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Tuscany Custom Homes, LLC v. Westover.

2020 COA 178. No. 19CA1724. Mediation Communications—Evidence—Admissibility.

December 31, 2020

Westover and two limited liability companies of which he was a member (collectively, the Westover defendants) entered into contracts for the construction, purchase, and sale of a home. Tuscany Custom Homes (Tuscany) agreed to construct the home and sell it to the Westover defendants, who would then sell it to the Platenaks. Tuscany ultimately sued the Westover defendants for breach of contract. The Westover defendants joined the Platenaks as third-party defendants.

The parties went to mediation, but due to the mediator’s computer problems, mediation was concluded without the parties signing any document memorializing an agreement. Instead, the mediator sent an email summarizing the parties’ settlement terms to serve as the basis for preparing a formal Mutual Release and Settlement Agreement by Tuscany’s counsel. The parties agreed, through emails, that the terms were correct, and Tuscany’s counsel drafted and distributed a draft agreement. The Westover defendants refused to sign the agreement, but the other parties signed.

Tuscany filed a motion to enforce a settlement agreement, which the Platenaks joined. They alleged that an oral settlement agreement was formed in the mediation proceeding, and they attached the mediator’s email and the draft agreement. The Westover defendants denied that an enforceable agreement existed. In a deposition, the mediator confirmed that the parties had reached agreement and the terms in his email and the subsequent emails accurately reflected that agreement.

The district court held a hearing on the motion to enforce the settlement agreement. The Westover defendants objected that some of the evidence proffered was inadmissible because it revealed confidential mediation communications, including the mediator’s deposition testimony, his email, the email chain following his email, and the draft agreement. The district court found that the parties formed an enforceable contract at the mediation and granted the motion to enforce. It also awarded costs and attorney fees to the Platenaks pursuant to a prevailing party provision in their real estate contract.

On appeal, the Westover defendants argued that under the Dispute Resolution Act, CRS §§ 13-22-301 to -313 (the Act), much of the evidence admitted at the hearing was inadmissible as mediation communications, and absent proper evidence, there was insufficient evidence to prove the existence of an enforceable agreement. The Act defines a mediation communication to include any memoranda or notes of a mediator, but excludes from this definition a final, fully executed written agreement reached as a result of a mediation or dispute resolution proceeding. Mediation communications are generally inadmissible in judicial proceedings under CRS § 13-22-307(2)–(3). Accordingly, the mediator’s email and the draft agreement were inadmissible mediation communications. It was thus an abuse of discretion to admit this evidence. Further, the remaining evidence was insufficient to establish an enforceable agreement.

The order enforcing the agreement and awarding fees and costs was reversed and the case was remanded for further proceedings.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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