Sanctionable Actions in Mediation

By: Donald L Swanson

Every now and then we get a picture of actions in mediation that result in sanctions. Studying such a picture can be helpful to us all—by illustrating the types of actions to be avoided.

Here is one such picture from the legal opinion of Vittiglio v. Vittiglio, 297 Mic.App. 391, 824 N.W.2d 591 (2012).

What happened

It’s a divorce case.  The parties reach a mediated settlement agreement.

After reaching the mediated agreement, but before judgment is entered, Plaintiff disavows the agreement, seeks to set it aside, and asks that the divorce case be dismissed.

The trial court denies Plaintiff’s requests and sanctions Plaintiff in the amount of $17,695 for Defendant’s attorneys fees. Plaintiff appeals, and the appellate court affirms.

Trial Court Developments

Here’s what happened at the trial court:

• the mediated settlement is intended to be a final resolution of all of issues between the parties, and it’s terms are memorialized by an audio recording;
• when Defendant seeks entry of a divorce judgment that includes the mediated settlement terms, Plaintiff refuses to sign; and
• the trial court, (i) enters a judgment of divorce that incorporates the settlement terms, and (ii) sanctions Plaintiff for “frivolous” action.

Appellate Court Responds to Appellant’s Arguments

Here’s the appellate court’s response to each of appellant’s arguments:

• A Michigan statute allows for memorializing terms of a settlement agreement by audio recording in “domestic relations” cases. Plaintiff’s argument that the divorce proceeding does not qualify as a “domestic relations” case is frivolous.
• Since the settlement involves interests in lands, it is subject to the statute of frauds, but the audio recording satisfies statute of frauds requirements.
• Once a settlement agreement is reached, a party cannot disavow it due to “a change of heart”: courts must uphold negotiated divorce settlements, whether in writing and signed by the parties or orally placed on the record and consented to by the parties.
• Plaintiff argues that no consent to the settlement actually occurred because, (1) Defendant had threatened Plaintiff’s life in the past, and Plaintiff has an extreme fear of Defendant, (2) the mediator told Plaintiff the settlement offer was greater than what Plaintiff would receive at a trial, and (3) Plaintiff felt “severely betrayed” because Plaintiff’s attorney negotiated a $50,000 payment for attorney fees.

The appellate court finds “no merit” to such arguments for these additional reasons:

• • the parties reached the settlement in a mediation, with counsel and a mediator present, using “shuttle diplomacy” in which the parties were not even in the same room, and Plaintiff never complained about being threatened into agreeing to the settlement;
  • the day after filing an affidavit relating the extreme fear of Defendant, Plaintiff moved to dismiss because of a wish to reconcile with Defendant;
  • as to Plaintiff’s claim that the mediator said the settlement is better than what Plaintiff could expect at a trial, (i) Defendant was not involved in any such communications, and (ii) “a certain amount of pressure to settle is fundamentally inherent in the mediation process,” which “is not, by itself, coercion”; and
  • Plaintiff felt betrayed by Defendant paying $50,000 directly to the attorney, because Plaintiff believed Defendant’s payment encouraged Plaintiff’s attorney to coerce Plaintiff to settle. However, there is nothing unusual about such a provision, and Defendant was not involved in negotiating the attorney fees payment.

Plaintiff asserts that the consent to settlement was impaired by severe stress.  But to prove such a defense, Plaintiff needed to show a failure to comprehend the nature or terms of the settlement. Plaintiff did not prove any such thing; instead, Plaintiff affirmed (in the audio recording) that Plaintiff understood and agreed to the settlement terms and had no questions for the attorney or the mediator.

Plaintiff asserts that the sanctions order lacked due process and was substantively improper.  However:

• • Plaintiff received notice that sanctions were being sought, in Defendant’s motion for costs and attorney fees, Plaintiff answered Defendant’s motion, and Plaintiff extensively argued against Defendant’s motion at the motion hearing;
  • the trial court concluded, on the basis of Plaintiff’s arguments and pleadings, that Plaintiff’s motion to disavow the settlement agreement and motion to dismiss the divorce case had frivolous motives, and such determinations are supported by the evidence; and
  • the trial court found that Plaintiff, (i) had ” buyer’s remorse” and simply wanted “a do-over,” (ii) had no reasonable basis to believe that the facts underlying the legal positions were true, and (iii) filed motions for the purpose of delay to prevent the judgment of divorce from being entered—such motions were disingenuous and directed at harassing Defendant.

Sanctions Are Proper and Reasonable

The $17,695 award of sanctions against Plaintiff for Defendant’s attorney fees is proper and reasonable because, (i) Defendant provided an itemization of fees and expenses, with supporting documentation, (ii) the trial court conducted an evidentiary hearing where Plaintiff’s counsel questioned Defendant’s attorneys about their billing statements, and (iii) the trial court applied proper legal standards.

Conclusion

Don’t do that.

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