Mediator Malpractice In New Jersey

There are so few reported cases in New Jersey involving claims of mediator malpractice that any cases involving such claims are important. In Jankowski v. Sandor, Docket No. A-0770-10T2 (App. Div., July 27, 2011), the Superior Court of New Jersey, Appellate Division, affirmed the dismissal of the mediator malpractice claims based upon choice of law issues, but in doing so providing some insight into how claims of mediator malpractice would be analyzed under New Jersey law.

Plaintiff Annette Jankowski and her then-husband Jeffrey retained defendants Deanna Sandor, an attorney licensed in New York and New Jersey, and Mediation Associates of New York and New Jersey, a New York corporation formed by Sandor, to mediate the dissolution of their marriage and negotiate a property settlement agreement (PSA) disposing of their marital assets. With Sandor’s assistance, plaintiff and her husband entered into a PSA through which the husband agreed to relinquish his rights to his pension plan. Over six years later after she moved to New Jersey, plaintiff discovered that her husband had withdrawn all the pension funds. He was able to do this because he never executed and filed a qualified domestic relations order (QDRO) with the administrator of the pension plan. Plaintiff then filed a legal malpractice action predicated on Sandor’s failure to advise plaintiff of the need for a QDRO. After the trial court granted defendants’ motions to dismiss plaintiff’s complaint finding it barred under New York State’s statute of limitations, plaintiff appealed.

The appeals court affirmed, holding that New York law was applicable and the action was barred by the New York statute of limitations. However, the court’s analysis of the mediator malpractice claim highlight several important issues. In  that regard,  the appellate court spent considerable time analyzing the mediation agreement signed by the divorcing couple and the mediator, noting that the agreement stated in straight-forward language that Sandor was acting as mediator and not as legal counsel for either party. The agreement also strongly recommended that both parties retain separate legal counsel to review the PSA and that, if either party failed to do so, the party would “be deemed to have voluntarily waived such review despite informed consent.” The appeals court also took a hard look at the PSA itself, which had been signed by both parties. The court noted that plaintiff acknowledged she was represented by another attorney in the PSA. The PSA also contained the several warnings, some noted prominently in bold:

Both parties understand and agree that they have been advised to seek legal counsel before the signing of this or any Agreement and that their failure to do so may result in a waiver of their rights under the law.

*  *  *

The parties acknowledge and agree that they have reached this Agreement through settlement negotiations with neutral facilitors who have not represented either party …

*  *  *

The parties further acknowledge that the mediator who prepared this Agreement acted only as a Scrivener.

The court concluded that the defendant mediator did not act as plaintiff’s attorney during the mediation sessions and therefore did not owe her a duty to advise her on how to secure and perfect her claims against her husband’s pension funds.

The court’s emphasis on the above issues leads to several conclusions:

  1. The mediator should have the parties sign a well-crafted mediation retainer agreement at the beginning of the engagement which identifies in complete detail the role which the mediator will play in the mediation.
  2. Mediators who prepare the parties’ PSA should include representations in plain language stating that the mediator did not act as attorney for any of the parties in the mediation. Further, to be safe, mediators may want to consider limiting their drafting to documents summarizing the parties’ agreement which are not signed by the parties.
  3. Risk-averse mediators may want to go beyond the lip-service boiler-plate incantation of “the parties have been advised of their right to consult with counsel,” etc. usually included in the mediation retainer agreement and PSA and insist that the mediating parties actually retain independent legal counsel. This approach would prevent any party from claiming that the mediator was acting as his or her legal counsel.

The case is annexed here – Jankowski v. Sandor