“PARTY” … Like it is 1999

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Are you trying to resolve a few claims before the end of the year?  If so, then please take a simple step to help keep a Grinch from stealing your settlement.

Just last week, the Court of Appeals issued an opinion that serves as a reminder that COVID-19 has not changed everything about the way that we handle workers’ compensation claims in North Carolina.   Although MITCHELL V. BOSWELL, __ N.C. App. __ (11/03/2020) does not involve a workers’ compensation claim, it is probably binding precedent with respect to the mediated settlement of a workers’ compensation claim.

In MITCHELL, the two adverse parties participated in a mediated settlement conference that had been ordered by the Superior Court.  Neither party was physically in North Carolina during the course of the mediation, so it appears that the parties agreed to waive the requirement that they physically attend the mediation. Instead, their attorneys and the mediator attended the mediation, in person, and at its conclusion, each of the party’s attorney’s signed a mediated settlement agreement “o/b/o” their respective clients.  The Court of Appeals suggested (without deciding) that the parties had entered into a settlement.  And, the facts also tended to show that the parties expressly authorized their respective attorneys to sign the mediated settlement agreement for them, and that the parties each told the mediator that this is what they intended to do.  

Subsequently, one party would not perform its contractual obligations set out in the mediated settlement agreement, and the other party moved to enforce the mediated settlement agreement. The Superior Court entered an order enforcing the settlement, but on appeal. The Court of Appeals reversed. The Court of Appeals held that the mediated settlement agreement under review was not enforceable.  Why?  Because the express terms of N.C. Gen. Stat. § 7A-38.1(1) require mediated settlements to be “reduced to writing and signed by the parties against whom enforcement is sought.” The Court of Appeals explicitly held that “’party’ does not include an attorney.”  Because the mediated settlement agreement did not meet the specific criteria for an enforceable settlement negotiated at court ordered mediation, the Court of Appeals held that, even if the parties had agreed to a settlement, then they still failed to sign it, rendering it unenforceable. 

The Rules for Mediated Settlement and Neutral Evaluation Conferences of the North Carolina Industrial Commission include language that is substantially similar to the language referenced in MITCHELL.  Rule 103(g) states, in pertinent part, as follows:  “No settlement agreement to resolve any or all issues reached at the settlement conference  … shall be enforceable unless the settlement agreement has been reduced to writing and signed by the parties.”  With the heading Finalizing Agreement, Rule 104(e) reiterates, and adds to Rule 103, requiring that the parties “reduce the agreement to writing, specifying all terms of the agreement that bear on the resolution of the dispute before the Commission, and shall sign the agreement along with their counsel.”    

However, Rule 104(e) also includes an accommodation that appears to be specific to workers’ compensation mediations, and that may be a trap for the unwary.   It provides that “Execution by counsel of a mediated settlement agreement for an employer or carrier who does not physically attend the mediated settlement conference shall be deemed to be in compliance with this Rule .” So, in practice, Rule 104(a) allows defense attorneys to sign off on mediated settlement agreements for their clients, and in doing so, to bind their clients.  But, the opposite is not necessarily true.  A plaintiff’s attorney’s signature probably is not sufficient to bind a plaintiff who does not sign the mediated settlement agreement himself/herself.   Although Rule 104 has been temporarily modified to relax attendance requirements, the provisions in Rules 103 and 104 that requires signatures have not been changed.   This is consistent with the North Carolina Industrial Commission’s more general published policy that allows it to accept the electronic signatures of a plaintiff (via DocuSign) on compromise settlement agreements and on North Carolina Industrial Commission forms, but which specifically states that an attorney is not permitted to sign these documents on behalf of his/her plaintiff/client.  The MITCHELL court did not specifically rule on the issue, so it is still up for debate as to what action a plaintiff must take, in order to “sign” a mediated settlement agreement.

All stakeholders in North Carolina’s workers’ compensation system have had to come up with different ways of doing business, since COVID-19 prevents us from doing business as usual. But, to be legally effective, all of our accommodations, flexibility, and work-arounds still have to comply with the law. So, if you want a binding settlement, then you have to think back to a time that seems so long ago, when every participant in a mediation would actually show up to the same place, put his/her signature on a common piece of paper, and maybe even use the same pen as the other participants.  All of this would be done with the mediator standing within 6 feet of the parties and their attorneys.   

The lesson here:  Even though it is 2020, treat your adverse “party” like it is 1999, and get that party’s signature on your mediated settlement agreement.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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