Court Opinion

ID: 1039007
Source: CourtListenerOpinion
Date Created: 2013-08-28 22:25:15.550028+00
Date Added: 2024-06-11T12:47:36.371090
License: Public Domain

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

                Willingboro Mall, LTD. v. 240/242 Franklin Avenue, L.L.C. (A-62-11) (069082)

Argued February 27, 2013 -- Decided August 15, 2013

ALBIN, J., writing for a unanimous Court.

         The issues in this appeal are (1) whether Rule 1:40-4(i) requires a settlement agreement reached at
mediation to be reduced to writing and signed at the time of mediation, and (2) whether plaintiff waived the
privilege that protects from disclosure any communication made during the course of mediation.

         In February 2005, Willingboro Mall, LTD. (Willingboro), the owner of the Willingboro Mall, sold the
property to 240/242 Franklin Avenue, L.L.C. (Franklin). Willingboro subsequently filed a mortgage foreclosure
action on the mall property and the Honorable Ronald E. Bookbinder, J.S.C., directed the parties to participate in
non-binding mediation. The mediation was conducted on November 6, 2007, in the offices of Franklin’s attorney.
Willingboro’s manager, Scott Plapinger, and attorney, Michael Z. Zindler, Esq., appeared on behalf of the company.
Franklin offered $100,000 to Willingboro in exchange for settlement of all claims and for a discharge of the
mortgage on the mall property. On behalf of Willingboro, Plapinger orally accepted the offer in the presence of the
mediator and affirmed that he gave his attorney authority to enter into the settlement. The terms of the settlement,
however, were not reduced to writing before the conclusion of the mediation session.

          On November 9, 2007, Franklin forwarded to Judge Bookbinder and Willingboro a letter announcing that
the case had been “successfully settled” and setting forth the purported terms of the settlement. Franklin’s attorney
sent a separate letter to Willingboro stating that he held $100,000 in his attorney trust account to fund the settlement,
that Franklin had executed a release, and that the monies would be disbursed when Willingboro filed a stipulation of
dismissal in the foreclosure action and delivered a mortgage discharge on the mall property. Willingboro rejected
the settlement terms and refused to sign a release or to discharge the mortgage. Franklin filed a motion to enforce
the settlement agreement and attached certifications from its attorney and the mediator that revealed
communications made between the parties during the mediation. Willingboro did not move to dismiss the motion,
or strike the certifications, based on violations of the mediation-communication privilege. Instead, in opposition to
the motion to enforce, Willingboro requested an evidentiary hearing and the taking of discovery, and filed a
certification from its manager, Scott Plapinger. The trial court ordered the taking of discovery and scheduled a
hearing to determine whether an enforceable agreement had been reached during mediation.

          The parties agreed that they were “waiv[ing] any issues of confidentiality with regard to the mediation
process” and agreed that the testimony elicited could be used for purposes of the motion to enforce the settlement
agreement only and not for purposes of the underlying foreclosure action. Despite the waiver, the mediator declined
to testify regarding the mediation in the absence of an order from Judge Bookbinder. Judge Bookbinder pointed out
to the parties’ attorneys that under Rule 1:40-4(d), “unless the participants in a mediation agree, no mediator may
disclose any mediation communication to anyone who was not a participant in the mediation.” Willingboro’s
attorney stated that the parties agreed to the disclosure. The parties then consented to the court order compelling the
mediator to testify. The mediator was deposed and divulged mediation communications.

         After the close of discovery, the Honorable Michael J. Hogan, P.J.Ch., conducted a four-day evidentiary
hearing. On the second day of the hearing, Willingboro reversed course and moved for an order expunging “all
confidential communications” disclosed, arguing that mediation communications are privileged under the New
Jersey Uniform Mediation Act (Mediation Act) and Rule 1:40-4. Judge Hogan ruled that Willingboro had waived
the mediation-communication privilege and held that “a binding settlement agreement was reached as a result of
[the] court-directed mediation.” The judge found that “[e]ven though the [settlement] terms were not reduced to a
formal writing at the mediation session,” an agreement had been reached. The court granted Franklin’s motion to
enforce the settlement as memorialized in its November 9 letter.
         The Appellate Division affirmed the trial court’s enforcement of the settlement agreement. The panel
found that Willingboro “waived the confidentiality normally afforded to” mediation sessions and therefore the trial
court properly proceeded to “determine whether the parties had reached a settlement.”

         The Supreme Court granted Willingboro’s petition for certification. 209 N.J. 97 (2012).

HELD: Plaintiff expressly waived the mediation-communication privilege and disclosed privileged
communications. The oral settlement agreement reached by the parties is upheld. Going forward, however, a
settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.

1. Public policy favors the settlement of disputes, and the court system encourages mediation as an important means
of achieving that end. Mediation is governed by Rule 1:40 to 1:40-12, the Mediation Act, N.J.S.A. 2A:23C-1 to -13,
and the rules of evidence, N.J.R.E. 519. The success of mediation as a means of encouraging parties to compromise
and settle their disputes depends on confidentiality. Confidentiality promotes candid and unrestrained discussion, a
necessary component of any mediation intended to lead to settlement. To this end, court and evidence rules and the
Mediation Act confer a privilege on mediation communications, ensuring that participants’ words will not be used
against them in a later proceeding. (pp. 15-17)

2. Rule 1:40-4(c) provides that a communication made during the course of mediation is privileged. N.J.S.A.
2A:23C-2 broadly defines a “[m]ediation communication” as any “statement, whether verbal or nonverbal or in a
record, that occurs during a mediation or is made for purposes of considering, conducting, participating in, initiating,
continuing, or reconvening a mediation or retaining a mediator.” The Mediation Act and the rules of evidence both,
in identical language, confer a privilege on mediation communications. The mediation-communication privilege,
however, is not absolute. Court and evidence rules and the Mediation Act carve out limited exceptions to the
privilege. The first is the signed-writing exception, which allows a settlement agreement reduced to writing and
properly adopted by the parties to be admitted into evidence to prove the validity of the agreement. The second
exception is waiver. A valid waiver requires not only that a party “have full knowledge of his legal rights,” but also
that the party “clearly, unequivocally, and decisively” surrender those rights. Knorr v. Smeal, 178 N.J. 169, 177
(2003). (pp. 17-21)

3. The signed–writing exception does not apply in this case because, early in the proceedings, Willingboro did not
seek to bar enforcement of the settlement based on the lack of a signed written agreement. The Mediation Act and
the evidence rules generally prohibit a mediator from making an “oral or written communication” to a court other
than to inform the court whether a settlement was reached. Here, the mediator went far beyond merely
communicating to the court that the parties had reached a settlement. By validating the contents of Franklin’s letter,
the mediator breached the privilege. Willingboro did not consent in advance to the disclosure of mediation
communications to the court. But despite Franklin’s violation of the mediation-communication privilege,
Willingboro did not timely move to strike or suppress the disclosures of the mediation communications. Instead,
Willingboro disclosed mediation communications and thereby itself breached the mediation-communication
privilege, completely opening the door. Although Franklin instituted the enforcement litigation and fired the first
shot that breached the privilege, Willingboro returned fire, further shredding the privilege. (pp. 22-28)

4. If the parties to mediation reach an agreement to resolve their dispute, the terms of that settlement must be
reduced to writing and signed before the mediation comes to a close. Going forward, a settlement that is reached at
mediation but not reduced to a signed written agreement will not be enforceable. The signed, written agreement
requirement will greatly minimize the potential for litigation. In addition, a party seeking the protection of a
privilege must timely invoke the privilege. A party that not only expressly waives the mediation-communication
privilege, but also discloses privileged communications, cannot later complain that it has lost the benefit of the
privilege it has breached. (pp. 28-30)

         The judgment of the Appellate Division is AFFIRMED.

        CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, HOENS, and PATTERSON; and JUDGE
RODRÍGUEZ (temporarily assigned) join in JUSTICE ALBIN’s opinion. JUDGE CUFF (temporarily
assigned) did not participate.

                                                           2
                                        SUPREME COURT OF NEW JERSEY
                                          A-62 September Term 2011
                                                   069082

WILLINGBORO MALL, LTD., a New
Jersey Limited Partnership,

    Plaintiff-Appellant,

         v.

240/242 FRANKLIN AVENUE,
L.L.C., a New York Limited
Liability Company; COLONIAL
COURT APARTMENTS, L.L.C., a
Delaware Limited Liability
Company; FESTIVAL MARKET AT
WILLINGBORO, L.L.C., a New
Jersey Limited Liability
Company; ROY LUDWICK; and
NAMIK MARKE,

    Defendants-Respondents.

         Argued February 27, 2013 – Decided August 15, 2013

         On certification to the Superior Court,
         Appellate Division, whose opinion is
         reported at 421 N.J. Super. 445 (2011).

         Glenn A. Weiner argued the cause for
         appellant (Klehr Harrison Harvey Branzburg,
         attorneys; Mr. Weiner and Michael A.
         Iaconelli, of counsel and on the briefs).

         Joseph P. Grimes argued the cause for
         respondents (Grimes & Grimes attorneys).

    JUSTICE ALBIN delivered the opinion of the Court.

    One of the main purposes of mediation is the expeditious

resolution of disputes.    Mediation will not always be
successful, but it should not spawn more litigation.      In this

case, the parties engaged in protracted litigation over whether

they had reached an oral settlement agreement in mediation.

Instead of litigating the dispute that was sent to mediation,

the mediation became the dispute.

    Communications made during the course of a mediation are

generally privileged and therefore inadmissible in another

proceeding.    A signed written settlement agreement is one

exception to the privilege.    Another exception is an express

waiver of the mediation-communication privilege by the parties.

    Here, defendant moved to enforce the oral settlement

agreement and, in doing so, submitted certifications by its

attorney and the mediator disclosing privileged communications.

Instead of seeking to bar the admission of privileged mediation

communications, plaintiff, in opposing the motion, litigated the

validity of the oral agreement.    In pursuing that course,

plaintiff also disclosed mediation communications.   In

particular, plaintiff expressly waived the privilege on the

record when questioning the mediator at a deposition and at an

evidentiary hearing.

    The Chancery Division found that plaintiff had waived the

privilege and upheld the parties’ oral agreement at the

mediation session.   The Appellate Division upheld the oral

agreement.    We affirm the judgment of the Appellate Division.

                                  2
    To be clear, going forward, parties that intend to enforce

a settlement reached at mediation must execute a signed written

agreement.   Had that simple step been taken, the collateral

litigation in this case might have been avoided.   In responding

to the motion to enforce, plaintiff did not timely interpose the

lack of a signed written agreement as a defense.   Moreover, if

plaintiff intended to defend based on the absence of a written

agreement, it was obliged not to litigate the validity of the

oral agreement by waiving the mediation-communication privilege.

This case should also serve as a reminder that a party seeking

to benefit from the mediation-communication privilege must

timely assert it.

                                I.

                                A.

    This case begins with a commercial dispute over the terms

of the sale of the Willingboro Mall in Willingboro Township.      In

February 2005, Willingboro Mall, LTD. (Willingboro), the owner

of the Willingboro Mall, sold the property to 240/242 Franklin

Avenue, L.L.C. (Franklin).   The specific terms of the contract

for sale are not germane to this appeal.   To secure part of

Franklin’s obligation, the parties executed a promissory note

and mortgage on the property.   Willingboro claimed that monies

due on August 3, 2005, were not forthcoming and filed a

                                 3
mortgage-foreclosure action on the mall property.    Franklin

denied that it had defaulted on its contractual obligations and

sought dismissal of the complaint.   The Honorable Ronald E.

Bookbinder, J.S.C., directed the parties to participate in a

non-binding mediation for potential resolution of the dispute.

                                B.

     On November 6, 2007, a retired Superior Court judge

conducted the mediation over the course of several hours in the

offices of Franklin’s attorney, Joseph P. Grimes, Esq.1

Willingboro’s manager, Scott Plapinger, and attorney, Michael Z.

Zindler, Esq., appeared on behalf of the company.     The mediator

met privately with each side, conveying offers and

counteroffers.   At some point, Franklin offered $100,000 to

Willingboro in exchange for settlement of all claims and for a

discharge of the mortgage on the mall property.     On behalf of

Willingboro, Plapinger orally accepted the offer in the presence

of the mediator, who reviewed with the parties the terms of the

proposed settlement.   Plapinger also affirmed that he gave his

attorney authority to enter into the settlement.     The terms of

the settlement, however, were not reduced to writing before the

conclusion of the mediation session.

1
  This statement of facts was primarily adduced at an evidentiary
hearing on a motion to enforce an alleged oral settlement
agreement between the parties.
                                 4
    Three days later, on November 9, Franklin forwarded to

Judge Bookbinder and Willingboro a letter announcing that the

case had been “successfully settled.”    The letter set forth the

purported terms of the settlement in eight numbered paragraphs.

On November 20, Franklin’s attorney sent a separate letter to

Willingboro stating that he held $100,000 in his attorney trust

account to fund the settlement, that Franklin had executed a

release, and that the monies would be disbursed when Willingboro

filed a stipulation of dismissal in the foreclosure action and

delivered a mortgage discharge on the mall property.

    On November 30, 2007, Willingboro’s attorney told

Franklin’s attorney that Willingboro rejected the settlement

terms and refused to sign a release or to discharge the

mortgage.    In December, Franklin filed a motion to enforce the

settlement agreement.    In support of the motion, Franklin

attached certifications from its attorney and the mediator that

revealed communications made between the parties during the

mediation.    Among other things, the mediator averred in his

certification that the parties voluntarily “entered into a

binding settlement agreement with full knowledge of its terms,

without any mistake or surprise and without any threat or

coercion” and that the settlement terms were accurately

memorialized in Franklin’s letter to the court.

                                  5
    Willingboro did not give its consent to the filing of

either certification.   However, Willingboro did not move to

dismiss the motion, or strike the certifications, based on

violations of the mediation-communication privilege.   Instead,

in opposition to the motion to enforce, Willingboro requested an

evidentiary hearing and the taking of discovery, and filed a

certification from its manager, Scott Plapinger.

    In his certification, Plapinger averred that he had

reluctantly agreed to participate in a mediation that his

attorney told him would be non-binding.   Plapinger also

certified to the substance of the parties’ discussions during

the mediation.   He asserted that as a result of his attorney’s

relentless insistence he went into a room where the mediator

summarized the settlement terms agreed upon by the parties.

Plapinger stated that the “purported terms of a final and

binding settlement” had not been reduced to writing and that if

it had, he would not have signed it.   According to Plapinger,

after the mediation, his attorney told him that the agreement

was “binding” and that he had to sign the settlement papers.     He

refused to do so.

    The trial court ordered the taking of discovery and

scheduled a hearing to determine whether an enforceable

agreement had been reached during mediation.

                                C.

                                 6
    The parties deposed five witnesses, including the mediator,

Willingboro’s manager, and Willingboro’s attorney.   Before

deposing the mediator, the parties agreed that they were

“waiv[ing] any issues of confidentiality with regard to the

mediation process” and agreed that the testimony elicited could

be used for purposes of the motion to enforce the settlement

agreement only and not for purposes of the underlying

foreclosure action.   Despite the waiver, the mediator declined

to testify regarding the mediation in the absence of an order

from Judge Bookbinder.

    After a recess, Judge Bookbinder entered the room where the

deposition was being taken.   Judge Bookbinder pointed out to the

parties’ attorneys that under Rule 1:40-4(d), “unless the

participants in a mediation agree, no mediator may disclose any

mediation communication to anyone who was not a participant in

the mediation.”   Willingboro’s attorney stated that the parties

agreed to the disclosure.   The parties then consented to the

court order compelling the mediator to testify.   The mediator

was deposed and divulged mediation communications.

                                D.

    After the close of discovery, the Honorable Michael J.

Hogan, P.J.Ch., conducted a four-day evidentiary hearing.

Franklin called the mediator as its first witness.   The mediator

gave detailed testimony concerning communications made between

                                 7
the parties during the course of the mediation.    The mediator

testified that at the conclusion of the mediation, after a

settlement had been reached, he asked Plapinger whether he had

authorized his attorney to accept the $100,000 settlement offer,

and Plapinger answered, “yes.”   Moreover, Plapinger -- who was

standing next to his attorney -- acknowledged that the

settlement ended the case.

    On cross-examination by Willingboro’s new attorney, Michael

Iaconelli, Esq., the mediator balked at disclosing “confidential

type information . . . conversations [he] had with Mr. Zindler

and [Mr. Plapinger].”    Iaconelli responded, “it’s our position

that the parties have waived confidentiality on that issue.”

Franklin’s attorney agreed that “Judge Bookbinder’s order is

broad enough to waive confidentiality with regard to the

mediation.”    Finally, to satisfy the mediator’s concerns,

Iaconelli requested that the court issue “a standing order”

requiring answers to questions that “concern discussions between

[the mediator] and Mr. Zindler and [Mr. Plapinger] . . . because

we are waiving, as we’ve already done, based on the agreement of

the parties and Judge Bookbinder’s order, any confidentiality on

that issue.”   Willingboro’s attorney then continued to question

the mediator concerning communications made during the

mediation.

                                  8
    On the second day of the hearing, Willingboro reversed

course and moved for an order expunging “all confidential

communications” disclosed, including those in the mediator’s

testimony and certification and Franklin’s attorney’s

certification, and barring any further mediation-communication

disclosures.   Willingboro maintained that mediation

communications are privileged under the New Jersey Uniform

Mediation Act (Mediation Act or Act) and Rule 1:40-4.

Willingboro argued that mediation communications could not be

presented in support of the motion to enforce the settlement.

    Judge Hogan -- after reviewing the record in detail --

ruled that Willingboro had waived the mediation-communication

privilege, and the hearing proceeded with the cross-examination

of the mediator.

    Franklin next called as a witness Michael Zindler,

Willingboro’s attorney at the mediation.    Zindler testified

that, on behalf of Willingboro, manager Scott Plapinger agreed

to a settlement at the mediation, and that the terms included a

payment of $100,000 by Franklin in exchange for a release and a

discharge of the mortgage by Willingboro.    He also stated that

Franklin’s November 9, 2007, letter accurately memorialized the

terms of the settlement agreement.

    Willingboro called Plapinger to the stand.    Plapinger

testified that his attorney and the mediator pressured him into

                                 9
agreeing to a settlement that he believed would be non-binding.

He acknowledged that the mediator read the terms of the proposed

settlement to him and that he “just . . . acquiesced and agreed

to everything that was asked of [him].”   According to Plapinger,

“I said whatever I needed to say to extricate myself from an

incredible uncomfortable, high pressure situation.”     Apparently

not given to understatement, he also said, “I would have

confessed to the Lindbergh kidnapping and the Kennedy

assassination . . . .   I said yes to all of it.”

     Bruce Plapinger, Scott’s cousin and a member of

Willingboro’s board of managers, testified to a telephone

conversation he had with Scott during the mediation.    Bruce

asserted that he did not believe -- based on his conversations

with Scott -- that the mediation proceeding would lead to a

binding result.2

                                II.

     Judge Hogan held that “a binding settlement agreement was

reached as a result of [the] court-directed mediation.”     He

credited the testimony of the mediator and Willingboro’s former

attorney, Michael Zindler, and discounted the testimony of Scott

2
  Also admitted into evidence was a videotaped deposition of Alan
Braverman, a business acquaintance of the parties, who testified
to an earlier attempt to settle the dispute. The court found
his testimony to be “essentially irrelevant.”
                                10
Plapinger, who -- Judge Hogan believed -- was suffering from

“buyer’s remorse.”    Judge Hogan found that “[e]ven though the

[settlement] terms were not reduced to a formal writing at the

mediation session,” an agreement had been reached, as confirmed

by the mediator and Zindler.    Judge Hogan noted that Zindler

testified that Franklin’s November 9 letter had accurately set

forth the parties’ agreement.    Last, the court determined that

the validity of the settlement agreement rested on Plapinger’s

verbal assent to the agreement in the presence of others, not on

any unexpressed mental reservations he may have had.       Thus, the

court granted Franklin’s motion to enforce the settlement as

memorialized in its November 9 letter.

                                III.

       The Appellate Division affirmed the trial court’s

enforcement of the settlement agreement.3   Willingboro Mall, Ltd.

v. 240/242 Franklin Ave., L.L.C., 421 N.J. Super. 445, 456 (App.

Div. 2011).    The appellate panel acknowledged that parties

assigned to mediation may waive the privilege that protects from

disclosure any communication made during the course of the

mediation, citing N.J.S.A. 2A:23C-5 and Rule 1:40-4(d).       Id. at

452.    The panel found that Willingboro “waived the

3
  We do not address other issues raised before the trial court
and Appellate Division, which are not germane to this appeal.
                                 11
confidentiality normally afforded to” mediation sessions and

therefore the trial court properly proceeded to “determine

whether the parties had reached a settlement.”     Id. at 455.

Additionally, the panel rejected Willingboro’s argument that the

mediation rule, R. 1:40-4(i), “require[d] contemporaneous

reduction of the terms to writing and obtaining signatures on

the document at the mediation.”    Id. at 453.   Finally, the panel

held that there was substantial credible evidence in the record

to support the court’s findings “that the parties had reached a

settlement at the mediation, the terms of the agreement were as

set forth in the November 9, 2007 letter prepared by defendants’

attorney to Zindler and the court, and that Scott Plapinger’s

assent to the settlement was not the product of coercion.”       Id.

at 455-56.

    This Court granted Willingboro’s petition for

certification.   Willingboro Mall, Ltd. v. 240/242 Franklin Ave.,

L.L.C., 209 N.J. 97 (2012).    Willingboro raises two issues in

its petition:    whether Rule 1:40-4(i) requires a settlement

agreement reached at mediation to be reduced to writing and

signed at the time of mediation, and whether Willingboro waived

the mediation-communication privilege.

                                 IV.

                                  12
    Willingboro urges this Court to hold that, under Rule 1:40-

4(i), “a settlement reached at mediation [is not] enforceable”

unless it is “reduced to writing at the time of the mediation

and signed by the parties.”    Because the writing memorializing

the terms of the settlement was forwarded by Franklin after the

mediation and never signed or otherwise assented to by

Willingboro, Willingboro argues that both the trial court and

Appellate Division erred in enforcing the oral agreement.

Moreover, Willingboro disputes the trial court’s and Appellate

Division’s findings that it waived the mediation-communication

privilege.   Willingboro submits that it did not waive the

mediation-communication privilege “by presenting evidence in

opposition” to the motion to enforce the oral agreement.

Willingboro takes the position that it could not have waived the

mediation-communication privilege, which “already had been

destroyed by [Franklin’s] disclosures” to the court through the

mediator’s certification.     Willingboro posits that its response

to Franklin’s breach of the mediation-communication privilege

was defensive and should not be taken as a waiver of the

privilege.

    In contrast, Franklin maintains that nothing in Rule 1:40-

4(i) requires that a written settlement agreement resulting from

mediation “be created or tendered on the actual day of the

mediation” or that it be signed by the parties.     Franklin argues

                                  13
that the Appellate Division correctly “determined that the three

day gap between mediation and memorialization of the settlement

was reasonable.”   Moreover, Franklin relies on the reasoning and

holdings of the trial court and Appellate Division that

Willingboro waived the mediation-communication privilege.     It

therefore requests that this Court uphold enforcement of the

oral settlement agreement reached at mediation between the

parties.

                                V.

    In construing the meaning of a court rule or a statute, our

review is de novo, and therefore we owe no deference to the

trial court’s or Appellate Division’s legal conclusions.      Murray

v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012) (citations

omitted); see also Manalapan Realty, L.P. v. Twp. Comm., 140

N.J. 366, 378 (1995) (citations omitted) (“A trial court’s

interpretation of the law and the legal consequences that flow

from established facts are not entitled to any special

deference.”).   On the other hand, we will defer to a trial

court’s factual findings, particularly those influenced by the

court’s opportunity to assess witness testimony firsthand,

provided the findings are supported by “sufficient credible

evidence in the record.”   Brunson v. Affinity Fed. Credit Union,

199 N.J. 381, 397 (2009) (internal quotation marks and citation

                                14
omitted); see also Cesare v. Cesare, 154 N.J. 394, 412 (1998)

(citation omitted).

                                 VI.

                                  A.

    Public policy favors the settlement of disputes.

Settlement spares the parties the risk of an adverse outcome and

the time and expense -- both monetary and emotional -- of

protracted litigation.    See State v. Williams, 184 N.J. 432, 441

(2005).   Settlement also preserves precious and overstretched

judicial resources.     See Herrera v. Twp. of S. Orange Vill., 270

N.J. Super. 417, 424 (App. Div. 1993) (“There is a clear public

policy in this state favoring settlement of litigation.”

(citation omitted)), certif. denied, 136 N.J. 28 (1994).

    Our court system encourages mediation as an important means

of settling disputes.    See Williams, supra, 184 N.J. at 446

(citations omitted).    Indeed, our court rules provide for

Complementary Dispute Resolution Programs, which are intended to

enhance the “quality and efficacy” of the judicial process.      R.

1:40-1.   In particular, Rule 1:40-4(a) authorizes, in certain

cases, a Superior Court judge to “require the parties to attend

a mediation session at any time following the filing of a

complaint.”

                                  15
    Mediation is governed by our court rules, R. 1:40 to 1:40-

12, the Mediation Act, N.J.S.A. 2A:23C-1 to -13, and our rules

of evidence, N.J.R.E. 519.   The success of mediation as a means

of encouraging parties to compromise and settle their disputes

depends on confidentiality -- a point recognized in both our

jurisprudence and our court rules.   See Williams, supra, 184

N.J. at 446-47; R. 1:40-4(d).

    Rule 1:40-4(d) provides: “Unless the participants in a

mediation agree otherwise or to the extent disclosure is

permitted by this rule, no party, mediator, or other participant

in a mediation may disclose any mediation communication to

anyone who was not a participant in the mediation.”     The rule

recognizes that without assurances of confidentiality,

“‘disputants may be unwilling to reveal relevant information and

may be hesitant to disclose potential accommodations that might

appear to compromise the positions they have taken.’”     Williams,

supra, 184 N.J. at 447 (quoting Final Report of the Supreme

Court Task Force on Dispute Resolution 23 (1990)).

Confidentiality promotes candid and unrestrained discussion, a

necessary component of any mediation intended to lead to

settlement.   Id. at 446-47 (citations omitted).   To this end,

our court and evidence rules and the Mediation Act confer a

privilege on mediation communications, ensuring that

                                16
participants’ words will not be used against them in a later

proceeding.

                                B.

    Rule 1:40-4(c) provides that a communication made during

the course of mediation is privileged:

           A mediation communication is not subject to
           discovery or admissible in evidence in any
           subsequent proceeding except as provided by
           the   New  Jersey   Uniform  Mediation  Act,
           N.J.S.A. 2A:23C-1 to -13.       A party may,
           however, establish the substance of the
           mediation    communication   in   any   such
           proceeding by independent evidence.

    Although our court rule does not define “mediation

communication,” the Mediation Act does.   N.J.S.A. 2A:23C-2

broadly defines a “[m]ediation communication” as any “statement,

whether verbal or nonverbal or in a record, that occurs during a

mediation or is made for purposes of considering, conducting,

participating in, initiating, continuing, or reconvening a

mediation or retaining a mediator.”

    The Mediation Act and our rules of evidence both, in

identical language, confer a privilege on mediation

communications.   N.J.S.A. 2A:23C-4(a) and N.J.R.E. 519(a)(a)

provide:   “Except as otherwise provided . . . a mediation

communication is privileged . . . and shall not be subject to

discovery or admissible in evidence in a proceeding unless

waived or precluded as provided by . . . [N.J.S.A. 2A:23C-5].”

                                17
(Emphasis added).     N.J.S.A. 2A:23C-4(b) and N.J.R.E. 519(a)(b)

specifically set forth the breadth of the privilege:

            b. In a proceeding, the following privileges
            shall apply:

                 (1) a mediation party may refuse to
                 disclose, and may prevent any other
                 person from disclosing, a mediation
                 communication.

                 (2) a mediator may refuse to disclose a
                 mediation    communication,    and  may
                 prevent    any    other    person  from
                 disclosing a mediation communication of
                 the mediator.

            . . . .

       Additional support for the broad scope of the privilege is

found in the drafters’ commentary to the model Uniform Mediation

Act.    The drafters explained that the mediation-communication

privilege allows a participant “to refuse to disclose and to

prevent another from disclosing particular communications.”

Nat’l Conference of Comm’rs on Unif. State Laws, Uniform

Mediation Act § 4, comment 4 (2003) (emphasis added)

[hereinafter UMA Drafters’ Comments], available at

http://www.uniformlaws.org/shared/docs/mediation/uma_final_03.pd

f.   The drafters understood that the ability to block another

from disclosing mediation communications “is critical to the

operation of the privilege” and that the “parties have the

greatest blocking power.”    Ibid.

                                  C.

                                  18
    The mediation-communication privilege is not absolute.        Our

court and evidence rules and the Mediation Act carve out limited

exceptions to the privilege, two of which are pertinent to this

case.   The first is the signed-writing exception, which allows a

settlement agreement reduced to writing and properly adopted by

the parties to be admitted into evidence to prove the validity

of the agreement.

    Rule 1:40-4(i) specifies the manner in which settlement

agreements are to be memorialized “[i]f the mediation results in

the parties’ total or partial agreement.”       It provides that the

agreement “shall be reduced to writing and a copy thereof

furnished to each party.”    Ibid.     Rule 1:40-4(i) also provides

that “[t]he agreement need not be filed with the court, but if

formal proceedings have been stayed pending mediation, the

mediator shall report to the court whether agreement has been

reached.”    Although Rule 1:40-4(i) does not state specifically

that a written agreement must be signed by the parties, a

publication prepared by the Civil Practice Division makes clear

that any settlement agreement should be reduced to writing and

signed.     Civil Practice Div., Mediator’s Tool Box: A Case

Management Guide for Presumptive Roster Mediators 11 (Nov.

2011), available at

http://www.judiciary.state.nj.us/civil/mediators_toolbox.pdf

(“Before the parties leave the mediation, the mediator should

                                  19
insist that a short form settlement agreement (term sheet) be

drafted by one of the attorneys and signed by the parties at the

mediation table.”).

    Although our court rule may be silent about whether a

signed agreement is necessary, the Mediation Act and our

evidence rules are not.       N.J.S.A. 2A:23C-6(a)(1) and N.J.R.E.

519(c)(a)(1) both provide that “an agreement evidenced by a

record signed by all parties to the agreement” is an exception

to the mediation-communication privilege.       (Emphasis added).

Because a signed agreement is not privileged, it therefore is

admissible to prove and enforce a settlement.

     Although neither the Mediation Act nor N.J.R.E. 519

specifies what constitutes an “agreement evidenced by a record”

and “signed,” the UMA Drafters’ Comments give insight regarding

the intended scope of those words.       The UMA Drafters’ Comments

report that those words apply not only to “written and executed

agreements,” but also to “those recorded by tape . . . and

ascribed to by the parties on the tape.”       UMA Drafters’

Comments, supra, at § 6(a)(1), comment 2.       For example, “a

participant’s notes about an oral agreement would not be a

signed agreement.”    Ibid.    In contrast, a “signed agreement”

would include “a handwritten agreement that the parties have

signed, an e-mail exchange between the parties in which they

                                    20
agree to particular provisions, and a tape recording in which

they state what constitutes their agreement.”      Ibid.

                                    D.

    The second exception to the mediation-communication

privilege relevant to this case is waiver.      The privilege

         may be waived in a record or orally during a
         proceeding if it is expressly waived by all
         parties to the mediation and:

                  (1) in the case of the privilege of a
                  mediator, it is expressly waived by the
                  mediator;                           and

                  (2) in the case of the privilege of a
                  nonparty participant, it is expressly
                  waived by the nonparty participant.

         [N.J.S.A. 2A:23C-5(a); N.J.R.E. 519(b).]

    “Waiver is the voluntary and intentional relinquishment of

a known right.”     Knorr v. Smeal, 178 N.J. 169, 177 (2003)

(citation omitted).       A valid waiver requires not only that a

party “have full knowledge of his legal rights,” but also that

the party “clearly, unequivocally, and decisively” surrender

those rights.     Ibid.   Importantly, N.J.S.A. 2A:23C-5(a) and

N.J.R.E. 519(b) mandate that the waiver be express.        The UMA

Drafters’ Comments explain that “[t]he rationale for requiring

explicit waiver is to safeguard against the possibility of

inadvertent waiver.”      UMA Drafters’ Comments, supra, at § 5(a)-

(b), comment 1.    Moreover, waivers “conducted on the record” do

not present the problem of proving “what was said.”        Ibid.

                                    21
                               VII.

                                A.

      We now apply these principles of law to the facts before

us.   First, had the parties reduced to writing the terms of the

agreement and affixed their signatures to the document at the

conclusion of the mediation, Franklin would have been able to

seek enforcement of the settlement with evidence that fell

within an exception to the mediation-communication privilege.

N.J.S.A. 2A:23C-6(a)(1); N.J.R.E. 519 (noting that “an agreement

evidenced by a record signed by all parties to the agreement” is

an exception to the mediation-communication privilege).      But

here, the signed-writing exception does not come into play

because, early in the proceedings, Willingboro did not seek to

bar enforcement of the settlement based on the lack of a signed

written agreement.   Moreover, if Willingboro intended to rely on

the signed-writing doctrine, then it was obliged to stand by

this rule and not litigate the oral agreement by waiving the

mediation-communication privilege.

      Second, we conclude that the certifications filed by

Franklin’s attorney and the mediator in support of Franklin’s

motion to enforce the oral agreement disclosed privileged

mediation communications.   The certifications refer to

statements made during the mediation and therefore fall squarely

                                22
within the definition of a “mediation communication” contained

in N.J.S.A. 2A:23C-2.

    Moreover, the Mediation Act and our evidence rules

generally prohibit a mediator from making an “oral or written

communication” to a court other than to inform the court whether

a settlement was reached.   N.J.S.A. 2A:23C-7(a)-(b); N.J.R.E.

519(d).   Here, the mediator went far beyond merely communicating

to the court that the parties had reached a settlement.   The

mediator certified to the accuracy of Franklin’s November 9

letter, which set forth in eight numbered paragraphs the terms

of an oral agreement between the parties.   Franklin’s letter

revealed mediation communications -- not only Willingboro’s oral

assent to the settlement, but also its specific agreement to

individual terms.   By validating the contents of Franklin’s

letter, the mediator breached the privilege.

    The terms of the settlement rested on privileged

communications between the parties and mediator.   However,

Willingboro did not consent in advance to the disclosure of

mediation communications to the court.

    In the absence of a signed settlement agreement or waiver,

it is difficult to imagine any scenario in which a party would

be able to prove a settlement was reached during the mediation

without running afoul of the mediation-communication privilege.

The United States Court of Appeals for the Third Circuit reached

                                23
a similar conclusion under its Local Appellate Rule (LAR) 33.5.

Beazer East, Inc. v. Mead Corp., 412 F.3d 429, 434-36 (3d Cir.

2005) (citing 3d Cir. L.A.R. 33.5 (1995)), cert. denied, 546

U.S. 1091, 126 S. Ct. 1040, 163 L. Ed. 2d 857 (2006).

    In Beazer, the plaintiff attempted to enforce an alleged

oral agreement made by the parties during an appellate

mediation.   Id. at 434.    Like the mediation-communication

privilege in N.J.S.A. 2A:23C-4 and N.J.R.E. 519(a), LAR 33.5(c)

provides that no one participating in the mediation session “may

disclose ‘statements made or information developed during the

mediation process.’”     Beazer, supra, 412 F.3d at 434-35 (quoting

3d Cir. L.A.R. 33.5(c) (1995)).     LAR 33.5(d) “further provides

that ‘if a settlement is reached, the agreement shall be reduced

to writing and shall be binding upon all parties to the

agreement.’”     Id. at 435 (quoting 3d Cir. L.A.R. 33.5(d)

(1995)).   The Third Circuit concluded that allowing oral

agreements reached at mediation to bind the parties “would

seriously undermine the efficacy of the Appellate Mediation

Program by compromising the confidentiality of settlement

negotiations.”    Id. at 434.   The policy reasons supporting this

approach are the encouragement of uninhibited discussion and the

avoidance of contested hearings to determine whether the parties

reached a settlement.      See id. at 435-36 (citation omitted).

Ultimately, the plaintiff in Beazer could not “prove the

                                   24
existence or terms of the disputed oral settlement without

violating this provision’s broadly stated [mediation-

communication-disclosure] prohibitions.”    Id. at 435.

    Third, without the use of communications made during the

mediation, Franklin likely could not have proved the existence

of a settlement.    Despite Franklin’s violation of the mediation-

communication privilege in seeking to enforce the oral

settlement agreement reached at mediation, Willingboro did not

timely move to strike or suppress the disclosures of the

mediation communications.    Instead, Willingboro proceeded to

litigate whether it had, in fact, entered into a binding, oral

settlement agreement.    In taking this tack, Willingboro followed

Franklin’s approach and disclosed mediation communications.

Willingboro breached the mediation-communication privilege by

appending to its opposition papers Scott Plapinger’s

certification, which revealed the substance of mediation

communications.    Additionally, Willingboro then engaged in the

discovery process, deposing the mediator and participating in

four other depositions that trenched on the mediation-

communication privilege.

    We reject Willingboro’s assertion that its own disclosures

of mediation communications were permitted by N.J.S.A. 2A:23C-

5(b) and N.J.R.E. 519(b)(b).    That statute and its corollary

evidence rule provide:   “A person who discloses . . . a

                                 25
mediation communication that prejudices another person in a

proceeding is precluded from asserting a privilege under

[N.J.S.A. 2A:23C-4], but only to the extent necessary for the

person prejudiced to respond to the representation or

disclosure.”    This language suggests that the disclosure of some

privileged communications does not necessarily open the door to

disclosure of all privileged communications.

       However, in this case, Willingboro expressly waived the

mediation-communication privilege in responding to the motion to

enforce the oral settlement agreement.     In defending against

Franklin’s violation of the privilege, Willingboro did not have

to make further disclosures of mediation communications.     It

merely had to invoke the protections of the Mediation Act and

our evidence rules, which provide that “a mediation party may .

. . prevent any other person from disclosing [] a mediation

communication.”    N.J.S.A. 2A:23C-4(b)(1);   N.J.R.E.

519(a)(b)(1).     Instead, Willingboro engaged in unrestricted

litigation over the validity of the oral agreement, which

involved its own wholesale disclosures of mediation

communications.    Willingboro completely opened the door; it

cannot now find shelter in N.J.S.A. 2A:23C-5(b) and N.J.R.E.

519.

                                  B.

                                  26
    The mediation-communication privilege “may be waived in a

record or orally during a proceeding if it is expressly waived

by all parties to the mediation.”     N.J.S.A. 2A:23C-5(a);

N.J.R.E. 519(b)(a).   Although Franklin instituted the

enforcement litigation and fired the first shot that breached

the privilege, Willingboro returned fire, further shredding the

privilege.   At the mediator’s deposition, Willingboro agreed to

“waive any issues of confidentiality with regard to the

mediation process.”   When the mediator declined to testify in

the absence of a court order, Willingboro gave its unequivocal

consent to having Judge Bookbinder direct the mediator to

respond to questions that touched on communications made during

the mediation.

    When the mediator testified on the first day of the hearing

concerning Franklin’s motion to enforce the oral settlement

agreement, Willingboro’s attorney insisted that the mediator

respond to questions that the mediator believed would elicit

“confidential type information.”     Franklin’s attorney told the

court that “Judge Bookbinder’s order is broad enough to waive

confidentiality with regard to the mediation.”     Willingboro’s

attorney was evidently in total agreement on this issue.

Indeed, Willingboro’s attorney asked the court to order the

mediator to answer questions about mediation discussions between

the mediator and Willingboro’s representatives, attorney Zindler

                                27
and company manager Plapinger.     Willingboro’s attorney also

stated that his client had waived the issue of confidentiality.

    Only after filing a certification in opposition to

enforcement of the oral agreement, participating in five

discovery depositions, and one day of an evidentiary hearing --

and after myriad breaches of the mediation-communication

privilege -- did Willingboro attempt to invoke the privilege on

the second hearing date.   However, by then, Willingboro had

passed the point of no return.    Willingboro had expressly waived

the privilege, N.J.S.A. 2A:23C-5(a) and N.J.R.E. 519(b)(a) -- it

had “clearly, unequivocally, and decisively” surrendered its

right to object to the admission of evidence regarding mediation

communications at the evidentiary hearing.     Knorr, supra, 178

N.J. at 177 (citing Country Chevrolet, Inc. v. Twp. of N.

Brunswick Planning Bd., 190 N.J. Super. 376, 380 (App. Div.

1983)).   Willingboro intentionally elected not to invoke the

privilege in a timely manner.

                                 VIII.

    In summary, if the parties to mediation reach an agreement

to resolve their dispute, the terms of that settlement must be

reduced to writing and signed by the parties before the

mediation comes to a close.     In those cases in which the

complexity of the settlement terms cannot be drafted by the time

                                  28
the mediation session was expected to have ended, the mediation

session should be continued for a brief but reasonable period of

time to allow for the signing of the settlement.   We also see no

reason why an audio- or video-recorded agreement would not meet

the test of “an agreement evidenced by a record signed by all

parties to the agreement” under N.J.S.A. 2A:23C-6(a)(1) and

N.J.R.E. 519(c)(a)(1).   See UMA Drafters’ Comments, supra, at §

6, comment 2.   To be clear, going forward, a settlement that is

reached at mediation but not reduced to a signed written

agreement will not be enforceable.

    The mediation-communication privilege is intended to

encourage candid and uninhibited settlement discussions.    The

rule requiring a signed, written agreement is intended to

ensure, to the extent humanly possible, that the parties have

voluntarily and knowingly entered into the settlement and to

protect the settlement against a later collateral attack.   A

settlement in mediation should not be the prelude to a new round

of litigation over whether the parties reached a settlement.

The signed, written agreement requirement -- we expect -- will

greatly minimize the potential for litigation.

    Last, this case serves as a reminder that a party seeking

the protection of a privilege must timely invoke the privilege.

A party that not only expressly waives the mediation-

communication privilege, but also discloses privileged

                                29
communications, cannot later complain that it has lost the

benefit of the privilege it has breached.

                               IX.

    For the reasons expressed, we affirm the judgment of the

Appellate Division, which upheld the Chancery Division’s

confirmation of the oral settlement agreement in this case.

     CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, HOENS, and
PATTERSON; and JUDGE RODRÍGUEZ (temporarily assigned) join in
JUSTICE ALBIN’s opinion. JUDGE CUFF (temporarily assigned) did
not participate.

                               30
                        SUPREME COURT OF NEW JERSEY

NO.       A-62                                   SEPTEMBER TERM 2011

ON CERTIFICATION TO               Appellate Division, Superior Court

WILLINGBORO MALL, LTD., a New
Jersey Limited Partnership,

      Plaintiff-Appellant,

                 v.

240/242 FRANKLIN AVENUE,
L.L.C., a New York Limited
Liability Company; COLONIAL
COURT APARTMENTS, L.L.C., a
Delaware Limited Liability
Company; FESTIVAL MARKET AT
WILLINGBORO, L.L.C., a New
Jersey Limited Liability
Company; ROY LUDWICK; and
NAMIK MARKE,

      Defendants-Respondents.

DECIDED               August 15, 2013
                  Chief Justice Rabner                        PRESIDING
OPINION BY             Justice Albin
CONCURRING/DISSENTING OPINION BY
DISSENTING OPINION BY

CHECKLIST                               AFFIRM
CHIEF JUSTICE RABNER                      X
JUSTICE LaVECCHIA                         X
JUSTICE ALBIN                             X
JUSTICE HOENS                             X
JUSTICE PATTERSON                         X
JUDGE RODRÍGUEZ (t/a)                     X
TOTALS                                     6