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August 21, 2000
(A version of this article appears in the California Construction
Law Reporter, published by the West Group.)
By James E. Acret
Olam,
a 65-year-old woman, owned two homes that were in foreclosure
and lived in one of them. Represented by successive counsel,
she signed two work-out agreements that were also signed
by her counsel. She then filed suit in U.S. District Court
to enjoin the foreclosure, claiming that the work-out agreements
were signed under duress and that the arbitration clause
in the loan agreement was procured by fraud. Represented
by her fourth lawyer, Olam agreed to a court-sponsored mediation.
A mediation session ended at 1 a.m. when the parties and
their lawyers signed a memorandum of understanding that
included a provision that it was an enforceable agreement.
Seven months later, defendants filed a motion to enforce
the settlement agreement, which was opposed by Olam through
her fifth attorney. Opposition was on the ground that she
was subjected to undue influence and signed when she was
in physical and emotional distress. Both parties waived
any "mediation privilege," and Olam also waived
any attorney-client privilege. The court determined that
the privilege issues were to be resolved under California
law.
Evidence
Code §703.5:
No
person presiding at any judicial or quasi-judicial proceeding,
and no arbitrator or mediator, shall be competent to testify,
in any subsequent civil proceeding, as to any statement,
conduct, decision, or ruling, occurring at or in conjunction
with the prior proceeding, except as to a statement or
conduct that should [give rise to contempt, constitute
a crime, trigger investigation by the State Bar or the
Commission on Judicial Performance, or give rise to disqualification
proceedings.]
Evidence
Code §1119:
(a)
No evidence of anything said or any admission made…
in the course of, or pursuant to, a mediation… is
admissible or subject to discovery, and disclosure of
the evidence shall not be compelled, in any… noncriminal
proceeding.… (b) No writing… prepared in the
course of, or pursuant to, a mediation… is admissible
or subject to discovery, and disclosure of the writing
shall not be compelled in any… noncriminal proceeding.…
(c) All communications… by and between participants
in the course of a mediation… shall remain confidential.
Evidence
Code §1123:
A
written settlement agreement prepared in the course of,
or pursuant to, a mediation, is not made inadmissible,
or protected from disclosure… if the agreement is
signed by the settling parties and… (b) The agreement
provides that it is enforceable or binding or words to
that effect.
No
party contended that the memorandum of understanding was
inadmissible, but nevertheless the court proceeded on the
assumption that the mediator was asserting the mediator's
privilege and formally objected to being required to testify
about anything said or done during the mediation.
HELD:
The mediator was ordered to testify, and the settlement
agreement was ordered enforced. Olam v. Congress Mortgage
Co., 68 F.Supp.2d 1110 (N.D. Cal. 1999). Here, both
parties requested that the mediator be compelled to testify,
and the mediator's evidence was necessary to determine the
credibility of Olam's testimony. The testimony of the mediator
was essential to doing justice. Olam's testimony that she
did not participate in negotiations or discussions and that
she did not understand the agreement was flatly contradicted
by mediator's testimony.
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