Mediated Agreement Fails When Condition Precedent Fails

In Hernandez v State Automobile, issued last month by the Michigan Court of Appeals, Plaintiff sued her automobile insurance company to get past and future personal-injury benefits. Following a couple of mediation sessions, the parties reached an agreement via emails with the mediator. It included the proviso that the agreement was contingent on the approval of the Michigan Catastrophic Claims Association (MCCA). The document formalizing their agreement was never signed.

The MCCA refused to approve the agreement, because surveillance indicated that the plaintiff was not as injured as she claimed. Defendant retracted the agreement, and plaintiff sued to enforce it. The trial court determined that defendant had waived the condition precedent by continuing its surveillance of the plaintiff after they had reached the agreement; defendant appealed.

The Court of Appeals’ first question was whether the parties had reached an enforceable agreement; the court agreed with the trial court that they had. Refuting the contention that a party must sign an agreement in order for it to be valid, the court noted that the attorneys’ names at the end of their emails satisfied the subscription requirement of MCR 2.507(G), citing Kloian v Domino’s Pizza LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006), a case which did not involve a mediated agreement.

As inked autographs become rarer, the Court has wrestled with the requirement in MCR 2.507(G) that to be enforceable, “evidence of the agreement is in writing, subscribed by the party against whom the agreement is offered or by that party’s attorney.” Do emails count as “in writing”? If so, how does the email meet the requirement that it be “subscribed”? The Kloian case attempted to answer this regarding negotiated settlements, if unartfully, and last summer the court applied it to a mediated agreement, ruling in Amante v Amante, (No. 331542, Court of Appeals unpublished case, June 20, 2017) that an email containing the attorney’s name was not a term of the settlement because the parties were not negotiating the settlement via email, having already reached a mediated agreement. So now Hernandez, while also an unpublished case, signals that email negotiations can result in an enforceable mediated agreement where the key provisions include the attorneys’ names.

The next question was whether the defendant had waived the condition precedent by continuing its surveillance of the plaintiff. The Court of Appeals, reversing the trial court, determined that defendant had done nothing to interfere with the condition precedent, so when the MCCA refused its approval, the agreement became invalid.

In the course of its analysis, the Court reviewed email and phone conversations between the mediator and the attorneys. Apparently no one objected to this. Perhaps the parties agreed in writing to waive confidentiality, a recognized exception under MCR 2.412(D)(1) – but it would’ve been helpful if the court had mentioned that they had done so.

At least two federal courts have upheld the enforceability of a dispute resolution clause in a Christian school contract requiring employees to resolve their differences “through Christian mediation, and if necessary, arbitration” rather than in court. One case, Easterly v. Heritage Christian Schools, Inc., 2009 WL 2750099 (S.D. Indiana Aug. 26, 2009), was decided several years ago; last summer, an Ohio court followed suit, in Maynard v. Christian Valley Academy, Case No. 5:16-CV-01889 (N.D. Ohio, August 20, 2017).

Jeannette Maynard was an employee of Christian Valley Academy (CVA) in Aurora, Ohio, for eleven years. The contract she signed with CVA included the standard Christian Conciliation contract clause long promoted by the Institute for Christian Conciliation (formerly a division of Peacemaker Ministries), which calls for mediation and, if necessary, arbitration, in accordance with biblical principles. The terms of the agreement read, in relevant part:

I agree to attempt to resolve differences with others (parents, fellow-workers, administration and any other person affiliated with [the school]) by following the biblical pattern of Matthew 18:15-17. . . Should unresolved issues remain even after following the above process . . . [disputes] shall be solved and settled by Christian mediation and, if necessary, legal binding arbitration in accordance with the rules of procedure for Christian Conciliation . . .

After Ms. Maynard’s employment was terminated, she attempted to sue CVA for lost wages. The School asked the court to enforce the ADR clause. For some reason, Ms. Maynard did not want to resolve her dispute through Christian conciliation, so she presented to the court several reasons why the Christian ADR clause was unenforceable. The Court found none of her arguments persuasive.

Ms. Maynard argued that the Christian conciliation process would deny her rights to which she would otherwise be entitled under the Fair Labor Standards Act. The Ohio court noted that an Indiana court faced the same argument in a similar case, Easterly v. Heritage Christian Schools, Inc., 2009 WL 2750099 (S.D. Indiana Aug. 26, 2009), and rejected it. Rule 4 of the Rules of Procedure for Christian Conciliation requires conciliators to “take into consideration any state, federal, or local laws that the parties bring to their attention,” but emphasized that “the Holy Scripture (the Bible) shall be the supreme authority governing every aspect of the conciliation process.” The court concluded that, while Christian conciliators are required to take into account biblical law, the plaintiff failed to explain how biblical law conflicted with the FLSA.

Ms. Maynard also argued that the contract clause was unconscionable, because she didn’t see or understand the Christian conciliation clause when she signed it. The court noted that the whole contract was a mere two pages: “If Maynard did not understand the terms after reading the agreement, the onus was on her, not VCA, to ensure that she did.”

To Maynard’s contention that the School had waived its right to assert the conciliation clause, by terminating her employment without first mediating their differences, the Court stated that it was actually Maynard who violated the clause, by suing the School instead of attempting to mediate.

As one who has for decades recommended the use of a Christian conciliation dispute resolution clause in contracts between Christians, I’m pleased with the Court’s careful analysis and with its ultimate conclusion that such clauses are valid and enforceable.

Here’s the standard Christian dispute resolution clause for contracts:

Any claim or dispute arising from or related to this agreement shall be settled by mediation and, if necessary, legally binding arbitration in accordance with the Rules of Procedure for Christian Conciliation of the Institute for Christian Conciliation. Judgment upon an arbitration may be entered in any court otherwise having jurisdiction. The parties understand that these methods shall be the sole remedy for any controversy or claim arising out of this agreement, and expressly waive their right to file a lawsuit in any civil court against one another for such disputes, except to enforce an arbitration decision.



Community Mediation Makes the News

The Detroit News is running a front-page story today about the success of Michigan’s Community Dispute Resolution Program (CDRP), focusing on the Wayne and Macomb mediation centers. The CDRP has survived ups and downs in its thirty years of serving Michigan, and continues strong today. I’ve been involved with it since its inception, and enjoy a close connection these days with the CDRP center in Grand Rapids, the Dispute Resolution Center of West Michigan.

Township Officials Apologize

It’s not often that government officials apologize for mistakes, but we saw an example this week when Meridian Township officials apologized for mishandling a complaint of sexual assault in 2004. The township, which lies adjacent to East Lansing, is governed by Manager Frank Walsh and a board of trustees, all of whom met yesterday along with Township Police Chief Dave Hall for a news conference to apologize publicly to Brianne Randall-Gay, who filed a complaint with Meridian Township police in 2004 after being molested by Dr. Larry Nassar during a medical exam.

Manager Walsh and Police Chief Hall described the errors their police department made in 2004. After Ms. Randall-Gay, age 17 at the time, filed her complaint, she was asked to submit to a rape kit procedure, which she did (although one wonders how a rape kit would provide any evidence to her claims of digital penetration and touching her breasts). Township Police Detective Andrew McCready then interviewed Dr. Nassar, who persuaded McCready, by the use of medical reports and a power point presentation, that Nassar’s treatment was medically viable. So the detective dismissed the complaint, telling Ms. Randall-Gay that the police could not force Nassar to follow medical protocols such as wearing gloves and having an adult present when he performed this “medical procedure.” Nassar, of course, went on to molest scores of other girls before he was arrested in 2016.

Meridian Township’s apology is notable for several reasons. They were the ones who initiated the phonecall to Ms. Randall-Gay. She said it was a phonecall she had “waited 14 years for.” The Township could have chosen not to go public with its apology; the manager said they had not received any legal advice on whether or how to do this public apology, but felt it was the right thing to do.

They followed up their words with actions: the Township paid to fly Ms. Randall-Gay from her home in Seattle so she could attend Nassar’s sentencing hearing in Lansing last month and give a victim impact statement. Apparently Manager Walsh attended portions of that hearing and talked with Ms. Randall-Gay outside the courtroom. And yesterday they announced several other planned actions: they have invited Ms. Randall-Gay to help them develop a program to help children understand criminal sexual conduct and how to report it; they are reviewing all other sexual abuse complaints from the last twenty years to see if other cases should have gone forward; they will provide extra training for their police officers regarding sexual assault; and the police chief will now sign off on all sexual assault cases.

A cynic might say the Township is initiating all these actions to stave off a lawsuit. But it doesn’t sound like any other entity initiated an apology with a Nassar victim, a fact which deepened the victims’ wounds. A sincere, well-timed apology can indeed prevent a lawsuit—and can do much more besides.


Michigan Court of Appeals Publishes Case on Enforceability of Mediated Agreement

The Michigan Court of Appeals has issued just its second published opinion on the enforceability of mediation agreements, and it’s another divorce case, Rettig v Rettig, Case No. 338614 (January 23, 2018). (The previous case was Vittiglio v Vittiglio, 297 Mich App 391; 824 NW2d 591 (2012).)  The narrow issue in Rettig concerns whether a trial court must make findings on the record regarding the best interests of the child(ren) and the established custodial environment, after the parties have already reached an agreement through mediation. (It does not.) So this case applies only to the minority of cases where a divorce involving minor children is mediated.

One question is why this case was one of the ten-percent of Court of Appeals cases selected for publication. Many thanks to my colleague Lee Hornberger for pointing out that it could be because Rettig overrules the holding in Vial v Flowers, Case No. 332549 (September 22, 2016), where the Court of Appeals ruled that the trial court had not “adequately examined” whether the mediated custody arrangement was in the best interests of the child. In Rettig, in contrast, the Court of Appeals rejected as “nonsensical” the father’s argument that the trial court was required to make a finding regarding “best interest” factors “in the context of an agreement between the parties.” The Rettig court seems much more willing to let the mediated agreement regarding custody stand without investigation by the trial court.

Interestingly, Judge Jane Markey was on the three-judge panels that decided both the Rettig case as well as Vial v Flowers.

Since it’s going to be published, becoming state-wide precedent, it’s worth considering other aspects of Rettig.

The court first wrestled with whether the “memorandum” that issued from the parties’ mediation was an enforceable agreement. It’s not clear why this was even an issue, since the memorandum apparently included various written terms and was signed by both parties. Why didn’t the Court simply refer to it as an “agreement”? The court said the husband “likened” their mediation agreement “to a mediation settlement, where MCR 3.216(H)(7) and MCR 2.507(G) would require certain procedures to be followed.” The only requirements of MCR 3.216(H)(7) are that “the terms of the settlement must be reduced to writing, signed by the parties.” The Court’s description of the Rettig memorandum meets this definition, so it’s unclear why the Court had to go to great lengths – noting that the agreement was “scrutinized” in a hearing – to declare it a valid agreement.

Rettig reiterates a point the Court has made in the past, that a party may not be relieved from a valid mediated agreement simply because that party has changed their mind. Consistent with other challenges to mediated agreements, the Court noted that the husband “had in fact agreed to the memorandum” but now appeared to have “simply regretted making it,” a condition to which the Court is unsympathetic.

The opinion says that the parties participated in “facilitated mediation.” Since the Court Rule defines “mediation” as a process in which a neutral third party “facilitates” communication, MCR 3.216(A)(2), it’s redundant to describe the process as “facilitated” mediation. Michigan continues to struggle with terminology regarding mediation, and the Court of Appeals is not helping.

One hopes that, before it’s officially published, the editors correct the typo in the second-to-last paragraph, “… whether the trial court must more stringently find by clear and convincing evidence that changing any established custodial environment is in the child’s best interest.”


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