Parties that are able to resolve their disputes at a mediation conference often sign a settlement agreement that states they will sign a more detailed release document at a later date. In a recent case,1 the parties’ disagreement and litigation did not end after they signed the mediation agreement.

The parties to the case were involved in an insurance dispute that arose from Hurricane Katrina. At the time of Hurricane Katrina, Instant Replay’s property was insured under an Allstate Business Customizer Insurance Policy. On September 11, 2009, following a two-day mediation, the parties reached a settlement agreement. The parties signed a one-page agreement, which set forth certain terms, including the deadline for payment, the number of checks to be issued, and the amount and the name of the payee on each of the checks. The agreement provided:

The defendant(s) will pay the full amount of $2 million dollars … to the plaintiff(s). Said payment will be made within 30 days from today. It is understood and agreed that, except as provided below, all liens or interventions for medical expenses, compensation payments or otherwise will be paid and satisfied by the plaintiff(s), including but not limited to all requirements under the law to satisfy the lien or rights of the [SBA].

The parties will draft a settlement and release agreement to be signed by all parties.

Payments will be made in the following manner:
1) Check to Instant Replay for $311,000 for contents due to wind
2) Check to Instant Replay for $245,000 for loss of income
3) [Check] to Instant Replay for $444,000 for contents due to looting
4) Check to Charles Orzehoskie for [$1,000,000] for damages due to personal injuries

On October 12, 2009, Allstate’s counsel e-mailed the face of the checks notifying, but Allstate did not deliver the checks until October 28, 2009. On October 13, 2009, Instant Replay filed a Motion for Summary Hearing and to Enforce Settlement Agreement and sought damages and penalties pursuant to a statute “for the defendants’ failure to pay the settlement within thirty days.”

Nearly a year later, the court heard the motions and denied Instant Replay’s motion and entered judgment for Allstate. Instant Replay appealed.

The appellate court noted that the mediation agreement was very specific as to the amounts of the checks, to whom the checks were payable, and that payment would be made within 30 days of the date the parties signed the mediation agreement. The 30–day period for Allstate to issue payment began to run on September 11, 2009, the date of the agreement.

The appellate court held that because the payments were not made according to the terms of the settlement agreement, Allstate violated the agreement and statute. The appellate court directed the trial court to enter judgment in favor of Instant Replay and remanded the case further proceedings, including assessment of penalties under the statute and the costs of the appeal.

In sum, the mediation agreement was binding, even though it contemplated a later creation of a more detailed release agreement. It is unfortunate when a mediation agreement and purported resolution actually results in a prolonged period of litigation and lack of finality. It took nearly three years from the date of the mediation agreement for a resolution in this case.

1 Instant Replay Sports, Inc. v. Allstate Ins. Co., 2012 WL3848978 (La. 1st Cir. 2012).