Title: Capano v. State
Citation: N/A
Docket Number: 177, 2003
State: Delaware
Issuer: Delaware Supreme Court
Date: September 25, 2003

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
JOSEPH L. CAPANO, II  
 
) 
 
 
 
 
 
 
)  No. 177, 2003 
 
 
Plaintiff Below, 
 
) 
 
 
Appellant,  
 
)  Court Below:  Chancery Court 
 
 
 
 
 
 
)  of the State of Delaware in and 
v. 
 
 
 
 
 
)  for New Castle County 
 
 
 
 
 
 
) 
STATE OF DELAWARE, ex rel., 
)  C.A. No. 19976 
M. JANE BRADY, ATTORNEY 
) 
GENERAL, STATE OF   
 
) 
DELAWARE, 
 
 
 
) 
 
 
 
 
 
 
) 
 
 
Defendant Below,  
) 
 
 
Appellee. 
 
 
) 
 
Submitted:  August 26, 2003 
Decided:  September 25,2003 
 
Before HOLLAND, BERGER and STEELE, Justices. 
 
O R D E R 
 
This  25th  day of September, 2003 upon consideration of the parties’ briefs, 
it appears to this Court that: 
1. 
Appellant, Joseph Capano, filed a complaint against the State in the 
Court of Chancery seeking enforcement of an arbitration agreement allegedly 
entered into during a failed Superior Court mediation.  The Assigned Vice 
Chancellor granted the State’s Motion to Dismiss. 
 
 
2
 
2. 
In 1999, the State filed a civil enforcement action in Superior Court 
against a number of entities and individuals, including Capano, alleging that the 
defendants violated various state consumer protection and deceptive trade laws.  In 
the summer of 2001, all of the parties in the Capano enforcement proceeding 
agreed to attempt mediation.  On September 18, 2001, the parties attended a 
mediation conference and appeared to reach an agreement.  The mediator 
presumed counsel would prepare a stipulation.  The parties dispute that an 
agreement ever existed and there is no written agreement signed by all parties.  
Capano presented a
 document that purported to be an agreement, although only 
Capano’s counsel signed it. 
 
3. 
On October 15, 2002, Capano filed a complaint under seal in the 
Court of Chancery seeking to compel arbitration under the Delaware Uniform 
Arbitration Act1 and common law contract theory.  The Vice Chancellor dismissed 
the action for several reasons.  First, the Vice Chancellor held that the substance of 
the alleged agreement is covered by a confidentiality provision that cannot be 
disclosed in a judicial proceeding.  Second, the Vice Chancellor concluded that the 
underlying matter is factually similar to Wilmington Hospitality v. New Castle 
County.2  There, the trial judge held that mediation under Court of Chancery Rule 
174 is best served by guaranteeing a confidential environment and enforcing an 
                                                 
1 10 Del. C. § 5701 et seq. 
2 788 A.2d 536 (Del. Ch.), interlocutory appeal ref’d, 781 A.2d 697 (2001). 
 
3
agreement to settle only when there is a writing that complies with subpart (g) of 
that rule.3  Finally, the Vice Chancellor applied this Court’s decision in 
MacDonald v. Hayman,4 which held that an agreement to arbitrate originating out 
of litigation is outside the scope of the Delaware Uniform Arbitration Act. 
4. 
The Vice Chancellor correctly decided this case.  Courts should not 
enforce a mediation agreement absent a written document signed by the parties and 
the mediator.  As the Vice Chancellor stated: 
 “ [the] candid disclosure that mediation seeks to encourage in an 
effort to resolve a legal dispute, would be chilled if this Court were to 
enforce partial agreements – agreements to resolve some of the dispute that 
have not reached a stage where a contract is actually signed.  If such 
agreements were enforced, the chilling effect would discourage the type of 
candid discussions that are necessary in order for a mediation to work at 
all.”5   
 
We Agree. 
NOW, THEREFORE, IT IS ORDERED, that the judgment of the Court of 
Chancery is AFFIRMED.6   
 
 
 
 
 
 
/s/ Myron T. Steele 
 
 
 
 
 
 
 
Justice 
                                                 
3 (g) Mediation agreement.  (1) If the parties involved in the mediation conference reach 
agreement with regard to the disputed issues, their agreement shall be reduced to writing and 
signed by the parties and the mediator. The agreement shall set for the terms of the resolution of 
the issues and the future responsibility of each party. The agreement will be binding on all 
parties to it and, upon filing by the mediator, will become part of the Court's record. If the parties 
choose to keep the terms of the agreement confidential, a Stipulation of Dismissal may be filed 
in the alternative. 
4 667 A.2d 1319 (Del. 1995). 
5 Capano v. State, C.A. No. 19976 (State’s Motion to Dismiss at 56-57). 
6 This decision hereby renders moot Appellant’s Motion to Stay dated August 14, 2003.