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The Enforcement of Mediation Agreements
What are the pros and cons of mediation?
Mediation is all the rage in family court these days. However, in my professional opinion mediation is very over rated. There are basically several types of mediation. If you are getting divorced, and if you get to settle your case at the ESP, then the parties must engage in non-binding mediation. The court has a list of approved mediators. The lawyers have to pick a mediator. The mediator must provide the first two hours of time for free. Thereafter, the mediator charges an hourly rate that ranges from $175 to $450 per hour.
The second type of mediation generally involves divorcing spouses engaging a mediator to try to reach a mediation agreement before the complaint for divorce is ever filed. Thereafter, once a mediation agreement is reached, then one spouse must hire a lawyer and then file for divorce. The mediation agreement is then converted into a PSA, and the parties can put the case through as an uncontested divorce. It is important to emphasize that even if you obtain a mediation agreement, you will still have to hire a lawyer to file for divorce, and to have the mediation agreement ratified by the court.
Mediation is not as great as it sounds. Most mediators charge about $300 per hour or more. Moreover, once you obtain a mediation agreement, you will still have to hire a lawyer to file for divorce. In my professional opinion many mediators insert page and page of filler, boiler-plate verbiage into the mediation agreement. I had one case wherein the divorcing couple paid approximately $4,000 for the services of a mediator. The mediator prepared a 60 page mediation agreement that was essentially all boiler-plate nonsense. The parties had very little assets and a 10 to 15 page mediation agreement would have been just fine. The mediator must have charged the clients by the pound.
The bottom line is that mediation is not the “end all be all.” Moreover, keep in mind that cases get dragged out in the mediation process. Mediators like to get paid. Most mediators slow down or stop working on a case if their bills don’t get paid. Moreover, mediators don’t have the power of a judge. In my experience, many divorcing spouses play all sorts of games in the mediation process. A mediator simply does not instill the same sense of fear into a divorcing spouse as a judge does. My major gripe with the mediation process is that it often gets dragged out. If the parties stop paying the mediator’s bills then the case grinds to a half. Thereafter, once the parties scrape up some money to pay up the mediator’s bill, then the legal issues may have changed, and the richer spouse has had more time to hide or dissipate the marital assets.
I am now getting divorced from my wife. We are now in the mediation process. If we reach an oral mediation agreement is it legally enforceable?
Courts love it when the parties reach settlements. The family court system is designed to put through divorce settlements. Only about 2% of the filed divorce cases go to trial. The New Jersey court system is not adequately funded. There should be at least three times the amount of judges than are currently on the bench. Mediation basically was created to reduce the backlog of pending divorce cases. The State of New Jersey simply refuses to hire more judges to keep up with the increased divorce case load. In 1969, only 3% of married couples got divorced. Today, the divorce rate is easily more than 50%. To cope with the explosion of divorces, the court system created mediation and arbitration to keep up with the ever expanding amount of cases. The case load will only increase more now that gay marriage will be a reality very soon. Basically, the mediator and the arbitrator take the place of the judge. However, the mediators and the arbitrators get paid from $200 to $450 an hour. You don’t have to pay the judge.
It is very common for the parties to reach an oral or an informal mediation agreement during the process. There is a big push in the mediation process to always reach a settlement. Therefore, at many mediation sessions the divorcing spouses reach an informal/oral mediation settlement. Sometimes these informal settlement agreements are reduced to writing. Thereafter, the lawyers will more formally memorialize the agreement.
Once the parties reach an oral mediation agreement, it is not uncommon that one spouse will change his/her mind, and cancel the agreement. The crucial legal issue then ensues as to whether the oral mediation agreement is enforceable. In the majority of cases an oral mediation agreement is enforceable unless it is manifestly oppressive and unjust.
A very illustrative case is N.H. v. H.H., 418 N.J. Super. 262 (App. Div. 2011). Here, the court held that it's not an error for the court to enforce a mediated PSA without a hearing where plaintiff claimed: (a) there was inadequate disclosure, (b) she did not understand the impact of waiving pretrial discovery; (c) that the PSA wasn’t fair or reasonable and (d) that there was no formal valuation of the marital estate. The Appellate Division held that public policy favors enforcement of agreements. The court opined that you do not need full and broad discovery for an agreement to be fair. In this case, the wife voluntarily executed the agreement and agreed to limit the scope of discovery to a streamlined valuation which was allowable under Lerner v. Laufer, 359 N.J. Super. 201 (App. Div.), certif. denied, 177 N.J. 223 (2003).
In the N.H. case, the wife received $3.3 million in cash, $800,000 in clothing and jewelry, artwork, furniture and a substantial alimony award of $8,000 per month. Moreover, the wife also received a percentage of her husband’s bonus for 24 months, and thereafter $10,000 per month in alimony. The court held that this settlement was fair and equitable.
What are some other recent cases that favor enforcing a mediation agreement(s)?
Another important case is Willingboro Mall, Ltd. v. 240/242 Franklin Avenue, LLC, 421 N.J. Super. 445 (App. Div. 2011). The major issue was whether the court will enforce an oral settlement reached during a Rule 1:40-4 mediation if the agreement was not reduced in writing for three days after the mediation session. The court held that although an agreement reached in mediation must be in writing to be enforceable pursuant to Rule 1:40-4(I), the terms may be prepared shortly thereafter. Thus, the court enforced the oral mediation agreement.
In summary, whether an agreement reached through mediation is enforceable is decided on a case by case basis. However, there is a strong push to enforce oral or informal mediation agreements. At the end of the mediation, the lawyers for the divorcing spouses or the mediator will prepare an agreement that documents all the main issues that have been agreed to. Eventually, both parties will sign this mediation agreement and the case should be over. After the mediation agreement has been prepared and signed, in most cases, this agreement is converted into a property settlement agreement (PSA). The lawyers may draw up a more formal document that can be filed with a court in order to dismiss the case. Recently, many experienced lawyers have started to bring their lap top computers to the mediation so that they can prepare an agreement at the end of the mediation.
New Jersey is an equitable distribution state, meaning that the division of property in a divorce is to be done fairly, not necessarily equally. The court can take into consideration any factor it deems relevant when dividing property, but it must consider certain factors, such as how long the couple was married and the age and health of both spouses, the income or property brought to the marriage by each spouse, the standard of living that was achieved during the marriage, and the extent to which one spouse may have deferred career goals, among others.
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