BY DAN GIBSON
On Nov. 3, the North Carolina Court of Appeals issued an important decision affecting mediated settlements, Mitchell v. Boswell. The court held N.C.G.S. § 7A-38.1(l)’s provision saying a mediated settlement agreement is unenforceable “unless it has been reduced to writing and signed by the parties against whom enforcement is sought” requires the parties themselves to sign. The court of appeals reversed the trial court’s order enforcing a mediated settlement agreement that only the trial attorneys signed. (Full disclosure: I represented the appellant in Mitchell).
Mitchell likely also affects family court mediations under § 7A-38.4(j) and mediations through clerks of court under § 7A-38.3B(i)(l). Because of its scope, Lawyers Mutual sent out a notice about Mitchell. The Dispute Resolution Commission issued a memorandum to all certified mediators saying that “this case may have a significant impact on your mediation practice.” CLEs have warned attorneys about Mitchell’s implications, especially because of COVID-19.
While Mitchell is a significant decision, existing law and rules provide powerful tools to comply with Mitchell’s signature requirement. The statute of frauds likely allows a person with a power of attorney to sign for the party. The Mediated Settlement Conference Rules include provisions to ensure the parties or those with authority to sign are present at mediation. And the Uniform Electronic Transactions Act can make signing digitally as simple as sending an email.
Because § 7A-38.1(l) is a statute of frauds a power of attorney should suffice
Because N.C.G.S. § 7A-38.1(l) is a statute of frauds, courts can look to a well-developed body of precedent to interpret it. This is not a novel law. The statute of frauds is older than our state. Its precedent almost certainly applies to N.C.G.S. § 7A-38.1(l). That precedent offers the first tool for complying with Mitchell: a power of attorney.
Our courts have held a document signed by a person with power of attorney “[is], in law, signed by the parties to be charged and in that respect [complies] with the statute of frauds.” If your client can’t attend mediation and you’re worried about the signature requirement, your client can execute a power of attorney. If your client wants to give you power of attorney, you’ll obviously need to consult with the Rules of Professional Conduct to ensure that’s completely ethical. Your client should be able to comply with Mitchell’s signature requirement by having someone with a power of attorney sign for them.
The Mediated Settlement Conference Rules already address Mitchell v. Boswell’s rule
The North Carolina Court of Appeals didn’t write on a blank slate when it interpreted N.C.G.S. § 7A-38.1(l) to require the parties’ signatures. The Mediated Settlement Conference Rules already contemplated this requirement. Rule 4.C provides: “If an agreement is reached at the conference, parties to the agreement shall reduce its terms to writing and sign it along with their counsel.” The Commission’s Comments echo Rule 4.C: “when a settlement is reached during a mediated settlement conference, the mediator shall be sure its terms are reduced to writing and signed by the parties and their attorneys before ending the conference.” Mitchell doesn’t require the Dispute Resolution Commission to rewrite its rules.
The Mediated Settlement Conference Rules impose a duty on mediators to get the parties’ signatures. But they don’t stop there. Because the parties must sign, the parties must also attend (Rule 4(a)(1)) and a court can hold them in contempt for not attending (Rule 5). If you know your client can’t attend mediation, you already have a duty to request opposing counsel’s permission for your client to not attend. Part of that duty is ensuring your client has some way to sign the mediated settlement agreement. On the other hand, if opposing counsel asks you to excuse her client’s absence, make sure you ask how the settlement agreement will get signed.
The Uniform Electronic Transactions Act is critical
Getting the mediated settlement agreement signed should not be difficult. In fact, the Mitchell decision provides a path to getting a signature. Footnote 4 observed the current availability of the provisions of the Uniform Electronic Transactions Act.
The UETA allows parties to sign contracts electronically—if the parties have “agreed to conduct transactions by electronic means.” N.C.G.S. § 66-315. With that agreement, getting an electronic signature can be simple. An electronic signature is any “electronic, sound, symbol, or process … executed or adopted by a person with the intent to sign the record.” N.C.G.S. § 66-312(9). Under this definition, an email could satisfy the signature requirement because it is a “process adopted by a person with the intent to sign.” So, getting the parties’ signatures could be as easy as attaching the mediated settlement agreement to an email, copying all parties, and asking them to reply all saying they approve the agreement.
Mitchell is a significant decision but it is not a watershed decision. It is the logical result of our statute of frauds, a statute with a long history. Attorneys need not innovate to comply with Mitchell. We need only apply the precedent and statutes our courts already enforce. With powers of attorney, the Mediated Settlement Conference Rules, and the Uniform Electronic Transactions Act, attorneys have many ways to comply with Mitchell’s signature requirement.
Dan Gibson is an attorney with Stam Law Firm in Apex whose practice focuses on civil litigation and appeals.