Reese v. Tingey Const.
| Decision Date | 01 February 2008 |
| Docket Number | No. 20060594.,20060594. |
| Citation | 2008 UT 7,177 P.3d 605 |
| Parties | Murlyn Craig REESE, Plaintiff and Appellee, v. TINGEY CONSTRUCTION and/or Freemont Compensation Insurance Group, Defendants and Appellees, v. LWP Claims Solutions, Inc., Real Party in Interest and Appellant. |
| Court | Utah Supreme Court |
C. Richard Henriksen, Jr., Robert M. Henriksen, Salt Lake City, for appellee.
Tim Dalton Dunn, Susan Black Dunn, S. Grace Acosta, Salt Lake City, for appellant.
INTRODUCTION
¶ 1 In this case, LWP Solutions, Inc. (LWP) appeals from a trial court order requiring its attorney Grace Acosta to appear and be deposed regarding the content of the mediation proceeding in which she allegedly reached a settlement on LWP's behalf with Murlyn Craig Reese. We are asked to determine whether Acosta's testimony regarding the content of the mediation is protected from disclosure by laws governing confidentiality in mediation and whether Utah law requires agreements reached during mediation to be reduced to writing in order for them to be enforceable by a court. We conclude that the content of the mediation is confidential and that mediation agreements must be reduced to writing in order to be enforceable. Thus, we reverse.
¶ 2 On May 24, 2000, Murlyn Craig Reese fell from a third-story balcony and significantly injured his leg when the temporary railing he was leaning on gave way. At the time of the accident, Reese was working for Interwest Mechanical, a subcontractor of Tingey Construction. Because his injuries occurred within the scope of his employment, Fremont Compensation. Insurance, Interwest Mechanical's workers compensation insurance carrier, provided coverage for the medical expenses relating to the injury.
¶ 3 In 2003, Fremont went into liquidation and, pursuant to Utah Code section 31A-28-202 to 222 (2005 & Supp.2007), the Utah Property and Casualty Insurance Guaranty Association (UPCIGA) assumed financial responsibility for Reese's medical expenses. UPCIGA retained LWP to make payments for Reese's medical expenses using UPCIGA funds.
¶ 4 On May 18, 2004, Reese filed suit against Tingey Construction, alleging that it negligently constructed the railing and that absent the negligence, Reese would not have fallen. Reese and Tingey Construction voluntarily agreed to try to settle their dispute through mediation on December 30, 2005. As Reese's insurance carrier, UPCIGA had a subrogation interest in any settlement proceeds, and LWP acted as UPCIGA's agent at the mediation to protect that interest. Reese alleges that he and LWP made an oral agreement to settle and that he relied on that agreement in reaching agreement with Tingey Construction. When the mediator incorporated the terms of both agreements into a Memorandum of Understanding (Memorandum), LWP refused to sign because, according to LWP, the Memorandum included a term to which it did not agree.
¶ 5 Reese and Tingey Construction filed a Joint Motion to Enforce Settlement. LWP argued that no agreement was made and that Utah Code section 78-31b-8 (Supp.2007) prohibits Reese from revealing confidential mediation communications. The trial court found that "[m]ediation discussions contain `confidential' and `non-confidential' discussions" and that the alleged agreement between. Reese and LWP was nonconfidential. Based on those findings, the trial court ordered LWP's mediation counsel, Grace Acosta, to "appear and be deposed regarding the content of the mediation ... including, the process of the mediation and the conversations and agreements that were made during the mediation." LWP filed a petition for discretionary interlocutory appeal with this court, seeking to preserve the confidentiality of the mediation discussions and to prevent Acosta from being deposed. We granted the petition.
¶ 6 We are asked to determine whether Utah Code section 78-31b-8 (Supp.2007) requires that discussions among participants in a mediation relating to an alleged oral agreement be kept confidential and whether the Utah Rules of Court—Annexed Alternative Dispute Resolution require agreements reached in the course of a mediation to be reduced to writing. Both issues are matters of statutory construction and thus present questions of law that we review for correctness. Anderson v. United Parcel Serv., 2004 UT 57 ¶ 7, 96 P.3d 903. We have jurisdiction over interlocutory appeals pursuant to Utah Code section 78-2-2(3)(j) (2002).
¶ 7 As a preliminary matter, we note that in his brief before this court, Reese argued that the oral agreement he claims to have reached with LWP was not reached within the context of the mediation and is therefore governed strictly by contract law and not by mediation rules. The argument that LWP was not a party to the mediation was not raised before the trial court.1 Absent plain error by the trial court or exceptional circumstances, neither of which have been argued by Reese, we will not consider the question. State v. Rhinehart, 2007 UT 61, ¶ 21, 167 P.3d 1046.
¶ 8 As a participant, LWP is entitled to the benefits of the laws governing mediation, which direct that mediation proceedings are designed to "encourage[] informal and confidential exchange among the persons present to facilitate resolution of the dispute." Utah Code Ann. § 78-31b-8 (Supp. 2007). "Confidentiality of all communications between the parties or among them and the mediator serves the important public policy of promoting a broad discussion of potential resolutions to the matters being mediated." Wilmington Hospitality, L.L.C. v. New Castle County, 788 A.2d 536, 541 (Del.Ch.2001). This candid exchange of information and ideas can be achieved only when the parties are assured that their communications will be protected from postmediation disclosure. The U.S. Court of Appeals for the Second Circuit, in discussing the importance of confidentiality during preargument conferences designed for the purpose of considering settlement or simplification of the issues, stated as follows:
It is essential to the proper functioning of the Civil Appeals Management Plan that all matters discussed at these conferences remain confidential. The guarantee of confidentiality permits and encourages counsel to discuss matters in an uninhibited fashion often leading to settlement.... If participants cannot rely on the confidential treatment of everything that transpires during these sessions then counsel of necessity will feel constrained to conduct themselves in a cautious, tight-lipped, noncommittal manner more suitable to poker players in a high-stakes game than to adversaries attempting to arrive, at a just resolution of a civil dispute. This atmosphere if allowed to exist would surely destroy the effectiveness of a program which has led to settlements and withdrawals of some appeals and to the simplification of issues in other appeals, thereby expediting cases at a time when the judicial resources of this Court are sorely taxed.
Lake Utopia Paper Ltd. v. Connelly Containers, Inc., 608 F.2d 928, 930 (2d Cir.1979) (internal quotation marks and citation omitted).
¶ 9 We recognize existing statutory exceptions to this general rule of mediation confidentiality. For example, all parties to a mediation, including the mediator, can agree to disclose information, such as memoranda, notes, records, or work product, that is obtained during the mediation. See Utah Code Arm. § 78-31b-8(4). A written agreement resulting from the mediation, signed by all the parties, may be filed with a court and enforced as a judgment of the court. Id. § 78-31b-7(3)(a). Other specific exceptions, such as discovery of child abuse or neglect, also require disclosure. See id. § 78-31b-8(6). We further recognize that in certain circumstances, for example, if duress, fraud, or another credible contract defense is alleged, the interests of justice may outweigh the parties' need for confidentiality in determining whether a settlement agreement was reached. None of these exceptions applies in this case.
¶ 10 The trial court's June 2006 Order concluding that "[m]ediation discussions contain both `confidential' and `non-confidential' discussions" and ordering Acosta to submit to a deposition "regarding the content of the mediation," including "the process of the mediation and conversations and agreements that were made in the mediation" conflicts with the laws and policy considerations outlined above. If, as indicated by the trial court's order, nonconfidential portions of the mediation include the content, process, conversations, and agreements of the mediation, it is hard to see what portion of the mediation would remain confidential. Furthermore, a practice of permitting courts to undertake the kind of after the fact sorting exercise necessitated by the trial court's order could jeopardize mediation participants' willingness to freely engage in settlement-inducing dialogue, thus undermining a primary requirement of successful mediation. Ryan v. Garcia, 27 Cal.App.4th 1006, 33 Cal.Rptr.2d 158, 161 (1994) ().
¶ 11 Additionally, Utah Code section 78-31b-8(4) prohibits any "person attending an ADR proceeding ... [from] disclos[ing] or be[ing] required to disclose any information obtained in the course of an ADR proceeding" unless all parties and the mediator agree otherwise. Under this rule, unless LWP consents, along with Reese, Tingey Construction, and the mediator, Acosta is prohibited from disclosing information obtained during the mediation, including information related to the alleged existence of an oral agreement. The...
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