Appellate Division Holds Settlement Reached at Voluntary Mediation Is Unenforceable in the Absence of a Signed Written Settlement Agreement
In Willingboro Mall, Ltd. v. 240/242 Franklin Avenue, LLC, a case decided 10 years ago, the New Jersey Supreme Court upheld the confirmation of an oral settlement agreement that was made at a court-ordered mediation session. The court announced, however, that “going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.” In a recent, to-be-published decision, the Appellate Division held that Willingboro’s “broad, bright-line rule” requiring a signed written settlement agreement extends to voluntary mediations, too. The new case, Gold Tree Spa, Inc. v. PD Nail Corp., involved a dispute over the plaintiffs’ sale of two nail salons to the defendants. After the plaintiffs filed suit, the parties voluntarily agreed to mediation, resulting in the mediator’s creation of a draft settlement agreement. Several hours after the mediation ended, one of the plaintiffs decided she did not want to settle and refused to sign the agreement. The defendants moved to enforce the settlement, and the plaintiffs responded that they would honor the settlement agreement only if certain contingencies regarding an assignment of the lease of one of the salons could be met. The defendants then contacted the mediator to finalize the settlement agreement and circulated the lease assignment and related documents. The plaintiffs raised issues...