Originally from Dispute Resolution Journal

MEDIATION

Proving Incapacity

The Supreme Judicial Court of Massachusetts held that some expert evidence of incapacity is necessary for a party to a settlement agreement to challenge the enforceability of that agreement on the ground that she lacked capacity to agree to it.

Sparrow sued her sister Demonico, claiming a half interest in the family home. Demonico claimed she was the owner. Before the pre-trial conference, the parties settled in a voluntary mediation and reached a settlement involving sale of the property “as soon as possible” and a payment to Sparrow from the proceeds. Sparrow and her attorney signed the settlement agreement. Before leaving the mediation Demonico and her husband authorized their attorney to execute the settlement agreement on their behalf. Sparrow sought to enforce that agreement in court. Demonico opposed enforcement, arguing that she lacked capacity to authorize a settlement. At the hearing, she testified that she had been taking Zoloft (but recently discontinued it), and on the day of mediation “was out of control emotionally” and “not thinking rationally.” Her husband testified that she was having a breakdown on the day of the mediation, that she was slurring her words, although she had not been drinking, and was crying and out of control. The judge credited this testimony and denied enforcement of the settlement. At trial, a different judge directed a verdict in favor of Demonico. An appeals court vacated the order denying the motion to enforce the settlement, and remanded for “express findings of fact on the extent of [Demonico’s] impairment at the time that she authorized the settlement agreement.” On remand, the trial judge denied enforcement of the settlement based on mental incapacity on the day of the mediation.