Recent Florida Case Makes Clear That Settlement Agreements Reached in Connection with Mediation Must be Signed by All Parties to be Enforceable

Many disputes that result in litigation are resolved through the mediation process prior to trial.  In fact, Florida’s Homeowners’ Association Act, Chapter 720, Florida Statutes, requires mandatory mediation for certain types of disputes between homeowners and the association before any lawsuit can be filed.  See Fla. Stat. § 720.311(2).   Florida circuit courts also typically require that the litigants attempt to mediate their civil dispute prior to the trial occurring.   In short, most private litigants will go through the mediation process in order to try to resolve the litigation prior to trial.

A recent Florida case involving a dispute between a condominium association and a unit owner illustrates a special requirement for settlements reached in connection with mediation that must be taken into account by the parties, attorneys and mediator involved in the mediation.  That is, that in order to be enforceable, a settlement reached at mediation must be in writing and signed by all parties and their counsel under Rule 1.730(b), Florida Rules of Civil Procedure.

The Parkland Condominium Association Case

The case, Parkland Condo. Ass’n, Inc. v. Henderson,[1] was decided by Florida’s Second District Court of Appeal on November 16, 2022, and involved a lawsuit by the plaintiff against her condominium association after a water leak caused damaged to her property.  Following court-ordered mediation in December 2021, the attorneys for the plaintiff and the association exchanged several emails including terms and drafts of a proposed settlement agreement.

Ultimately, more than a month after mediation, on February 2, 2022, the plaintiff’s attorney sent the association’s attorney a settlement agreement that included all of the essential terms of settlement.  The association’s attorney accepted the settlement agreement by email on February 7, 2022, in which he stated that “I have received word from my client that they agree to the documents as drafted.”  Id. at *1.  However, the association later changed its position and it and its counsel refused to sign the settlement agreement.  The plaintiff then filed a motion for the court to enforce the settlement agreement based on the prior agreement to the essential terms of settlement.  After the trial court denied the motion, the plaintiff appealed.

On appeal, the Second District Court of Appeal acknowledged the general rule of law in Florida that “[S]ettlements are highly favored and will be enforced whenever possible.”  Id. at *1 (quoting Robbie v. City of Miami, 469 So. 2d 1384, 1385 (Fla. 1985).  The court also explained that settlement agreements are governed by contract law, and that a “binding contract is formed when the parties indicate mutual assent to the agreement’s material, essential terms,” and that the “signatures of the parties themselves are not required under common law principles of contract formation.”  Id.; see also 11 Fla. Jur. 2d Contracts § 102 (2022) (“[I]t is not necessary for a party to be a signatory to a contract to be bound by its terms.”).

The Second District further explained that in another context not involving mediation, “we would likely conclude that it was a binding and enforceable” settlement agreement reached between the parties because “by February 7, 2022, both parties’ attorneys appeared to have agreed on the essential terms and had indicated that their clients were on board.”  Id. at *2.  However, because the settlement had been reached in the context of court-ordered mediation, the outcome was different, and the Second District held the settlement agreement was not enforceable.

This is because the Second District held that “[w]hen parties reach a settlement agreement after mediation” Florida Rule of Civil Procedure 1.730(b) applies, and its expressly states: If a partial or final agreement is reached, it shall be reduced to writing and signed by the parties and their counsel, if any.”  Id. at *1.  Because of this special requirement for settlements reached in the context of mediation, the Second District ruled that association and its counsel’s refusal to sign the settlement agreement rendered it unenforceable under Rule 1.730(b).

This was true even though the mediation had occurred in December 2021, and the emails confirming agreement to the settlement terms were sent more than a month later in February 2022.  The Second District explained that under section 44.404(1), Florida Statutes, a court-ordered mediation only ends when either a settlement agreement is signed by the parties, the mediator declares an impasse, the mediation is terminated by court order, or by agreement of the parties after they have complied with the court order to appear at the mediation.  Id. at *1, n.2.  Because none of those events occurred, the Second District found the settlement agreement reached in February 2022, was still in the context of court-ordered mediation that occurred in December 2021, and the requirements of Rule 1.730(b) for the settlement agreement to be signed by the parties and their counsel therefore applied to the settlement agreement.

Conclusion

There are several key takeaways from The Parkland Condominium Association case.  First, any settlement agreement reached in connection with mediation, and even after mediation if there was no impasse declared by the mediator, must be in writing and signed by all parties and their counsel.  Otherwise, the settlement agreement will simply not be enforceable under Florida Rule of Civil Procedure 1.730(b).

Second, the parties, their counsel and the mediator should avoid ever leaving a mediation with a settlement agreement agreed in principal, or with a settlement documented by email agreement of the parties, with the idea that the formal settlement agreement can be prepared and signed the next day or thereafter.  This is because after a long day of mediation the parties may agree to settlement terms, but then the next day or thereafter a party may have buyer’s remorse and refuse to sign the settlement on the terms previously agreed to at mediation.  Under Rule 1.730(b) and the Parkland Condominium case, the settlement reached at mediation would not be enforceable.  Therefore, at minimum, if a settlement is reached a mediation, a simple written agreement with all of the essential terms should always be signed by all parties and their counsel before leaving the mediation to ensure the agreement reached at mediation will be enforceable.

Finally, if mediation does not result in a settlement, the parties should request the mediator to declare an impasse so that the mediation is concluded.  That way, future settlement discussions will not be considered part of the mediation and the requirements of Rule 1.370(b) should not apply.

[1] No. 2D22-1279, 2022 WL 16954010, at *1 (Fla. Dist. Ct. App. Nov. 16, 2022)