Let us suppose a hypothetical: you are given notice of the date and time of a court ordered mediation but choose not to attend. Those who do attend reach an agreement and sign a settlement agreement. Is that agreement binding on you although you did not attend the mediation?
While many of you may answer, “No”, a recent California appellate court answered “Yes.”
In Breslin v Breslin et al , Case No. 2d Civ. No.B301383 (Ventura County Superior Court Case No. 56-2018-0052839-PR-TR-OXN ) (January 26, 2021), Division Six of the Second Appellate District held that “…[a] party receiving notice who fails to participate in a court-ordered mediation is bound by the result.” (Id. at 2.)
The case arose out of the probate of the estate of Don Kirchner who died in 2018 leaving an estate valued at between $3–$4 million contained in a living trust. It seems that as part of the trust, Breslin listed 24 charities to which he wished to donate part of his estate. (Id.)
As part of the probate proceedings, the court ordered both the intestate heirs and the listed charities to attend mediation. One of the charities did send a notice to all the charities listing the date and time of the mediation and advising that the mediation may result in an agreement on how to distribute the assets of the estate and that those parties receiving such notice who decide not to attend may be bound by the terms on any such agreement reached at mediation. (Id. at 2-3.)
Only five of the listed charities and the intestate heirs attended the mediation. The remaining charities (aka “Pacific parties”) did not attend. A settlement was reached awarding specific amounts to the appearing charities with attorneys’ fees and costs being awarded as well. The remainder of the estate was given to the intestate heirs. The non-appearing charities aka Pacific parties were excluded from the agreement. (Id. at 4.)
The settlement agreement was confirmed by the probate court over the objection of the Pacific parties. So, they appealed. (Id.)
The appellate court affirmed. First, it concluded that the Pacific parties waived their right to an evidentiary hearing in the probate court by failing to appear at the mediation. (Id. at 5.). Second, the appellate court rejected their contention that the Trustee of the estate had failed to act impartially with all the beneficiaries as required by the Probate Code, noting that all of the beneficiaries did receive notice of the mediation and it was the Pacific parties’ choice not to participate. It was not the fault of the Trustee that they did not attend. (Id. at 6.)
The appellate court also rejected the contention that the Trustee breached his fiduciary duty by approving large gifts to the intestate heirs including himself. The court noted that all of the parties attending the mediation agreed to this, including the five charities; it was not solely the trustee’s decision. (Id. at 7.)
The Pacific parties also argued that they should have been apprised of the potential settlement agreement before it was signed so that they could suddenly take part by objecting. The short response of the court was that to go through a mediation, reach a settlement but hold up finalizing it so that those not appearing could object “… would have made the mediation a waste of time, money and effort.” (Id. at 7.)
Finally, the Pacific parties argued that the agreement should be set aside for extrinsic fraud on the basis that one of the other charities had urged the court to determine the identities of the beneficiaries. In fact, that charity had made no such request. The appellate court rejected this contention.
In sum, the appellate court affirmed the judgement: those given notice of a court-ordered mediation but deciding not to attend will be bound by any settlement agreement reached during that mediation.
The takeaway is easy to figure out: when invited to a mediation to be attended by several others, it is wise not to decline as you may be bound by what the others agree to in your absence. While this case did involve a court ordered mediation, its holding may well apply to privately scheduled mediations as well. It may be a risk not worth taking.
… Just something to think about.
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