Dismissal Without Reserving Enforcement Rights May Limit Parties’ Recourse Under Rule 1.730
Counsel’s Signature and Failure to Reserve Enforcement Jurisdiction in a Mediated Settlement Agreement May Lead to Unintended Results
Kimberly Sands, a partner with Upchurch Watson White & Max, has been a civil litigator and has been involved with difficult and complex disputes as litigator or mediator for over 30 years. To schedule a mediation with Kimberly, please call her case manager, Cathy McCleary, at (800) 863-1462, or visit our online calendar.
In a case that just keeps coming back, like a nightmare or a bad penny -- depending on your perspective -- the Fourth District Court recently weighed in on two “settlement” related subjects that happen every day throughout Florida and elsewhere, without a thought for the potential consequences.
First, it reminds us what can happen when counsel signs a settlement agreement or release without clearly indicating his or her capacity or intent. Although not the subject of the opinion, Dandar v. Church of Scientology Flag Service Organization, No. 2D14-1511, Mar 2, 2016, results from a case in which plaintiff’s counsel became a party to a settlement agreement.
In 2004, Counsel signed a confidential settlement agreement on behalf of his client allegedly in his “individual capacity.” Counsel is also alleged to have pledged in the 2004 agreement “that he would not be involved in any adversarial proceedings against this defendant under any circumstances at any time.” The case was dismissed following settlement via a joint stipulation for dismissal with prejudice as to all related claims.
Five years later, Counsel filed suit against the same defendant on behalf of another plaintiff. The defendant successfully moved to enforce the 2004 agreement against Counsel in the dismissed 2004 action. The court also awarded the defendant attorney fees and costs in excess of $1 million based on breach of the terms of the settlement agreement described above.
Counsel appealed the trial court’s order enforcing the settlement agreement on the grounds that the court lacked jurisdiction. The Fourth District Court agreed, concluding that the filing of the voluntary dismissal divested the trial court of jurisdiction. The parties’ settlement agreement alone could not confer jurisdiction on the trial court. The Court reasoned that Florida Rule of Civil Procedure 1.420(a) allows for voluntary dismissals without court order. This divests the court of jurisdiction to proceed in the case in any manner. The Court relied on a general discussion of this Rule in Pino v. Bank of New York, 121 So.3rd 23, 32 (Fla 2013), et.al. The Court, however, distinguished cases in which the settlement agreement is submitted for approval by the court and the order of dismissal incorporates the agreement or the court reserves jurisdiction for enforcement purposes.
The history and subject matter of this dispute is so toxic that one may wonder about the dynamics that led to this result. However it evolved, the ruling conflicts with the expectations of some parties executing mediated settlement agreements under Florida’s Rules of Mediation.
Mediation Rule 1.730 (b), Florida Rules of Civil Procedure, provides that “if a partial or final agreement is reached it shall be reduced to writing and signed by the parties and their counsel, if any.” The Rule further provides:
[T]he agreement shall be filed when required by law or with the parties’ consent. A report of the agreement shall be submitted to the court or a stipulation of dismissal shall be filed. By stipulation of the parties, the agreement may be electronically or stenographically recorded. In such event, the transcript may be filed with the court. The mediator shall report the existence of the signed or transcribed agreement to the court without comment within 10 days thereof. No agreement under this rule shall be reported to the court except as provided herein.
Subsection (c) provides that [I]n the event of any breach or failure to perform under the agreement, the court upon motion may impose sanctions, including costs, attorneys’ fees, or other appropriate remedies including entry of judgment on the agreement.
The Rule thus requires a signature by counsel, a potentially hazardous undertaking if capacity and/or intent are not clear under the agreement. Also under Dandar, the settlement agreement must be submitted for approval by the court and the order of dismissal must incorporate the agreement or the court must reserve jurisdiction in the dismissal order to ensure that enforcement rights are preserved under Rule 1.730 (c).
In my experience, most mediated settlement agreements clearly identify the parties to the agreement. Since Rule 1.730 (b) requires a signature by counsel, I request a signature as counsel. Occasionally, issues arise in which a signature by counsel is requested with respect to specific terms under the agreement. To the extent that such terms are consistent with the interests of the client and not prohibited by the Code of Professional Conduct, counsel may agree. Rarely, however, do I see a mediated settlement agreement which reserves the jurisdiction of the court for enforcement purposes. It may be pro forma in the settlement documents which follow a mediated settlement agreement, but best practice may be to include the Dandar language in any settlement agreement in which dismissal is contemplated before the terms of a settlement agreement are fully performed. A party may still have recourse via an independent action, but without specification this involves at least another lawsuit and the possibility of trial by jury.
PRACTICE TIP: It is always a good idea to come to mediation with a list of required settlement terms. Anticipating all possible outcomes may not be practical, but for those terms that can be anticipated, having the desired language drafted and ready to incorporate into a settlement agreement will save time and reduce the possibility of error, oversight, misunderstanding, or unintended consequences.
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