The North Carolina Industrial Commission (NCIC) recently released the following statement, following the Court of Appeals’ ruling in MITCHELL v. BOSWELL:
The NC Court of Appeals recently published an opinion in the matter of Mitchell v. Boswell, No. COA19-1077 (N.C. Ct. App. Nov. 3, 2020). The case arose from a dispute over the enforcement of a memorandum of settlement signed by attorneys on behalf of their clients. The court determined that the statute governing superior court mediation, N.C.G.S. § 7A-38.1(l), requires that the settlement agreement contain the signatures of the named parties to the action. Mediators who serve in NCIC cases should note that N.C.G.S. § 7A-38.1(l) is not applicable to NCIC cases; the statute governing NCIC mediations is N.C.G.S. § 97-80(c). Additionally, Rules 11 NCAC 23G .0103(g) and .0104(e) of the Rules for Mediated Settlement and Neutral Evaluation Conferences of the NCIC govern agreements reached during a mediated settlement conference.
All questions regarding the NCIC’s Mediation Program should be directed to John Schafer at John.Schafer@ic.nc.gov
Cranfill Sumner PRACTICE POINTER: At mediation, if an enforceable settlement is critical, then along with the signature of opposing counsel, defendants should have the individual plaintiff sign the mediated settlement agreement.
For a more complete analysis, please see below:
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Recently, the Court of Appeals issued an opinion that is a reminder that COVID-19 has not changed everything about the way that that we handle workers’ compensation claims in North Carolina. Although MITCHELL v. BOSWELL, __ N.C. App. __ (11/03/2020) does not involve a workers’ compensation claim, workers’ compensation stakeholders should probably treat it as if it is binding precedent.
In MITCHELL, the two adverse parties participated in a mediated settlement conference that had been ordered by the Superior Court. Neither party was in North Carolina during the course of the mediation, so it appears that the parties waived the physical attendance requirement. But, their attorneys and the mediator attended the mediation in person, and at its conclusion, each of the party’s attorney’s signed a mediated settlement agreement “o/b/a” their respective clients. The mediator signed the documents, too.
Although it was disputed, the Court of Appeals suggested (without deciding) that the parties had entered into a settlement. The facts tended to show that the parties expressly authorized their respective attorneys to sign the mediated settlement agreement for them. And, the facts also tended to show that the parties each told the mediator that they intended to enter into the mediated settlement agreement. Subsequently, one party did not think that the other party was honoring the settlement, and it moved to enforce the mediated settlement agreement. The Superior Court entered an order enforcing the settlement, but on appeal, the Court of Appeals reversed.
The Court of Appeals held that the mediated settlement agreement was not enforceable as a matter of law. Why? Because the express terms of N.C. Gen. Stat. § 7A-38.1(1) require mediated settlements to be “reduced to writing and signed by the parties against whom enforcement is sought.” The Court of Appeals explicitly held that “’party’ does not include an attorney.” Because the mediated settlement agreement did not meet the specific criteria for an enforceable settlement, negotiated at a court ordered mediation, the Court of Appeals held that, even if the parties had agreed to a settlement, they did not sign the settlement agreement, rendering it unenforceable. NOTE: The Court of Appeals did not explicitly address what a party must do to “sign” a document.
N.C. Gen. Stat. §97-80(c) is the statute that authorizes the North Carolina Industrial Commission’s mediation program. It says that “The Commission may order parties to participate in mediation, under rules substantially similar to those approved by the Supreme Court for use in the Superior Court Division ….” (Emphasis added). And, the North Carolina Industrial Commission’s mediation rules use language that is substantially similar to the language that was under review in MITCHELL.
The Rules for Mediated Settlement and Neutral Evaluation Conferences of the North Carolina Industrial Commission include Rule 103(g), which says in pertinent part: “No settlement agreement to resolve any or all issues reached at the settlement conference … shall be enforceable unless the settlement agreement has been reduced to writing and signed by the parties.” With the heading Finalizing Agreement, Rule 104(e) reiterates, and it adds to Rule 103, saying that the parties must “reduce the agreement to writing, specifying all terms of the agreement that bear on the resolution of the dispute before the Commission, and shall sign the agreement along with their counsel.” (Emphasis added). However, Rule 104(e) also includes an accommodation that may be a trap for the unwary. It provides that “Execution by counsel of a mediated settlement agreement for an employer or carrier who does not physically attend the mediated settlement conference shall be deemed to be in compliance with this Rule .”
So, in practice, Rule 104(e) allows defense attorneys to sign off on mediated settlement agreements for their clients, and in doing so, to bind their clients. But, the rule is not bilateral, so the opposite is not necessarily true. A plaintiff’s attorney’s signature may not be sufficient to bind a plaintiff who does not sign the mediated settlement agreement himself/herself. Although Rule 104 has been temporarily modified to relax attendance requirements, the provisions in Rules 103 and 104 that address signatures have not been changed. And, the significance of the plaintiff’s own signature is consistent with the North Carolina Industrial Commission’s more general, published policy that allows it to accept the electronic signatures of a plaintiff (via DocuSign) on compromise settlement agreements and on North Carolina Industrial Commission forms. Still up for debate … what action does a plaintiff need to take, in order to “sign” a mediated settlement agreement?
All stakeholders in North Carolina’s workers’ compensation system have had to come up with different ways of doing business, since COVID-19 prevents us from doing business as usual. But, to be legally binding, all of our accommodations, flexibility, and work-arounds must comply with the law. So, if you want the benefit of your bargain, then think back to a time that seems long ago, before most folks had even heard of a coronavirus, and when mediations concluded with a certain formality that ensured that claims that had been settled, stayed settled. In those halcyon days, every participant at a mediation would show up to the same place; every participant would greet the other participants with a handshake; and most participants would accept a drink offered by the host. Then, the attorneys, and sometimes the parties too, would speak with the other participants … with nary a mask in sight. If the mediation resulted in a settlement, then every participant would put his/her signature on a common piece of paper, and maybe even borrow their adversary’s pen to do that. Of course, almost all of this would be done with the mediator standing within 6 feet of the parties and their attorneys. How quaint.
The lesson: Even though it is 2020, treat your adverse “party” like it’s 1999. Go through the closing ritual, and get that party’s signature on your mediated settlement agreement.