exaltation of form over substance. Dr. Ghaderi does not dispute the relevant facts; she never has. She has simply decided that, since the facts do not appear to favor her current legal position which had been repeatedly rejected by the trial court, she will now assert that the court can take no notice or evidence of these facts, because they happened to occur in the course of a mediation. Recognition of mediation confidentiality in this case would not help to ensure open communication in mediation; but it would allow a disgruntled litigant to use the shield of mediation confidentiality as a convenient place behind which to hide facts, although indisputably true, she no longer believes are favorable.

When a party asks the court to determine a matter, the party is estopped from arguing the court’s action was, in fact, outside of the court’s statutory power to resolve. (Gee v. American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412, 1414; Conservatorship of Kevin M. (1996) 49 Cal.App.4th 79, 92.) This is, in effect, what Dr. Ghaderi has done in this case. For fifteen months, Dr. Ghaderi placed before the trial court the facts of the mediation and sought a legal determination as to their effect, effectively conceding the trial court’s jurisdiction to resolve the dispute. Only when it appeared that the trial court’s determination was going against her did Dr. Ghaderi then argue that the mediation confidentiality statutes put the undisputed facts beyond the court’s reach. To allow Dr. Ghaderi to seek the court’s resolution of the legal effect of the proceedings before the mediator and thereafter argue the Evidence Code barred the court from doing so “ ‘ “would permit [her] to trifle with the courts.” ‘ “ (Gee v. American Realty & Construction, Inc., supra, 99 Cal.App.4th at p. 1414.)

We find Dr. Ghaderi’s attempt to prevent enforcement of the undisputed settlement contract on the ground of mediation confidentiality particularly egregious in this case, in that, once Dr. Ghaderi signed the written consent to settle, she had no further rights to object to the settlement at all. (See Fiege v. Cooke, supra, 125 Cal.App.4th at p. 1354 [when the insured is fully covered by insurance, “ ‘ “the primary insurer is entitled to take control of the settlement negotiations and the insured is precluded from interfering therewith.” ‘ “] Dr. Ghaderi consented to CAP-MPT settling plaintiffs’ claim and the claim was settled prior to Dr. Ghaderi revoking her consent. Just as Dr. Ghaderi has no authority to challenge the settlement by a subsequent withdrawal of her consent, she similarly has no authority to challenge the settlement by raising the principles of mediation confidentiality. Having given her written consent to CAP-MPT, Dr. Ghaderi cannot be heard to complain about the settlement CAP-MPT reached.

We do not here disagree with the principle that mediation confidentiality rights cannot be waived impliedly by merely raising a claim about an agreement reached through mediation. (Eisendrath v. Superior Court (2003) 109 Cal.App.4th 351, 360.) We simply hold that once a party voluntarily declares certain facts to be true, stipulates that she does not dispute them and extensively litigates the legal effect of such facts, she is estopped to later claim that the court must disregard those facts based upon a belated assertion of mediation confidentiality.^[1] We therefore affirm.^[2]

DISPOSITION

The judgment is affirmed. Plaintiffs shall recover their costs on appeal.

CERTIFIED FOR PARTIAL PUBLICATION

CROSKEY, J.

I Concur:

KLEIN, P.J.

ALDRICH, J., Dissenting.

I respectfully dissent.

INTRODUCTION

By avoiding the mediation confidentiality statutes (Evid. Code, § 1115 et seq.), the majority ignores the pivotal and dispositive law governing this case. A proper analysis of this statutory scheme, together with its legislative history, leads inescapably to the conclusion that in this case there was no admissible evidence of an oral contract. Therefore, the trial court erred in accepting oral and documentary evidence made during the mediation and in entering judgment for plaintiffs on their breach of oral contract cause of action. The matter must be reversed and remanded for a trial on the merits.

FACTUAL AND PROCEDURAL BACKGROUND

1. The initial complaint.

On March 27, 2002, plaintiffs filed a wrongful death complaint against Lida Ghaderi, M.D., alleging medical malpractice caused the death of Kintausha Clemmons (Clemmons).

2. The July 9, 2003, mediation.

Cooperative of American Physicians, Inc./Mutual Protection Trust (CAP-MPT) was Dr. Ghaderi’s medical malpractice provider.^[3]

On July 9, 2003, the parties attended mediation with the Honorable Robert T. Altman, retired. Plaintiffs and their counsel appeared. Dr. Ghaderi was present with her two attorneys, Kent T. Brandmeyer and Robert C. Reback. Attorney Brandmeyer was the CAP-MPT attorney and attorney Reback was Cumis counsel.^[4] Ms. Obi Amanugi, a CAP-MPT claims specialist, was also present.

Before any discussions occurred, Amanugi presented Dr. Ghaderi with a standard CAP-MPT written consent to settlement form. This one-page, three paragraph document authorized CAP-MPT to negotiate a settlement on behalf of Dr. Ghaderi. It recognized that the settlement amount was not to exceed that authorized by CAP-MPT’s claims review committee and was not to be construed as an admission of liability. It also stated that Dr. Ghaderi’s consent to settlement could only be revoked in writing and would remain in force until a written revocation was received by CAP-MPT at its offices.^[5]

Dr. Ghaderi executed the consent to settlement form and in her own handwriting added the following statement to the document: “The settlement value is limited to one hundred & twenty five thousand dollars + zero cents.” At the time Dr. Ghaderi signed the consent to settlement, she understood her consent would remain in effect until her written revocation was received by CAP-MPT.

The parties engaged in settlement discussions. At one point, Judge Altman was instructed to offer plaintiffs $125,000 to settle the matter in exchange for a dismissal with prejudice and a waiver of costs. Pursuant to these instructions, Judge Altman extended that offer to plaintiffs. Plaintiffs accepted the offer.

Judge Altman then placed the essential terms of the settlement into a document for the parties to sign. Additionally, the proposed settlement agreement stated in part that the parties “further agree that this agreement may be introduced into evidence in any subsequent proceeding to enforce the terms of this agreement and that Evidence Code Section 1119 does not apply in such a proceeding.” Plaintiffs and their counsel signed the settlement agreement, which was initialed by Judge Altman as witness.

Dr. Ghaderi was informed that the case had settled. Dr. Ghaderi stated she did not agree with the resolution of the case and declined to sign the settlement agreement. Dr. Ghaderi left the building without signing the written settlement agreement prepared by Judge Altman. Neither of her counsel signed the settlement agreement.

Amanugi contacted the CAP-MPT office and learned that CAP-MPT would consider Dr. Ghaderi’s oral revocation of her consent valid.

3. The July 10, 2003, hearing.

At a hearing on two motions, the plaintiffs’ attorney and the CAP-MPT attorney representing Dr. Ghaderi appeared. Both counsel recounted the events of the preceding day, including that plaintiffs had accepted the $125,000 offer, but Dr. Ghaderi had departed before signing the settlement agreement prepared by Judge Altman. The parties asked for guidance. Plaintiffs’ attorney expressed the bewilderment of both counsel when he stated, “we are somewhat flummoxed by this . . . .”

The trial court speculated that perhaps there was an enforceable settlement, vacated the upcoming trial date, and set an order to show cause re dismissal.

4. The written revocation of consent and order to show cause.

On July 16, 2003, Dr. Ghaderi sent CAP-MPT a letter revoking her consent to settlement.

The following day, CAP-MPT’s attorney informed the trial court that CAP-MPT was “still trying to figure it out[,]” but he did not think CAP-MPT would pay if Dr. Ghaderi did not consent. The trial court set an order to show cause re dismissal and ordered Dr. Ghaderi to appear on that date.

Dr. Ghaderi personally appeared at the dismissal hearing with counsel. After an unreported conference in chambers, the trial court placed on the record the fact that Dr. Ghaderi was unwilling to consent to the settlement. The trial court suggested plaintiffs bring a motion to enforce settlement (Code Civ. Proc., § 664.6) and set a hearing to consider such a motion.

5. Plaintiffs’ motion to enforce settlement.

Plaintiffs moved to enforce settlement pursuant to Code of Civil Procedure section 664.6. After describing the events of July 9, 2003, plaintiffs contended that a valid oral contract was entered into because Dr. Ghaderi had provided CAP-MPT written consent to settle. Plaintiffs attached to their motion Dr. Ghaderi’s written consent to settle, the settlement agreement prepared by Judge Altman and signed only by plaintiffs and their counsel, and a declaration from Judge Altman.

Dr. Ghaderi did not dispute plaintiffs’ summary of the event of July 9, 2003. However, she opposed plaintiffs’ motion arguing that “no agreement was consummated” because her consent had been withdrawn and thus, “CAP/MPT has no authority to execute a settlement agreement on her behalf.” Dr. Ghaderi also argued that the settlement could not be enforced because it did not meet the requirements of Code of Civil Procedure section 664.6 as there was no “writing signed by the parties outside the presence of the court or orally before the court. . . .” Lastly, Dr. Ghaderi argued that since her insurance policy with CAP-MPT was a professional liability policy, no settlement could be enforced because there was no consent to settle as required by Business and Professions Code section 801, subdivision (g).^[6]

The trial court denied the motion to enforce settlement. The court concluded that the requirements of Code of Civil Procedure section 664.6 had not been met. The trial court speculated, however, that there might be an enforceable oral contract and suggested plaintiffs amend the complaint to allege breach of contract.

6. The breach of contract cause of action.

On March 9, 2004, plaintiffs amended the complaint to add a cause of action for breach of contract. Plaintiffs alleged that Dr. Ghaderi breached an oral settlement arrived at during the mediation.

Plaintiffs served a request for admissions on Dr. Ghaderi and deposed Dr. Ghaderi. In response to this discovery, Dr. Ghaderi did not deny the events that had occurred during the July 9, 2003 mediation.

7. The summary adjudication motion.

Dr. Ghaderi moved for summary adjudication of the breach of contract cause of action. Dr. Ghaderi argued there was no enforceable settlement because the mediation had concluded before a formal settlement agreement had been executed and her refusal to sign the settlement agreement and her act of leaving the building were manifestations of her lack of consent. Dr. Ghaderi also argued these acts constituted a withdrawal of her consent to settle. (Bus. & Prof. Code, § 801.)

The trial court denied Dr. Ghaderi’s motion for summary adjudication.

On September 23, 2004, the trial court granted plaintiffs’ motion to sever the causes of action. The case proceeded to a court trial only on plaintiffs’ cause of action for breach of oral contract.

8. The trial and judgment entered against Dr. Ghaderi.

Plaintiffs submitted the following documents at trial: (1) the consent to settlement signed by Dr. Ghaderi; (2) the settlement agreement prepared by Judge Altman; (3) Dr. Ghaderi’s July 16, 2003, letter revoking her consent to settlement; (4) Dr. Ghaderi’s deposition testimony; (5) Amanugi’s deposition testimony; and (6) a declaration from Judge Altman.

In Dr. Ghaderi’s trial brief she argued that the mediation confidentiality rules codified in Evidence Code section 1115 et seq., and in particular Evidence Code section 1119, made inadmissible all evidence of an oral contract. Dr. Ghaderi argued, “the law of the State of California does not permit discussions at a mediation or documents generated thereat to be introduced at trial to prove that an agreement was created there.” Dr. Ghaderi filed a formal objection to plaintiffs’ evidence in which she objected to “any and all testimony and/or documentary evidence concerning the any [sic] mediation held in this action . . . pursuant to California Evidence Code, § 1119, et seq. and Ryan v. Garcia (1994) 27 Cal.App.4th 1006.” Dr. Ghaderi asserted that plaintiffs could not prove the existence of an oral contract to settle the medical malpractice case because any proof would violate the confidentiality of mediation.

At the bench trial of the breach of contract cause of action, the parties agreed to almost everything that had occurred on July 9, 2003, including that they had entered into mediation discussions once Dr. Ghaderi had provided written consent to CAP-MPT to settle the case up to $125,000. The parties further agreed that plaintiffs had accepted a $125,000 offer, Judge Altman prepared a written settlement agreement reflecting the parties’ agreement, and Dr. Ghaderi had refused to sign the document and had left the mediation. The only factual item in conflict was what Amanugi did once Dr. Ghaderi refused to sign the settlement agreement. Over objection, Amanugi was called to the stand and testified about those events. The bulk of the trial consisted of arguments of counsel as to the effect of Dr. Ghaderi’s act of refusing to sign the settlement agreement prepared by Judge Altman and whether the mediation confidentiality statutes, including Evidence Code section 1119, prevented plaintiffs from proving their case.

The trial court issued a tentative statement of decision in favor of plaintiffs on the breach of contract cause of action. The trial court held an enforceable oral contract for settlement came into existence before Dr. Ghaderi withdrew her consent. The trial court reasoned that Dr. Ghaderi had given her attorneys, her authorized agents, authority to communicate a $125,000 offer to plaintiffs, and that offer had been accepted prior to any withdrawal of consent.

On December 23, 2004, the trial court adopted the tentative decision as its final decision, issued a final statement of decision, and entered a judgment in favor of plaintiffs. The judgment ordered Dr. Ghaderi to pay plaintiffs $125,000, plus prejudgment interest and costs.

Dr. Ghaderi timely appealed.

DISCUSSION

1. Introduction.

In mediation, Dr. Ghaderi gave her attorneys the authority to offer plaintiffs up to and including $125,000 to settle the case. Acting within the confines of their authority, the attorneys caused this offer to be conveyed to plaintiffs who accepted the offer. Dr. Ghaderi refused to sign a settlement agreement, and terminated the mediation by leaving the building. The majority does not dispute any of these facts. Inexplicably, however, the majority never discusses the mediation confidentiality statutes.

I would hold that the mediation confidentiality statutes contained in Evidence Code section 1115 et seq., preclude plaintiffs from proving the existence of an offer and acceptance, the terms of an oral settlement, or the creation of an oral agreement. I reach this holding by examining the confidentiality statutes, the 1997 Law Revision Commission comments to the present statutes that articulate the Legislature’s intent, and the most recent case authority. All of these compel one conclusion -- evidence of an oral agreement formed during the July 9, 2003, mediation was made inadmissible in the trial by Evidence Code section 1119 and plaintiffs cannot satisfy the explicit burden under Evidence Code sections 1118 and 1124 to introduce evidence of an oral agreement.

2. The mediation confidentiality statutes.

“California’s Legislature has a strong policy favoring mediation as an alternative to litigation. Because mediation provides a simple, quick, and economical means of resolving disputes, and because it may also help reduce the court system’s backlog of cases, it is in the public interest to encourage its use. [Citation.]” (Doe 1 v. Superior Court (2005) 132 Cal.App.4th 1160, 1165.)

The mediation confidentiality statutes were designed by the Legislature to “promote ‘a candid and informal exchange regarding events in the past . . . . This frank exchange is achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory processes.’ [Citations.]” (Foxgate Homeowners’ Assn., Inc. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 14 (Foxgate).) “[C]onfidentiality is essential to effective mediation . . . .” (Ibid.)

Commencing with Evidence Code section 1115 et seq., the Legislature has delineated the parameters of mediation confidentiality and the express statutory exceptions thereto.^[7] These statutes apply to all mediations, except family conciliation proceedings (Fam. Code, § 1800 et seq.), mediation of custody and visitation issues (Fam. Code, § 3160 et seq.), and court supervised mandatory settlement conferences pursuant to California Rules of Court, rule 222. (Evid. Code, § 1117.)^[8]

To be continue as Part III ...

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^[1] Assuming arguendo that Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1 and Rojas v. Superior Court (2004) 33 Cal.4th 407 preclude any judicially-created exceptions to the mediation confidentiality statutes -- a proposition emphasized and relied upon by our dissenting colleague -- they present no bar in this case. While both cases reversed judicially-created exceptions to the mediation confidentiality statutes, we create no such exception here. We simply prevent a litigant from tardily relying on mediation confidentiality to shield from the court facts which she had stipulated to be true and had extensively litigated without raising such bar.

^[2] On appeal, Dr. Ghaderi asserts that the judgment was improperly entered against her rather than CAP-MPT. The assertion is meritless. Dr. Ghaderi was the named defendant in this case, not CAP-MPT. The insurer was never a party to malpractice litigation. Judgment was properly entered against Dr. Ghaderi.

^[3] It appears that CAP-MPT is an interindemnity arrangement organized pursuant to Insurance Code section 1280.7. (See, Mundy v. Mutual Protection Trust (1990) 219 Cal.App.3d 127.)

^[4] The authority for such counsel is San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 364 and Civil Code section 2860.

^[5] In part, the document stated, “I consent to the settlement of the [plaintiffs’] claim for an amount not to exceed that authorized by the Claims Review Committee of [CAP-MPT]. It is understood that my consent to the negotiated settlement of this claim involves the compromise of a doubtful and disputed claim. . . .

. . .

I understand and agree that this consent to settlement may only be revoked in writing. This consent to settlement shall remain in full force and effect unless and until written revocation of my consent to settlement is received by [CAP-MPT at its office].”

^[6] Business and Professions Code section 801 refers to professional liability insurance. Subdivision (g) states in pertinent part: “Notwithstanding any other provision of law, no insurer shall enter into a settlement without the written consent of the insured, except that this prohibition shall not void any settlement entered into without that written consent. The requirement of written consent shall only be waived by both the insured and the insurer.”

^[7] Other statutes also address aspects of mediation. (E.g., Evid. Code, § 703.5 [making mediators incompetent to testify about proceedings over which they presided].)

^[8] The parties concede that they participated in a mediation on July 9, 2003, pursuant to an order of the trial court. Further, the record contains no information suggesting that the proceedings were anything other than a traditional mediation. As will become apparent by my discussion, the distinction between mediation and other types of proceedings, such as mandatory settlement conferences pursuant to California Rules of Court, rule 222, and arbitrations, can become critical. Many unforeseen results can occur if parties unwittingly participate in mediation. (See, Saeta v. Superior Court (2004) 117 Cal.App.4th 261 [distinguishing mediation from arbitration]; Doe 1 v. Superior Court, supra, 132 Cal.App.4th at pp. 1166-1167, fn. omitted [“If counsel wish to avoid the effect of the mediation confidentiality rules, they should make clear at the outset that something other than a mediation is intended. Except where the parties have expressly agreed otherwise, appellate courts should not seize on an occasional reference to ‘settlement’ as a means to frustrate the mediation confidentiality statutes.”].)