Mediations, like so many things in the world right now, are being conducted via Zoom and other web-based platforms. A recent Court of Appeals decision should give pause to anyone participating in a mediation conducted remotely. The decision in Mitchell v. Boswell deals with whether a settlement agreement signed on behalf of a party by that party’s attorney, is enforceable. The Court of Appeals concluded, based upon the language of N.C. Gen. Stat. § 7A-38.1(1), that such a settlement agreement is not enforceable.

N.C. Gen. Stat. § 7A-38.1(1) provides in pertinent part:

“No settlement agreement to resolve any or all issues reached at the proceeding conducted under this subsection or during its recesses shall be enforceable unless it has been reduced to writing and signed by the parties against whom enforcement is sought.”

The court reasoned based upon the language of this statute that since the attorney who signed the settlement agreement on behalf of their clients was not the “… parties against whom enforcement is sought…” that the agreement was void under the statute of frauds as a matter of law.

Mitchell argued in his brief to the Court of Appeals that since Mediated Settlement Conference Rule 4(A)(2)(a) allows participation without physical attendance but does not present a procedure for a non-attending party to sign, that N.C. Gen. Stat. § 7A-38.1(1) should be read to allow for authorized persons to enter into settlement agreements on behalf of the non-attending party. The Court disagreed with this.

The practical implication of this decision in the era of Zoom mediations is that the party needs to sign the mediated settlement agreement and then figure out how to get that signature to the mediator and the opposing side. With some parties this will likely be as simple as printing, signing, scanning, and emailing the document. Things become more complicated when lawyers and their clients are not physically in the same space at the time of mediation, and a party does not have the ability to print a document and scan it back. Here, it is likely the responsibility of the lawyer to print and mail a copy to their client to be signed and returned. The question becomes, what is the status of settlement while the parties are waiting on the mail? I believe that Mitchell and the rules and statutes discussed therein would suggest that during that window of time, a settlement has actually not been reached.

It is likely a good idea for the parties to include in mediated settlement agreements language that the agreement may be executed in counterparts, and that wet ink originals are not necessary in order for the agreement to be binding. Additionally, if safe and practical, it is likely a good idea for a lawyer and their client to attend a virtual mediation together at the lawyer’s office under proper social distancing guidelines.

Both during the COVID-19 pandemic and after the pandemic is over, it is important to take steps to make sure that your settlement agreements are enforceable. As is evidenced by Mitchell, procedural issues stand to possibly void settlements. Having a lawyer in your corner who understands how to ensure your settlement agreement is binding is critical. The lawyers at Vann Attorneys would be glad to discuss not only how to obtain a favorable settlement for your particular matter, but also how to be sure that once an agreement is reached, that agreement will be enforceable.