More and more courts and judges are favoring the idea of mediation for purposes of settling disputes. Commonly in family law matters, and personal injury litigation, judge’s order that the parties attend mediation, and attempt to reach a settlement, before the judge will set a final hearing. Mediation falls into the category of “Alternative Dispute Resolution,” which is exactly as the name says, an alternative, other than through the court system, to resolving a dispute between persons and/or business entities.
Currently, our court system is overwhelmed with cases, and simply does not have the funds and resources to conduct full trials on each and every case that is filed. Judges are looking towards alternative means of settling disputes as a means to help minimize judicial resources and costs. While the courts may see the benefits of parties attending mediation as a means to control costs and resources in the court system, mediation is also a benefit to the parties.
If the parties are able to reach a settlement agreement at mediation, the agreement is submitted to the court for approval, and the court will not have to expend resources, such as a judge, courtroom use, and court staff, to conduct a trial. The parties have the opportunity to pick and chose which issues are most important to them, and maintain some control of the outcome.
A mediator serves as a neutral third party to help guide the parties through the negotiating process by considering each parties’ and providing insight into how a court may rule on a particular issue. The parties may settle all issues of a case through mediation, or may settle some. For example: in a divorce case where both property and child custody are an issue, the parties may make a settlement agreement as to property, but fail to reach an agreement as to child custody. The provisions of a settlement agreement, that both sides sign and submit to the court, is a binding contract, which can be enforced through the concepts of contract law (with the exception being child custody and child support, which are modifiable given certain circumstances).
If the parties, after a good faith effort, cannot reach a settlement agreement, they may go to court and request a hearing and/or trial.
While mediation has many benefits, and often the benefits outweigh the risks, there is one important drawback that one must consider before signing a settlement agreement. Because mediation is essentially a negotiation, and a settlement agreement is a contract, there are certain rules of confidentiality for mediation sessions1. These rules are in place to promote the use of mediation. If mediation fails and no agreement is reached, it would not be fair for to present statements made during the mediation session in court at trial. For example: if in good faith, someone makes a settlement offer, simply for the purpose of closing out the dispute, but does not admit guilt or wrongdoing, it would be unfair for the offer to be used at trial as inferential proof of guilt. Additionally, if a settlement agreement is reached, it would be equally unfair for the other side, years later, to attempt to change the settlement agreement / contract based on extrinsic evidence (evidence not contained in the settlement agreement itself) to modify the agreement. A recent Indiana Supreme Court cause decided this very issue.
In Horner v. Carter2, the parties were divorced in 2005. The parties had mediated a settlement agreement whereby Husband would make a monthly housing payment for Wife’s housing as spousal support. The parties submitted the agreement to the trial court, which approved, and signed an Order for dissolution of marriage, incorporating the terms of the parties’ mediated settlement agreement.
In 2011, Husband petitioned the court to modify the settlement agreement as it related to the provision for spousal support. By 2011 Wife had remarried, and Husband, in his petition to modify, stated that his intention when mediating was that when Wife did remarry, he would not be obligated to continue providing financial support. However, the settlement agreement did not contain language that indicated this was Husband’s intention. Husband sought to testify as to his own statements, that he made to the mediator, as evidence of his intent. The trial court excluded Husband’s purported testimony as to his statements to the mediator on the grounds that the mediation session was confidential. Thus, the trial court denied husband’s motion to modify the settlement agreement. The Indiana Supreme Court agreed.
We hope that this blog post has provided you with some insight into the mediation process as an alternative to litigation. Ciyou & Dixon, P.C. practices throughout the state of Indiana. This blog post was written by attorney, Lori B. Schmeltzer.