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 II ...

Although “[m]ediation [may take] many forms[]” (Saeta v. Superior Court, supra, 117 Cal.App.4th at p. 270), it is defined broadly in Evidence Code section 1115 as “a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable agreement.” (1997 Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (2006 supp.) foll. § 1115, p. 198 [“To accommodate a wide range of mediation styles, the definition is broad, without specific limitations on format.”].)^[1]

Evidence Code section 1119 is an expansive limitation on the admissibility of evidence emanating from mediations. It “prohibits any person, mediator and participants alike, from revealing any written or oral communication made during mediation.” (Foxgate, supra, 26 Cal.4th at p. 13.) It bars admission in any civil action, and in other specified proceedings, of anything said or any admission, as well as any writing, made for the purpose of, in the course of, or pursuant to, a mediation or mediation consultation. Evidence Code section 1119 mandates that all communications, negotiations, or settlement discussions between the participants in the course of mediation shall be confidential. It also makes such evidence not subject to discovery.

Evidence Code section 1119 reads:

“Except as otherwise provided in this chapter:

“(a) No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

“(b) No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.

“(c) All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.”

The only way evidence of an oral agreement arrived at in mediation can be admissible is for it to meet the requirements of an express statutory exception to Evidence Code section 1119. This exception is delineated in Evidence Code section 1124, which refers to Evidence Code section 1118.

Evidence Code section 1124 states:

“An oral agreement made in the course of, or pursuant to, a mediation is not made inadmissible, or protected from disclosure, by the provisions of this chapter if any of the following conditions are satisfied:

“(a) The agreement is in accordance with Section 1118.

“(b) The agreement is in accordance with subdivisions (a), (b), and (d) of Section 1118, and all parties to the agreement expressly agree, in writing or orally in accordance with Section 1118, to disclosure of the agreement.

“(c) The agreement is in accordance with subdivisions (a), (b), and (d) of Section 1118, and the agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute.”

Evidence Code section 1118 states:

“An oral agreement ‘in accordance with Section 1118’ means an oral agreement that satisfies all of the following conditions:

“(a) The oral agreement is recorded by a court reporter, tape recorder, or other reliable means of sound recording.

“(b) The terms of the oral agreement are recited on the record in the presence of the parties and the mediator, and the parties express on the record that they agree to the terms recited.

“(c) The parties to the oral agreement expressly state on the record that the agreement is enforceable or binding or words to that effect.

“(d) The recording is reduced to writing and the writing is signed by the parties within 72 hours after it is recorded.”

Evidence Code section 1122 also permits the disclosure of oral agreements emanating from a mediation if there is an express agreement to do so, under certain conditions. It specifies, in part, that a communication or writing “made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation, is not made inadmissible” if there is express agreement to disclose in writing or “orally in accordance with Section 1118 . . . .” (Evid. Code, § 1122, subd. (a)(1)(2).)^[2]

Other statutes also delineate express exceptions to mediation confidentiality. For example, Evidence Code section 1123 addresses when written settlement agreements emanating from mediation are not made inadmissible.^[3] Evidence Code section 1121 delineates when a mediator’s report or findings are not confidential.

The Legislature also clarified that statements made during mediation and “mediation materials are confidential not only during mediation, but also after the mediation ends . . . .” (Evid. Code, § 1126; 1997 Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (2006 supp.) foll. § 1126, p. 217.)^[4] Evidence Code section 1125 defines when mediation ends for purposes of confidentiality. This includes when there is an oral agreement fully resolving the dispute in accordance with Evidence Code section 1118. (Evid. Code, § 1125, subd. (a)(2).) Evidence Code section 1125 recognizes that a party may end a mediation without reaching an agreement. (Evid. Code, § 1125, subd. (a)(2).)^[5]

3. Plaintiffs had no admissible evidence of an oral contract.

The comprehensive mediation confidentiality statutes delineated above makes it clear that plaintiffs are precluded from proving their cause of action. To prove their breach of oral contract cause of action, plaintiffs had to show that Dr. Ghaderi had given settlement authority to her attorneys, the terms of the offer, and that the offer was accepted before Dr. Ghaderi rescinded authority. At trial, Dr. Ghaderi objected to all testimony and documentary evidence concerning the mediation pursuant to Evidence Code section 1115 et seq. A proper ruling on that objection should have prevented plaintiffs from proving their case as there would have been no admissible evidence of an oral agreement.

Subdivisions (a) and (c) of Evidence Code section 1119 preclude admission in any civil proceeding of all communications, negotiations, settlement discussions, and anything said for the purpose of, in the course of, or pursuant to a mediation. Thus, for plaintiffs to prove the oral agreement, they would have to meet the explicit requirements of the exceptions in Evidence Code section 1124, that in turn, refer to Evidence Code section 1118. Plaintiffs are unable to do so.

Specifically, after the mediation ended, there was no reliable means of sound recording, such as a recording by a court reporter or tape recorder that recorded an agreement; the terms of the oral agreement were not recited on the record in the presence of the parties and the mediator and the parties did not express on the record the terms of such an agreement; the parties did not expressly state on the record that the agreement was enforceable or binding; and the agreement was not reduced to writing or signed by the parties within 72 hours after a recording. The parties did not expressly agree in writing or orally that the agreement could be disclosed and there were no issues of fraud, duress, or illegality.

To the extent the settlement agreement prepared by Judge Altman was used as evidence of an oral contract, this writing was also made inadmissible by subdivision (b) of Evidence Code section 1119, as well as Evidence Code sections 1122 and 1123, as there was no express agreement that it could be disclosed and it was not signed by the settling parties. (See fns. 8 & 9.) Although the settlement agreement drafted by Judge Altman included a provision waiving Evidence Code section 1119, neither Dr. Ghaderi nor her attorneys signed the settlement agreement. Rather, when Dr. Ghaderi stated she did not want to settle, did not sign the settlement agreement, and left the scene, she ended the mediation without reaching an agreement and terminated the mediation. (Evid. Code, § 1125, subd. (c); see fn. 11.) Likewise, Judge Altman’s declaration was inadmissible. (Evid. Code, §§ 1119, 1121.)

Because the evidence of an oral agreement was made inadmissible by Evidence Code section 1119 and the exceptions in Evidence Code sections 1118 and 1124 do not apply, there was no evidence to prove plaintiffs’ breach of contract cause of action and Dr. Ghaderi was entitled to judgment as a matter of law.^[6]

4. The 1997 California Law Revision Commission comments demonstrate that there is no enforceable oral contract.

My interpretation of the mediation confidentiality scheme is bolstered by the 1997 California Law Revision Commission comments to the statutes. These comments demonstrate that the statutes were designed to make inadmissible in a civil proceeding any evidence of an oral agreement in this case.

To provide context to the 1997 California Law Revision Commission comments, it is necessary that I discuss two cases decided prior to the enactment of the present statutes.

a. Ryan and Regents.

In 1994, Ryan v. Garcia, supra, 27 Cal.App.4th 1006 (Ryan) addressed a situation similar to the one before us.

In Ryan, the parties mediated their dispute. After meeting with the parties, the mediator announced a settlement had been reached. Someone stated the terms of the agreement and one party was assigned to reduce the agreement to writing. The parties left, believing the case was settled; they later disagreed about the terms of the settlement and no writing was executed. (Ryan, supra, 27 Cal.App.4th at pp. 1008-1009.)

The plaintiffs amended their complaint to add a cause of action to enforce an oral settlement agreement and the case proceeded to a court trial only on that cause of action. (Ryan, supra, 27 Cal.App.4th at p. 1009.) At trial, the defendants objected to anything said during the mediation, contending such statements were inadmissible under former Evidence Code section 1152.5 (Section 1152.5), the predecessor to Evidence Code section 1119. The trial court overruled the objection as to “statements made after the mediator announced the parties had reached an agreement. The court reasoned mediation had ended when an agreement was reached, and the statement of the terms of the agreement was therefore not a part of mediation.” (Ryan, supra, at p. 1009.)

The appellate court phrased the issue before it as “whether the evidence used to prove the existence and terms of the oral settlement agreement was admissible.” (Ryan, supra, 27 Cal.App.4th at p. 1009.) Ryan examined Section 1152.5 that contained some of the language now found in Evidence Code section 1119. Section 1152.5 stated in relevant part: “Evidence of anything said or of any admission made in the course of the mediation is not admissible in evidence . . . .” (Ryan, supra, at p. 1009.)^[7]

Ryan had to define the operative phrase, “in the course of the mediation,” as neither this phrase nor the boundaries of the mediation process were defined in Section 1152.5. (Ryan, supra, 27 Cal.App.4th at p. 1010.) The plaintiffs argued that the evidence of “the existence and terms of the settlement agreement were not made ‘in the course of mediation’ because the mediation was successfully completed when the mediator convened the parties to recite the terms of the settlement.” (Ibid.) “They contend[ed] this must be so because, otherwise, settlements reached in mediation would be unenforceable.” (Ibid.)

Ryan, supra, 27 Cal.App.4th 1006, rejected the plaintiffs’ argument concluding, as the defendant had asserted, that “the existence and terms of the settlement agreement were part of the mediation and, therefore, were inadmissible as evidence.” (Id. at p. 1010.) Ryan, supra, reasoned that Section 1152.5 “must be interpreted broadly to serve its purpose, that is, to encourage the use of mediation by ensuring confidentiality. . . .

By using the broad phrase ‘in the course of the mediation,’ the Legislature manifested its intent to protect a broad range of statements from later use as evidence in litigation.

. . .

Furthermore, narrow interpretation would lead the trial court to filter the mediation proceedings to determine if any portion of the proceeding crossed the line from negotiation into agreement. This is the type of disclosure and use of statements made in mediation the confidentiality statute is meant to preclude.

[W]e need not undertake the task of defining the boundaries of mediation. Instead, we merely determine that the statements made here among the parties and the mediator, at the time and in the place set for mediation, were well within ‘the course of the mediation,’ and, therefore, evidence of those statements was inadmissible in a later proceeding under section 1152.5.

. . .

Indeed, if the parties to mediation sign a written settlement agreement waiving confidentiality, the agreement can be enforced in the courts by a simple motion. (§ 1152.5, subd. (a)(2); Code Civ. Proc., § 664.6.)” (Ryan, supra, pp. 1011-1013, fns. omitted.)

Ryan, supra, 27 Cal.App.4th 1006, held that the trial court “erred by admitting evidence, over . . . objection, of statements made in the course of mediation. [Citation.] Without this evidence, there is no substantial evidence of an oral settlement agreement and the judgment cannot be sustained.” (Id. at p. 1013, fn. omitted.)

Justice Raye dissented in Ryan. He would have held that “[o]nce a compromise is reached the mediation process is over. An oral agreement cannot be crafted until after compromise has been reached. Therefore an oral statement of the terms of the agreement does not fall within Evidence Code 1152.5.” (Ryan, supra, 27 Cal.App.4th at p. 1014 (dis. opn. of Raye, J.).)

Soon after Ryan, supra, a conflict was created when Regents of University of California v. Sumner (1996) 42 Cal.App.4th 1209 (Regents) was decided. In Regents, supra,

the plaintiffs brought a sexual harassment action against the Regents, and others. (Id. at pp. 1210-1211.) Following mediation sessions, the terms of a settlement agreement were dictated into a tape recorder. The plaintiffs indicated they agreed to the terms of the settlement. The settlement required the formal approval of the Regents and the parties agreed that after the Regents approved the settlement, the terms would be placed into a formal document. (Id. at p. 1211.) “However, after the dictated settlement was concluded and before the typed release was prepared,” the plaintiffs decided not to “go through” with the settlement. (Ibid.) Thereafter, the defendants brought actions to enforce the dictated settlement agreement. The trial court granted the defendants’ motion for summary judgment, from which the plaintiffs appealed. (Id. at p. 1212.)

In affirming the summary judgment, Regents, supra, 42 Cal.App.4th 1209, rejected the reasoning of Ryan, supra. Among other holdings, Regents held that Ryan was distinguishable because “[i]n the present case, the parties concluded their mediation session, and then created a transcript of the settlement they had reached in order to memorialize the agreement they had reached. The transcript of the settlement was not a part of the mediation session, where section 1152.5 would bar introduction into evidence of concessions of liability made only for purposes of mediation or settlement discussions. No valid purpose would be served here by misinterpreting 1152.5 to bar introduction of evidence regarding the settlement agreed to by the parties.” (Regents, supra, at p. 1213.)

Regents, supra, 42 Cal.App.4th 1209, concluded by stating that Justice Raye’s dissenting opinion in Ryan, supra, “properly recognized that evidence of oral statements defining the scope of a settlement agreement reached after mediation is admissible to enforce the settlement, since the Legislature’s enactment of section 1152.5 shields only statements made ‘in the course of’ mediation from admission in subsequent proceedings, and section 1152.5 does not affect the admissibility of evidence of an oral settlement which is reached after mediation has successfully concluded: ‘Once a compromise is reached the mediation process is over. An oral agreement cannot be crafted until after compromise has been reached. Therefore an oral statement of the terms of the agreement does not fall within [section] 1152.5.’ “ (Regents, supra, at p. 1213 (citing dis. opn. of Raye, J.).)

This split of authority was quickly addressed in 1997 when the Legislature repealed Section 1152.5 and replaced it with the comprehensive scheme now found in Evidence Code section 1115 et seq. (Stats. 1997, ch. 772, §§ 3, 5.)^[8]

With the enactment of Evidence Code section 1119, the present statutory scheme has continued, without substantial change, the provisions of Section 1152.5. However, the protections in Evidence Code section 1119 are more expansive. Evidence Code section 1119 “explicitly applies in a subsequent arbitration or administrative adjudication, as well as in any civil action or proceeding. . . . In addition, the protection of Section 1119(a) extends to oral communications made for the purpose of or pursuant to a mediation, not just oral communications made in the course of the mediation.

. . . [S]ubdivision (b) expressly encompasses any type of ‘writing’ as defined in Section 250, regardless of whether the representations are on paper or on some other medium.” (1997 Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (2006 supp.) foll. § 1119, p. 202.)

When the exceptions to Evidence Code section 1119 were drafted, Evidence Code sections 1124 and 1118 were crafted to set the standards for the admission in civil proceedings of oral agreements made in the course of, or pursuant to, a mediation. These and other statutes were expressly designed to codify Ryan, supra, and reject Regents, supra.

As the 1997 California Law Revision Commission comments to Evidence Code section 1124 state in part: “[Evidence Code, section] 1124 sets forth specific circumstances under which mediation confidentiality is inapplicable to an oral agreement reached through mediation. Except in those circumstances, Sections 1119 (mediation confidentiality) and 1124 codify the rule of Ryan[, supra,] 27 Cal.App.4th 1006 . . . (mediation confidentiality applies to oral statement of settlement terms), and reject the contrary approach of Regents[, supra,] 42 Cal.App.4th 1209 . . . (mediation confidentiality does not protect oral statement of settlement terms).

Subdivision (a) of Section 1124 facilitates enforcement of an oral agreement that is recorded and memorialized in writing in accordance with Section 1118.” (1997 Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (2006 supp.) foll. § 1124, p. 214.)

The Legislature has established by statute when a “mediation ends.” As relevant here, Evidence Code section 1125, subdivision (a)(2) provides that a mediation ends when “[a]n oral agreement that fully resolves the dispute is reached in accordance with [Evidence Code] Section 1118.” (See fn. 11.) The 1997 California Law Revision Commission comments to Evidence Code section 1125 state in part: “Subdivision (a)(2) applies where mediation participants fully resolve their dispute by an oral agreement that is recorded and memorialized in writing in accordance with Section 1118. The mediation is over upon completion of that procedure, and the confidentiality protections of this chapter do not apply to any later proceedings, such as attempts to further refine the content of the agreement. See Section 1124 (oral agreements reached through mediation) . . . .” (1997 Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (2006 supp.) foll. § 1125, p. 215.)

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^[1] “Mediation” is also defined in Code of Civil Procedure section 1775.1.

^[2] Evidence Code section 1122 reads:

“(a) A communication or a writing, as defined in Section 250, that is made or prepared for the purpose of, or in the course of, or pursuant to, a mediation or a mediation consultation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if either of the following conditions is satisfied:

“(1) All persons who conduct or otherwise participate in the mediation expressly agree in writing, or orally in accordance with Section 1118, to disclosure of the communication, document, or writing.

“(2) The communication, document, or writing was prepared by or on behalf of fewer than all the mediation participants, those participants expressly agree in writing, or orally in accordance with Section 1118, to its disclosure, and the communication, document, or writing does not disclose anything said or done or any admission made in the course of the mediation.

“(b) For purposes of subdivision (a), if the neutral person who conducts a mediation expressly agrees to disclosure, that agreement also binds any other person described in subdivision (b) of Section 1115.”

^[3] Evidence Code section 1123 reads:

“A written settlement agreement prepared in the course of, or pursuant to, a mediation, is not made inadmissible, or protected from disclosure, by provisions of this chapter if the agreement is signed by the settling parties and any of the following conditions are satisfied:

“(a) The agreement provides that it is admissible or subject to disclosure, or words to that effect.

“(b) The agreement provides that it is enforceable or binding or words to that effect.

“(c) All parties to the agreement expressly agree in writing, or orally in accordance with Section 1118, to its disclosure.

“(d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute.”

^[4] Evidence Code section 1126 reads: “Anything said, any admission made, or any writing that is inadmissible, protected from disclosure, and confidential under this chapter before a mediation ends, shall remain inadmissible, protected from disclosure, and confidential to the same extent after the mediation ends.”

^[5] Evidence Code section 1125 reads in part:

“(a) For purposes of confidentiality under this chapter, a mediation ends when any one of the following conditions is satisfied:

“(1) The parties execute a written settlement agreement that fully resolves the dispute.

“(2) An oral agreement that fully resolves the dispute is reached in accordance with Section 1118.

“. . .

“(c) This section does not preclude a party from ending a mediation without reaching an agreement. This section does not otherwise affect the extent to which a party may terminate a mediation.”

^[6] In responding to the requests for admissions served upon her, Dr. Ghaderi admitted (1) the genuineness of the written consent to settlement dated July 9, 2003; (2) the July 9, 2003, written consent to settlement signed by her could only be revoked by her in writing; and (3) the written consent for settlement dated July 9, 2003, was to remain in full force and effect until her written revocation was received by CAP-MPT. The trial court found a secondary basis for awarding judgment to plaintiffs based upon these admissions. Plaintiffs argue these responses constitute judicial admissions that prove the breach of contract cause of action. (Code Civ. Proc., § 2033.410 [matter admitted in response to request for admissions is conclusively established].) Assuming for purposes of discussion only, that the admission statements were admissible, they do not prove the terms of an enforceable oral contract. At the most, they would prove the content of the consent to settle.

^[7] Section 1152.5 was enacted in 1985. It was amended in 1992, 1993, 1994, and 1996. (Added by Stats. 1985, ch. 731, § 1. Amended by Stats. 1992, ch. 163, § 73, operative Jan. 1, 1994; Stats. 1993, ch. 219, § 77.7, Stats. 1993, ch. 1261, § 6; Stats. 1994, ch. 1269, § 8; Stats. 1996, ch. 174, § 1.)

^[8] Former Evidence Code section 1152.6 addressing the inadmissibility of mediator’s findings and statements was also repealed and replaced with Evidence Code section 1121. (Stats. 1997, ch. 772 , §§ 3, 6.)