In Re Empire Pipeline Corp.
2010 WL 3566155, 323 S.W.3d 308 (2010)
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Rule of Law:
Under the Texas Alternative Dispute Resolution (ADR) statute, communications made and records created during a mediation are confidential and privileged from discovery, particularly when a party seeks to use them to challenge the validity of the settlement agreement reached in that same proceeding.
Facts:
- H. Glenn Gunter and Empire Pipeline Corporation (Relators) were involved in a dispute concerning an oil and gas exploration contract.
- The parties attended a mediation in December 2007 to resolve their dispute.
- During the mediation, Gunter, representatives from Empire, and Empire's attorney, Robert L. Harris, all signed a document titled "settlement agreement."
- Subsequently, a dispute arose over the validity of the settlement agreement, with Gunter alleging it was procured through duress and fraud.
- Empire sought to enforce the terms of the settlement agreement.
- In the litigation over the agreement's validity, Gunter sought to depose Empire's attorney, Robert L. Harris, about the discussions and negotiations that occurred during the mediation.
- Gunter also requested that Harris produce all notes and drafts of documents created in connection with the mediation and the settlement agreement.
Procedural Posture:
- H. Glenn Gunter sued Empire Pipeline Corporation (Relators) in a Texas trial court for breach of contract (the 'original underlying action').
- After the parties signed a settlement agreement at mediation, Gunter filed a motion to vacate it.
- The trial court denied Gunter's motion, enforced the agreement, and dismissed Gunter's claims.
- Gunter (appellant) appealed to the Texas Court of Appeals, which reversed the trial court's judgment and remanded the case for further proceedings.
- On remand, Gunter served a notice to depose Empire's attorney and obtain documents related to the mediation.
- Empire (Relators) filed a motion to quash and for a protective order, asserting mediation privilege.
- The trial court granted, in part, Gunter's motion to compel, ordering the deposition and production of documents that were communicated to the mediator or to Gunter's side.
- Empire (Relators) filed a petition for a writ of mandamus in the Texas Court of Appeals, seeking to compel the trial court to vacate its discovery order.
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Issue:
Does the Texas ADR statute's confidentiality privilege protect a party's attorney and representatives from being deposed and from producing notes and drafts related to communications made during a mediation, when the opposing party seeks that discovery to challenge the validity of the settlement agreement reached in that mediation?
Opinions:
Majority - Justice Lang
Yes. The Texas ADR statute's confidentiality privilege protects communications and records from the mediation from being discovered to challenge the resulting settlement agreement. The Texas Civil Practice and Remedies Code § 154.073 establishes a broad privilege, stating that communications relating to the subject matter of a dispute made during an ADR procedure are confidential, not subject to disclosure, and may not be used as evidence against a participant. This "cloak of confidentiality" is essential to encourage frank discussions and facilitate settlements. The court distinguished this case from precedent like Avary v. Bank of America, where discovery was allowed to prove a new and independent tort committed during mediation. Here, Gunter sought discovery not to prove a separate claim but to directly attack the validity of the settlement agreement itself, which is precisely what the statutory privilege is designed to prevent.
Analysis:
This decision reinforces the strength and breadth of the mediation privilege in Texas. By strictly applying the confidentiality provisions of the ADR statute, the court protects the integrity of the mediation process, ensuring that parties can negotiate freely without fear that their communications will be used against them later. The ruling clarifies that the narrow exceptions to mediation confidentiality do not apply when a party is attempting to unwind the very settlement agreement reached in mediation. This holding promotes the finality of mediated settlements and signals to litigants that mediation communications cannot be used as a post-settlement discovery tool to challenge the agreement's formation.
