Important Changes Impacting Settlement Agreements and Mediation

By March 12, 2019Litigation Tips

As every litigator knows, most California settlement agreements include a waiver of Civil Code section 1542.  Because, in a settlement agreement, the parties typically agree to abandon, or give up, rights or claims that otherwise could be pursued or enforced, a section 1542 waiver is needed if the settling parties wish to include both known and unknown claims in a general release.  Effective January 1, 2019, the language of section 1542 has been amended as follows:

A general release does not extend to claims which that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, which and that if known by him or her, must would have materially affected his or her settlement with the debtor or released party.

While these amendments may seem picayune, the practitioner would be well advised to be sure the new language is included in future settlement agreements, otherwise he or she risks the section 1542 waiver being ineffective.

The New Year also saw a change in the rules governing mediations.  Effective January 1, 2019, all parties to California based mediations will be required to sign a written disclosure form confirming that the client understands and agrees to mediation confidentiality.  The new rule, which is embodied in California Evidence Code section 1129, requires the attorney to obtain a printed acknowledgment, signed by that client, stating that he or she has read and understands the confidentiality restrictions governing mediation.  There are many samples of such forms, such as the one found here.  While some have criticized the new rule as fixing a non-existent problem, practitioners should ensure compliance as a matter of routine practice to avoid any issues on the day of the mediation.