Willingboro Mall Rule That Settlements in Mediation Must be Reduced to Writing and Signed at the Mediation Applies to Voluntary Mediations as Well as Court-Ordered Ones

Gold Tree Spa, Inc. v. PD Nail Corp., 475 N.J. Super. 240 (App. Div. 2023). In Willingboro Mall, Ltd. v. 240/242 Franklin Ave., LLC, 215 N.J. 242 (2013), the Supreme Court announced a requirement that where a settlement is reached in mediation, “”the terms of [the] settlement must be reduced to writing and signed by the parties before the mediation comes to a close.”

In a concise opinion by Judge Sumners today, the Appellate Division faced a case in which one group of parties to a voluntary settlement mediation of a commercial dispute moved to enforce a settlement that the movants asserted was reached at the mediation. The mediator had prepared a draft settlement agreement, but the parties did not sign it, as one of the parties refused to go forward with the settlement. There were further negotiations after the mediation, but still the parties did not definitively agree.

The Law Division (Judge Zazzali-Hogan, whom the Appellate Division identified by name) denied the motion to enforce the settlement, based on failure to comply with the Willingboro requirement. Willingboro involved a court-ordered mediation, and the movants here argued that Willingboro did not extend to voluntary mediations such as that involved in today’s case. The movants cited a case and a statute, the Uniform Mediation Act, N.J.S.A. 2A:23C-1 et seq., that recognized certain differences between the different types of mediation.

Applying de novo review, Judge Sumners rejected the movants’ position. “Willingboro clearly applies and its holding is unambiguous: ‘[t]o be clear, going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.’ 215 N.J. at 263. The parties did not sign the draft settlement agreement and, therefore, it is unenforceable under Willingboro‘s broad, bright-line rule. See id. at 262-63. While there is a distinction between the various forms of mediation, as indicated in N.J.S.A. 2A:23C-3, the differences are irrelevant when considering the policy behind the Willingboro decision…. In deciding this appeal, whether mediation is court-ordered or voluntary is a distinction without a difference.”

The post-mediation events did not result in a settlement either, as Judge Sumners went on to explain. The panel thus affirmed the ruling of Judge Zazzali-Hogan.

If there was any doubt about the scope of Willingboro, this opinion resolves it. Counsel and parties who settle cases in mediation of any type need to ensure that the settlement is memorialized in a signed agreement at that time.