Settlement Agreement? Where?

Strict Compliance with Rule 43(k), SCRCP

by Joshua Hinson

So you went to mediation, got an agreement from all the parties at 4:55 p.m., which the mediator typed up and passed around to each party for signatures.  The mediator gives you a copy and you head home, another case finished.

A few weeks later, one of the parties refuses to comply with the terms of the agreement.  You call their lawyer and tell them you plan to file a motion to enforce the settlement agreement if you don’t hear from them within 10 days.  They tell you the settlement agreement isn’t enforceable because the lawyer didn’t sign it, only the client.  They point you to Rule 43(k), SCRCP, which indicates “No agreement between counsel affecting the proceedings in an action shall be binding unless reduced to the form of a consent order or written stipulation signed by counsel and entered in the record, or unless made in open court and noted upon the record, or reduced to writing and signed by the parties and their counsel.” 

Unfortunately for you, the Supreme Court agrees with your opponent.  S.C. Human Affairs Comm’n v. Chen, Op. No. 27988 (S.C.Sup.Ct. filed July 22, 2020) (Shearhouse Adv.Sh. No. 29 at 8).  The court refused to enforce a mediated settlement agreement signed by the Commission, the aggrieved parties, Chen and Yang because Chen and Yang’s lawyer did not sign the agreement.  Id. at 15.  The Court found the settlement agreement did not comply with the language of 43(k), regardless of counsel’s presence during the mediation and execution of the agreement.  Id.  Furthermore, the court noted that the settlement agreement could not be enforced as a simple contract because “this Court has held [Rule 43(k)’s] terms are mandatory, which precludes a party from turning to contract or equitable principles (or counter public policy arguments) to vitiate those terms.”  Id.  Accordingly, the Commission could not enforce the settlement agreement.

The Court has made crystal clear now that attorneys and their clients must sign a settlement agreement in South Carolina for it to be enforceable.  This issue is simple to rectify during the course of a normal, in-person mediation; however, as mediations continue to proceed by virtual means, it is important that the parties consider how best to comply with Rule 43(k)’s mandates prior to the mediation officially ending.  Otherwise, it may be a difficult conversation for you to have with your client down the road.