“When Mediating in Colorado [or Elsewhere], Sign a Settlement Memorandum During the Mediation”

Daniel E. Evans and Colleen M. Kwiatkowski of Gordon & Rees have authored this article, available at Lexology, discussing the Colorado Court of Appeals decision in Tuscany Custom Homes, LLC v. John B. Westover, et al., No. 2020CA1724, in which they explain that the court “held that post-mediation communications from a mediator memorializing the parties’ agreement reached during mediation (but not executed by the parties) and an unsigned settlement agreement formalizing those settlement terms were ‘mediation communications’ under Colorado’s dispute resolution statute … and thus inadmissible evidence of a settlement agreement.” The explain that the court’s decision “serves as a cautionary tale to those engaged in mediation that the extra effort to solidify the parties’ agreements before ending the day is the safest bet.”

This cautionary tale carries with it an additional gloss dating to a 2001 Connecticut decision in Sharon Motor Lodge, Inc. v. Tai, No. CV 98 0077828 S (Dec. 3, 2001), in which a trial court ordered the mediator to answer interrogatories as to whether and, if so, on what terms did parties reach a settlement agreement during the mediation.

The Tuscany Motor Homes and Sharon Motor Lodge decisions, collectively, suggest the importance of counsel for the parties–not the mediator–documenting settlement terms reached before the parties leave the mediation. Even if the term sheet needs to be further formalized into a full blown settlement agreement, the term sheet will substantially eliminate the risk of controversy. And, by the parties themselves–not the mediator–preparing and signing off on the document, it eliminates the risk that the mediator will be called to provide written or oral testimony as to what transpired.

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