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Van Winkle: Decision pits mediation confidentiality against contract law

John R. Van Winkle
July 18, 2012
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By John Van Winkle

van-winkle-john-mug.jpg Van Winkle

In the recent case of Horner v. Carter, __N.E.2nd__ (Ind.Ct.App. 2012), 34A02-1111-DR-1029, the Indiana Court of Appeals held that evidence of mediation communications was admissible in a hearing to modify a 7-year-old mediated settlement agreement incorporated into a decree of dissolution. The court had two basic reasons for allowing the testimony of matters communicated during the mediation. First, the court ruled that the evidentiary exclusion provisions of ADR Rule 2.12 and Indiana Evidence Rule 408 did not require exclusion of the evidence because it was offered for a purpose other than “to prove liability for or invalidating of the claim or its amount.” The court ruled that the husband was offering the mediation communication to establish that a mistake had been made in the drafting of the agreement.

The second basis for the court’s ruling is arguably more problematic; that is, that the mediation confidentiality provisions of the ADR rules do not prohibit the admission of mediation communications when used to establish traditional contract defenses such as mistake, fraud and duress.

Clash of mediation confidentiality and substantive contract law

The Horner case highlights the difficulty that occurs when mediation confidentiality provisions collide with long-established contract common law. Courts have not reached unanimous conclusions. For example, in the case of In re Marriage of Kieturakis, 138 Cal.App.4th 56 (Ct.App.2006), the California Court of Appeals wrestled with the problem. In that case, two years after a mediated settlement agreement was reached in a dissolution of marriage, the wife sought to overturn the agreement alleging it had been reached under duress. The California Court of Appeals excluded the testimony of mediation communications, continuing in that state what has been considered to be a “super privilege” created by the California mediation statute.

In the article, “When Mediation Confidentiality and Substantive Law Clash: An Inquiry into the Impact of In Re Marriage of Kieturakis on California Confidentiality Law,” [8 Pepperdine Dis. Res. L. J, Article 7 (2012)], the journal editor discussed the Kieturakis case and the issue presented when mediated agreements are later challenged and parties seek to introduce evidence of mediation communications to support or defend against such challenges. Importantly, that article, as did the court in Horner, cited and discussed the provisions and comments of the Uniform Mediation Act. The UMA was drafted in 2001 by a joint effort of the American Bar Association’s Section of Dispute Resolution and the National Conference of Commissioners on Uniform State Laws, and was based not on the evidentiary exclusionary principles of Evidence Rule 408 but rather upon the establishment of a privilege for mediation communications.

Unlike California, however, where the mediation confidentiality provisions have been strictly enforced, the UMA recognized that in appropriate circumstances the mediation confidentiality should defer. The UMA provides in Section 6(B)(2)that the confidentiality privilege may not apply in certain instances in connection with proceedings “to prove a claim to rescind or reform or a defense to avoid liability on a contract arising out of mediation.” The UMA, however, provides important preconditions that must be met before mediation communications will be admissible.

The UMA requires an in camera hearing and weighing of interests

Although the Indiana Court of Appeals in Horner cited UMA Section 6(B)(2) and its comments for the proposition that the exception to the privilege created was to preserve traditional contract defenses, it did not discuss the important balancing and weighing of interests contemplated by that same section. The drafters of the UMA understood that there would be occasions when equities would require that evidence of what was done or said in a mediation be admitted into evidence.

The policy and process reasons for the confidentiality provisions were so critical, however, that the drafters wanted to ensure that such occasions were limited and that there would be process safeguards in place. Therefore, the UMA provides that no evidence of mediation communications should be admitted into evidence until and unless there is an in camera hearing in which the party seeking to use the evidence demonstrates that “the evidence is not otherwise available” and that “there is a need for the evidence that substantially outweighs the interest in protecting confidentiality.” Peter Robinson’s article, “Centuries of Contract Common Law Can’t Be All Wrong: Why the UMA’s Exception to Mediation Confidentiality in Enforcement Proceedings Should Be Embraced and Broadened,” 2003 J.Disp.Resol.135, (2003) is cited in Horner in support of the decision to allow the admission of mediation communication, but the decision does not refer to or discuss the critical weighing and balancing principles inherent in the UMA’s exception. Robinson in that article states: “While this exclusion provides the means to apply contract law when enforcing mediated agreements, the UMA reflects a strong commitment to the interests of mediation confidentiality by imposing numerous conditions and one problematic limitation on the implementation of the exception.” (2003 JDR at p.168)

Although Robinson concludes the UMA is flawed in that it prohibits mediator testimony, he underscores the importance of the in camera hearing and states that the “extreme remedy” of allowing the admission of mediation communications is only available after specific findings by a neutral authority. It is this balancing and weighing inherent in the in camera hearing which is missing from the discussion and holding of Horner.

Conclusion

It is submitted that the balancing and weighing of interests contemplated by the UMA and embodied in the requirement for an in camera hearing should be adopted by Indiana courts. Such a hearing ensures that traditional contract defenses and actions are preserved without unnecessary erosions of mediation confidentiality.

The question is how best to graft this requirement into our current law. A clarification or expansion of the holding in Horner by the Indiana Supreme Court would serve as one path. Because, however, the change or expansion of the law would create an affirmative obligation on the part of trial courts to conduct in camera hearings, it could be that the best course would be for the Indiana General Assembly to join the 11 other states, including our neighbors Ohio and Illinois, and adopt the Uniform Mediation Law. Although the adoption of the UMA in Indiana would require some tweaking of the ADR Rules, there would not be a radical departure from the manner in which those ADR Rules have been interpreted to date by the Indiana Supreme Court. Evidence of mediation communications should only be permitted if the court finds after an in camera hearing that the evidence is otherwise not available and that the interest in protecting mediation confidentiality is outweighed by the need for the evidence.•

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John Van Winkle is a full-time mediator and a former chair of the American Bar Association’s Section of Dispute Resolution. The opinions expressed are those of the author.

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