The North Carolina Court of Appeals recently considered the issue of whether a mediated settlement agreement can be signed by the attorneys on behalf of their clients in the case of Mitchell v. Boswell, ____ N.C.App. ___, ___ S.E.2d ___ (2020). In that case the parties were out of state while their attorneys participated in an in-person mediation. Once an agreement was made, the attorneys signed a memorandum of settlement on behalf of their clients. A settlement agreement was later drafted by Boswell’s attorney, sent to Mitchell’s attorney and executed by Mitchell. However, Boswell did not sign the agreement. He argued he did not sign or authorize his attorney to enter into the memorandum of settlement on his behalf.

The Court evaluated N.C.G.S. § 7A-38.1(l) in its determination of whether to enforce the memorandum of settlement against Boswell. This statute provides “No settlement agreement to resolve any or all issues reached at the proceeding conducted under this subsection or during its recesses shall be enforceable unless it has been reduced to writing and signed by the parties against whom enforcement is sought.” N.C.G.S. § 7A-38.1(l). The Court found the statute to unambiguously require the signature of the parties—not their attorneys—on any settlement agreement reached as a result of a mediated settlement conference.

The Court did not stop there. In dicta, it opined that the General Assembly “unambiguously omitted the authority to sign by authorized agent as it has included in other statute of fraud contexts.” Mitchell, ____ N.C.App. at ___, ___ S.E.2d at ___. By allowing authorized agents (such as a person possessing power of attorney) to sign for another in other situations but not at mediated settlement conferences, the Court ruled the General Assembly intended “to require the signature of the parties themselves to satisfy the statute of frauds.” Id. (emphasis in original) (citing Dickson v. Rucho, 366 N.C. 332, 342, 737 S.E.2d 362, 370 (2013)). Therefore, a party cannot circumvent the statute by giving an attorney authority to sign for them.

It should be noted that the statute in question before the Court expressly limited its application to mediated settlement conferences arising from superior court civil actions. See N.C.G.S. § 7A-38.1(a). Therefore, this opinion clearly applies to mediated settlement conferences arising out of such actions, but raises the question of whether it reaches beyond to other areas of law.

Deputy Commissioner J. Schafer issued a memorandum on November 10, 2020 addressing this concern. In his memorandum, Deputy Commissioner Schafer noted Industrial Commission mediations are governed by N.C.G.S. § 97-80(c) and any agreement reached at these mediations is governed by Rules 11 N.C.A.C. 23G .0103(g) and .0104(e), which allows attorneys to sign mediated settlement agreements on behalf of their clients.

The General Assembly has the ability to take another look at N.C.G.S. § 7A-38.1(l) with Mitchell in mind when it comes back to Raleigh in 2021 and amend it if they deem necessary. Until then, individuals participating in Superior Court civil mediations should have all the parties execute a memorandum of settlement at the conference or as soon as practicable following the conference. Every path to settlement is different, and our team at Teague Campbell can help you throughout this process. Feel free to give us a call.