Case Summary: Reese v. Tingey Construction v. LWP Claims Solutions, Inc., 2008 UT 7

Issue: The Supreme Court of Utah addressed the issue of whether Utah's Alternative Dispute Resolution Act (ADRA) requires that discussions among participants in a mediation relating to an alleged oral agreement be kept confidential, and whether Utah law requires agreements reached in mediation to be reduced to writing in order to be enforceable by a court.

Rule: The Court held that the content of mediation was confidential, and that mediation agreements must be reduced to writing in order to be enforceable by a court.

Facts: On May 24, 2000, Murlyn Craig Reese suffered significant leg injuries while working for a subcontractor for Tingey Construction. Tingey's workers compensation insurance carrier provided coverage for the medical expenses. In 2003, the insurance carrier went into bankruptcy, and the Utah Property and Casualty Insurance Guaranty Association (UPCIGA) assumed financial responsibility for Reese's medical expenses and engaged LWP to make payments for Reese's medical expenses using UPCIGA funds. [1]

In May of 2004, Reese filed a lawsuit against Tingey, alleging that he would not have been injured but for Tingey's negligence in constructing the railing Reese had been leaning against when he fell. Reese and Tingey voluntarily agreed to settle their dispute through mediation. During the mediation, LWP acted as an agent for UPCIGA, who had a subrogation interest in any proceeds. Reese claims he and LWP made an oral agreement to settle, and that he relied on that agreement in reaching agreement with Tingey. The mediator incorporated the terms of both settlements into a Memorandum of Understanding, but LWP refused to sign it because it claimed the Memorandum included a term to which it did not agree. [2]

Reese and Tingey jointly moved to enforce the settlement. LWP argued that no agreement had been made, and that Utah's ADRA prohibited Reese from revealing confidential mediation communications. The trial court found that the alleged agreement between Reese and LWP was non-confidential information since it dealt mainly with the process of mediation, and it ordered Grace Acosta, LWP's mediation counsel, to appear and be deposed regarding the content of the mediation. In response, LWP filed a petition for discretionary interlocutory appeal with the Supreme Court of Utah, seeking to preserve the confidentiality of the mediation and to prevent Acosta from being deposed. [3]

Discussion: The court begins by noting that participants to mediation are entitled to the benefits of the laws governing mediation, which direct that mediation proceedings are designed to encourage informal and confidential exchange among the persons present to facilitate resolution of the dispute. [4]

Certain statutory exceptions to the general rule of mediation confidentiality do exist, including situations where the parties agree to disclose information obtained during the mediation, or where a signed written agreement is filed with a court and enforced as a judgment of the court, or in cases involving child abuse or neglect, or fraud or duress. [5]

The court discusses the holding of the trial court, that because the alleged agreement was part of the process of mediation and was thus nonconfidential, and states that if "nonconfidential portions of mediation include the content, process, conversations, and agreements of the mediation, it is hard to see what portion of the mediation would remain confidential. Furthermore…permitting courts to undertake the kind of after-the-fact sorting exercise…could jeopardize mediation participants' willingness to freely engage in settlement-inducing dialogue, thus undermining a primary requirement of successful mediation." [6]

Utah's ADRA prohibits any person attending an ADR proceeding to disclose any information in the course of the proceeding unless all parties and the mediator agree otherwise. Under this rule, LWP would have to consent to Acosta's disclosure of information obtained during the mediation, including information pertaining to the alleged existence of an oral agreement. [7] For these reasons, the Supreme Court of Utah vacates the trial court's order requiring Acosta to appear and be deposed regarding the content of the mediation.

The court next turns to the issue of whether agreements reached in mediation must be reduced to writing to be enforceable by a court. The language of Utah's ADRA says that any settlement "may" by executed in writing and filed with the court, but that only agreements executed in writing will be enforceable as a judgment of the court. A court could not enforce the terms of an oral agreement without requiring disclosure of confidential mediation communications. Absent a statutory exception, the court states that it will not invade the confidentiality protections afforded to mediation participants in this manner. [8]

The court notes that the National Conference of Commissioners on Uniform State Laws explained in a comment to the Uniform Mediation Act that oral agreements were intentionally not included as an exception to the confidentiality rules, because an exception for oral agreements has the potential to swallow the entire rule of privilege. [9]

Requiring the parties to reduce their agreement to writing also encourages them to prepare a comprehensive, final settlement agreement "free from misunderstandings and ambiguities." [10] This makes it more likely that mediation will lead to clear resolutions, not further uncertainty and conflict. [11]

While traditional contract law would permit the enforcement of oral agreements in certain circumstances, the Supreme Court of Utah suggests that this is not an appropriate role for courts to play when the putative agreement was reached in the context of a mediation. [12] Therefore, the court holds that Utah law requires agreements reached in mediation to be reduced to a writing and signed by all parties to the agreement in order for the agreement to be enforceable by a court.

[1] See Reese v. Tingey Construction v. LWP Claims Solutions, Inc., 2008 Utah 7, at 2-3.

[2] See id. at 4.

[3] See id. at 5.

[4] Id. at 7-8.

[5] See Reese, supra note 1 at 9.

[6] Id. at 10.

[7] See id. at 11.

[8] See id. at 12.

[9] Id.

[10] Reese, supra note 1 at 13.

[11] See id.

[12] See id. at 14.