Cal.App.: Mediation Term Sheet Enforceable Where No Final Agreement Reached (Web)
April 25, 2005
Tender Loving Things, Inc. v. Robbins: (Cal. App. 4/20/2005) On April 20th, 2005, the First District of the California Court of Appeals upheld a trial court order enforcing a writing stipulation for settlement signed as part of a JAMS mediation. The parties intended to prepare and execute a final agreement at a later time, but failed to agree on its terms.
The original dispute arose out of a commercial arrangement for the manufacture and marketing of “the Tingler,” a massage device resembling a whisk broom. After mediation, the parties signed a term sheet that “extensively listed numerous detailed terms of the agreement regarding manufacturing and marketing of the Tingler.” Although the sheet mentioned and contemplated a later “final agreement,” Tender Loving Things sought enforcement of the term sheet.
Under California law, the term sheet would only be enforced if its terms were sufficiently certain. Citing to the specificity in the eight page preliminary agreement, Judge Stevens, writing for the court, held that the agreement was sufficiently certain.
Interestingly, the term sheet contemplated that the settlement agreement would include an ADR provision “with mediation, facilitation and arbitration provisions to be agreed between the parties.” Although the final agreement was never reached, the term supports evidence from other sources of the increasing use of stepped ADR processes.
Although Robbins pointed specifically to the intent to form an ADR clause as evidence of uncertainty, the court ruled that: “under the circumstances, the addition of more specific alternative dispute resolution (ADR) provision as a remedy for a breach of the agreement would be a minor or incidental term that does not go to the heart for the settlement agreement, or impair its enforceability.” Since the preliminary agreement only referred to ADR in the context for using a stepped clause in the final agreement, the court held that it had jurisdiction, rather than an arbitrator, to determine whether the mediated agreement was enforceable.
Tender Loving Things, Inc. v. Robbins is an unpublishable opinion, and California Rules of Court, rule 977(a) prohibits courts and parties from citing or relying on such opinions unless specified by rule 977(b). It can be found at 2005 WL 902648 (Ca.App. 1 Dist.). It is also available at: http://www.courtinfo.ca.gov/opinions/nonpub/A103989.PDF
- Mark Boyko