Simmons v. Ghaderi (44 Cal. 4th 570, 2008)

Opinion

CHIN, J.

Evidence Code section 1115 et seq. sets forth an extensive statutory scheme protecting the confidentiality of mediation proceedings, with narrowly delineated exceptions. In this breach of contract action arising from a medical malpractice suit, plaintiffs sought to enforce an oral settlement agreement allegedly formed during mediation. During pretrial proceedings, the doctor stipulated to, and submitted evidence of, events which had occurred during mediation, arguing that no enforceable contract was formed during mediation. For the first time at trial, the doctor invoked the mediation confidentiality statutes to prevent plaintiffs from introducing evidence relating to the mediation proceedings. Over the doctor’s objection, the trial court admitted the evidence.

A majority of the Court of Appeal held that, despite the statutory confidentiality protections, the doctor was judicially estopped from arguing that evidence of the settlement agreement is statutorily inadmissible; she “placed before the trial court the facts of the mediation and sought a legal determination as to their effect.” We conclude that the Court of Appeal improperly relied on the doctrine of estoppel to create a judicial exception to the comprehensive statutory scheme of mediation confidentiality and that the evidence relating to the mediation proceedings should not have been admitted at trial.

I. Factual and Procedural History

On March 27, 2002, plaintiffs (the minor son and mother of Kintausha Clemmons) filed a wrongful death complaint against defendant Dr. Lida Ghaderi, alleging that her medical malpractice caused the death of Kintausha Clemmons. Cooperative of American Physicians, Inc./Mutual Protection Trust (CAP-MPT) was defendant’s medical malpractice insurance provider.

On July 9, 2003, the parties attended a mediation with the Honorable Robert T. Altman, retired. Plaintiffs and their counsel appeared. Defendant was present with a CAP-MPT claims specialist, the CAP-MPT attorney, and Cumis counsel. Under the provisions of her professional liability policy with CAP-MPT, defendant had the right to withhold her consent to the settlement of any third party malpractice claim. At the request of the mediator, before the beginning of settlement discussions, defendant executed a standard consent-to-settlement form provided by CAP-MPT. This document authorized CAP-MPT to negotiate a settlement on defendant’s behalf, with the settlement value limited to $125,000. The document also stated that defendant’s consent to settlement could only be revoked in writing and would remain in force until a written revocation was received by CAP-MPT at its offices.

The parties then engaged in settlement discussions while defendant waited in another room with Cumis counsel. At one point, CAP-MPT instructed Judge Altman to offer plaintiffs $125,000 to settle the matter in exchange for a dismissal with prejudice and a waiver of costs. Plaintiffs orally accepted the offer. Judge Altman then placed the essential terms of the settlement into a document for the parties to sign. When defendant was informed that the case had settled, she declared that she was revoking her consent and left the building without signing the settlement agreement. The claims specialist, unsure of how to proceed, contacted the CAP-MPT office and learned that CAP-MPT would consider defendant’s oral revocation of her consent valid. Plaintiffs and their counsel signed the settlement agreement, but no one signed on behalf of defendant or CAP-MPT.

The following day, plaintiffs’ attorney and CAP-MPT’s attorney appeared in court and sought guidance. Both counsel recounted the facts of the mediation to the court, including defendant’s written consent to settle for $125,000, the offer in that amount, the acceptance of the offer, and defendant’s departure while the settlement was being reduced to writing. The trial court speculated that there might be an enforceable oral settlement agreement. Accordingly, the trial court vacated the trial date and set the matter for an order to show cause why the case should not be dismissed.

On July 16, 2003, defendant sent CAP-MPT a letter formally revoking her consent to settle.

At the July 29, 2003, dismissal hearing, defendant spoke with the trial court. The court stated on the record that defendant was unwilling to consent to the settlement, but then suggested that plaintiffs move to enforce the settlement under Code of Civil Procedure section 664.6.

On August 15, 2003, plaintiffs moved to enforce the settlement on the ground that an oral agreement had been reached with CAP-MPT while CAP-MPT had defendant’s consent to settle the action. Plaintiffs supported their motion with a copy of defendant’s signed consent to settle, the written settlement agreement prepared by Judge Altman and signed only by plaintiffs and their counsel, and declarations from plaintiffs’ attorney and the mediator setting forth the events at the July 9 mediation.

In opposing plaintiffs’ motion to enforce, defendant did not dispute their factual representations regarding the mediation. Instead, arguing the legal effect of those facts, she claimed that the settlement could not be enforced because it did not meet the requirements of Code of Civil Procedure section 664.6. Defendant argued that no agreement had been consummated; she had not signed the written settlement agreement and had withdrawn her consent, and therefore CAP-MPT had no authority to execute a settlement agreement on her behalf. The trial court denied the motion to enforce settlement. It found that, because neither defendant nor CAP-MPT had signed the written agreement, the requirements of Code of Civil Procedure section 664.6 had not been met. However, it noted there might be an enforceable oral contract and suggested plaintiffs amend their complaint to allege breach of contract.

Following the trial court’s suggestion, plaintiffs amended their complaint to add a cause for breach of contract and alleged that defendant breached an oral settlement agreement reached during mediation. Plaintiffs served a request for admissions on defendant and deposed her. In response to this discovery and in her motion for summary adjudication of the breach of contract cause, defendant did not dispute the events that had occurred during the mediation. Indeed, in a declaration appended to her motion, defendant proffered that she had signed a written consent for CAP-MPT to settle, her counsel had made a $125,000 settlement offer to plaintiffs, and she had revoked her consent without executing the settlement agreement.

The trial court denied defendant’s motion for summary adjudication of the breach of contract cause of action and granted plaintiffs’ motion to sever the breach of contract and medical malpractice claims. The case proceeded to trial only on the breach of contract cause.

On October 6, 2004, nearly 15 months after the mediation, defendant filed her trial brief. For the first time, she asserted that the mediation confidentiality statutes precluded plaintiffs from proving the existence of an oral settlement agreement. Defendant’s trial brief raised no other issue.

At a bench trial, over defendant’s objection, plaintiffs submitted the following documents relating to the mediation: (1) the consent to settlement signed by defendant; (2) the settlement agreement prepared by Judge Altman; (3) defendant’s letter revoking her consent to settlement; (4) defendant’s deposition testimony; (5) the deposition testimony of the CAP-MPT claims specialist; and (6) a declaration from Judge Altman. The parties agreed to almost everything that had occurred at the mediation, except what the CAP-MPT claims specialist did once defendant had refused to sign the document. Over defendant’s objection, the CAP-MPT claims specialist testified about the events of the mediation.

The trial court concluded that plaintiffs and defendant’s agent, acting within his authority as evidenced by defendant’s signed consent agreement, had entered into a valid, enforceable oral contract before defendant withdrew her consent. It ordered specific performance of the agreement and entered judgment in favor of plaintiffs for $125,000, plus prejudgment interest.

In a two-to-one decision, the Court of Appeal affirmed the trial court’s judgment. The majority held that a valid oral agreement had been reached during mediation. It further held that, because defendant had presented evidence of the occurrences at the mediation and failed to object to plaintiffs’ use of these facts during pretrial motions, she was estopped from asserting mediation confidentiality. In his dissent, Justice Aldrich maintained that the mediation confidentiality statutes prevented plaintiffs from proving the existence of an oral settlement agreement, that the majority’s focus on estoppel was “a veiled attempt at relabeling waiver as estoppel,” and that a party cannot impliedly waive mediation confidentiality through litigation conduct.

We granted defendant’s petition for review to determine if she could be estopped from objecting to the admission of evidence proving the existence of an oral settlement agreement reached during mediation proceedings.

II. Discussion

Defendant contends that the Court of Appeal majority improperly relied on the doctrine of estoppel to create a judicial exception to the statutory requirements of confidentiality of mediation proceedings. (§ 1115 et seq.) As explained below, we agree.

1. The Mediation Confidentiality Statutes

In 1997, the Legislature adopted the California Law Revision Commission’s (Commission) recommendations and revised the mediation confidentiality statutes. (Fair v. Bakhtiari (2006) 40 Cal.4th 189, 194—196 [51 Cal.Rptr.3d 871, 147 P.3d 653] (Fair).) It enacted section 1115 et seq., creating an extensive statutory scheme governing mediation confidentiality and its exceptions. (Fair, supra, at pp. 194-196.)

“California’s Legislature has a strong policy favoring mediation as an alternative to litigation. Because mediation provides a simple, quick, and economical means of resolving disputes, and because it may also help reduce the court system’s backlog of cases, it is in the public interest to encourage its use. [Citation.]” (Doe 1 v. Superior Court (2005) 132 Cal.App.4th 1160, 1165 [34 Cal.Rptr.3d 248].) The Legislature designed the mediation confidentiality statutes to “promote ‘a candid and informal exchange regarding events in the past .... This frank exchange is achieved only if the participants know that what is said in the mediation will not be used to their detriment through later court proceedings and other adjudicatory processes.’ [Citations.]” (Foxgate Homeowners’ Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 14 [108 Cal.Rptr.2d 642, 25 P.3d 1117] (Foxgate).) “[Confidentiality is essential to effective mediation . . . .” (Ibid.)

Section 1119 governs the general admissibility of oral and written communications made during the mediation process. It “prohibits any person, mediator and participants alike, from revealing any written or oral communication made during mediation.” (Foxgate, supra, 26 Cal.4th at p. 13.) Section 1119, subdivision (a) states, in pertinent part, that: “Except as otherwise provided in this chapter: [