Date: 04-08-2002

Case Style: David Riner, et al. v. H. William Newbaugh, et al.

Case Number: 30087

Judge: Albright

Court: West Virginia Court of Appeals

Plaintiff's Attorney: Richard G. Gay and Nathan P. Cochran of the Law Office of Richard G. Gay, Berkeley Springs, West Virginia, Attorneys for the Appellants

Defendant's Attorney: William Richard McCune, Jr. and Michelle D. Baldwin of the Law Office of William Richard McCune, Martinsburg, West Virginia, Attorneys for the Appellees, H. William Newbraugh; Newbraugh, Development Company, Inc., and Newbraugh's Lumber & Building Supply, Inc.

Roger Schlossberg of Schlossberg & Associates, Hagerstown, Maryland, Attorney for the Appellee, Dan Ryan Builders, Inc.

Description: Mr. and Mrs. Riner appeal from the March 16, 2001, order of the Circuit Court of Berkeley, denying their motion to alter or amend the judgment entered on February 13, 2001, that pertains to enforcement of a settlement agreement that was reached as a result of a court-ordered mediation. While the Riners signed the Mediation Settlement Agreement, which was prepared by mediator Patrick Henry, (See footnote 1) the Appellees did not sign that document. The Appellees' counsel prepared and submitted a separate document to the Riners for signature, which was entitled “Settlement Agreement and Release.” In its order of February 13, 2001, the trial court directed the Riners to sign the settlement document prepared by the Appellees' counsel. Upon our review of this matter, we conclude that the trial court committed error by requiring the Riners to sign an agreement that differed in substance from the agreement reached as the result of the mediation conference. Accordingly, we reverse and remand this matter for trial, barring further and successful settlement results.

I. Factual and Procedural Background

Beginning in 1997, the Riners entered into several agreements with the Appellee builder/developers in connection with developing certain farm land owned by the Riners into a subdivision known as Harlan Run. When a dispute arose between the Riners and the Appellees regarding the apportionment of expenses and disbursement of funds relative to Harlan Run, the Riners filed a civil action in the circuit court in which they alleged fraud and breach of fiduciary duty.

On August 14, 2000, the parties participated in an unsuccessful court-ordered mediation conference. Due to the continuing efforts of the mediator and the parties, however, an agreement was reached via the telephone on August 31, 2000. The mediator reduced that agreement to writing and both he and the Riners signed the Mediation Settlement Agreement on September 5, 2000. Although the two-page agreement was immediately transmitted to the Appellees, they chose not to sign that document. The Appellees' counsel prepared a lengthier document that restated certain provisions of the Mediation Settlement Agreement, included other provisions not specifically addressed at the mediation conference, and provided for the mutual release of both existing and future claims related to the Harlan Run venture.

When the Riners refused to sign the separate document prepared by the Appellees_the “Settlement Agreement and Release”_the Appellees filed a motion to enforce the settlement agreement. (See footnote 2) Two hearings were held on the issue of whether the settlement agreement could be enforced at which testimony was offered by former counsel for the Riners, (See footnote 3) the Appellees' counsel, Mr. Riner, and the mediator. By order dated February 13, 2000, the circuit court ruled that it could “find no substantive area of disagreement or misunderstanding that was not resolved by the [mediation settlement] Agreement, which appears to the Court to be a valid, fair and enforceable settlement agreement.” The lower court, in granting the Appellees' motion to enforce the settlement agreement, ordered that the Riners were to execute the “Settlement Agreement and Release” prepared by the Appellees, and further directed that the parties were to be bound by the terms of such document.

The Riners sought relief from the lower court, but by order entered on March 16, 2001, the circuit court denied their motion to alter or amend the February 13, 2001, judgment. It is from that decision that the Riners now appeal.

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In asking this Court to set aside the lower court's ruling, the Riners argue that the agreement cannot be enforced under the provisions of West Virginia Trial Court Rule 25.14 (hereinafter “Rule” or “Trial Court Rule”). That Rule, which addresses the enforceability of a settlement agreement reached through court-ordered mediation, provides that: “If the parties reach a settlement and execute a written agreement, the agreement is enforceable in the same manner as any other written contract.” The Riners contend that since the Appellees never signed the Mediation Settlement Agreement, Trial Court Rule 25.14 prevents the agreement from being enforced.

The Riners, in this Court's opinion, read Trial Court Rule 25.14 far too narrowly. Contrary to their contention, we do not believe that Rule 25.14 was intended to prevent the enforcement of settlement agreements reached through mediation that have not been reduced to writing and signed by all the parties. Instead, the Rule extends to the parties to a settlement agreement reached and signed (See footnote 4) following court-ordered mediation the availability of remedies routinely available for the enforcement of contracts without the correspondent duty of demonstrating the elements of a valid contract. The Rule does not, however, state, or even suggest, that only those settlement agreements that have been reduced to writing following court-ordered mediation and signed by all the parties are subject to enforcement. Thus, in providing for the enforceability of settlement agreements that are reached and signed in a court-ordered mediation conference, West Virginia Trial Court Rule 25.14 does not provide the exclusive means for the enforcement of such settlement agreements. See also U.S. ex rel. McDermitt, Inc. v. Centex-Simpson Constr. Co., 34 F.Supp.2d 397, 399 (N.D. W.Va. 1999) (recognizing that “settlement agreement made in open court . . . is a valid, enforceable agreement and need not be reduced to writing”), aff'd, 203 F.3d 824 (4th Cir. 2000); see generally 15A Am.Jur.2d Compromise and Settlement § 16 at 737 (2000) (recognizing that “no particular form of agreement and no writing is ordinarily essential to a valid compromise”).

In those instances where a settlement agreement was reached but not signed by the parties, the agreement may still be enforced provided the parties produce sufficient evidence concerning the attainment of an agreement and the mutually agreed upon terms of the agreement. See Few v. Hammack Enters., Inc., 511 S.E.2d 665, 669-70 (N.C. App. 1999) (recognizing that trial court can determine enforceability of settlement agreement where one party refuses to sign Mediation Settlement Agreement by hearing evidence regarding the agreement and its terms). Accordingly, we hold that a settlement agreement reached during, or as the result of court-ordered mediation, (See footnote 5) which does not fully comply with West Virginia Trial Court Rule 25.14, may be enforced by the circuit court where (1) the parties to the mediation reached an agreement; (2) a memorandum of that agreement was prepared by the mediator, or at his direction, incident to the agreement; (3) the circuit court finds, after a properly noticed hearing, that the agreement was reached by the parties free of coercion, mistake, or other unlawful conduct; and (4) the circuit court makes findings of fact and conclusions of law sufficient to enable appellate review of an order enforcing the agreement.

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While the result may not be quite as dire as the Riners suggest in arguing that an “in terrorem” effect will surround the mediation process if we affirm the trial court, we do recognize that the mediation process will only work where the parties are ensured that the process is fair to both sides and where the attainment of settlement is viewed as non- compulsory. See W.Va. T.C.R. 25.11 (stating that “[n]o party may be compelled by these rules, the court, or the mediator to settle a case involuntarily or against the party's own judgment or interest”). Upon the facts of this case, public policy clearly does not compel the enforcement of the “Settlement Agreement and Release,” given that document's inclusion of terms that differ in substance from those set forth in the Mediation Settlement Agreement.

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Click the case caption above for the full text of the Court's opinion.

Outcome: Based on the foregoing, the decision of the Circuit Court of Berkeley County is hereby reversed and this matter is remanded for further proceedings.

Plaintiff's Experts: Unavailable

Defendant's Experts: Unavailable

Comments: None