In Jilco, Inc. v. MRG of S. Fla., Inc., 2014 Fla. App. LEXIS 16800 (Fla. 4th DCA 2014), a case decided last week by the Fourth District Court of Appeal of Florida (“4th DCA”), the Court held that within Florida statute and civil procedure, a settlement agreement can exist between two parties even if not approved by the trial court. Where the parties enter into a settlement agreement, the settlement bars discovery regarding settled matters no longer at issue in the litigation. An order compelling discovery while the settlement agreement is still in effect constitutes a departure from the essential requirements of Florida law. A signed mediated settlement agreement is a contract and the proper course is for a court to resolve a dispute regarding the validity of the agreement before ruling on a request for discovery. To treat the agreement as though it does not exist would pose a great threat to mediated settlements.
Earlier this year, after Jilco, Inc. (“Jilco”) subleased a commercial property to a separate company, MRG of South Florida, Inc. (“MRG”), a dispute arose regarding the rent payments per month, and a trial court ordered mediation where the parties entered into a preliminary settlement agreement. This agreement stated that MRG’s rent would be set at $31,000 per month and that the rent would always be $14,000 more than Jilco’s rent to the owner of the property. After a few months had passed and the agreement was signed, Jilco notified MRG that rent under the sublease would be increased to $33,995.71 due to a property tax increase, but was still $14,000 more than Jilco’s new rent to the owner.
MRG filed a motion asking the court to set the rent amount at $31,000, and Jilco argued that the increase was consistent with paragraph (b) of the agreement. Consequently, MRG asked that the agreement be rescinded or voided due to mistake or absence of a meeting of the minds. Furthermore by subpoena, MRG requested numerous documents including all leases and communications relative to the property, the entire lease file, and all records of payment and ledgers. Jilco then filed a protective order seeking to limit discovery to information relevant only to the disputed settlement agreement, and objected that both MRG’s request asked for nineteen years of correspondence, and it would cause Jilco irreparable harm.
The trial court essentially found that there was no settlement agreement until one was submitted and approved by the court, and therefore the case remained open and full discovery would be available. Jilco appealed, and argued that the agreement did not need to be approved by the court to be valid and that discovery beyond the terms of the settlement was prohibited at the current time. On appeal, the 4th DCA agreed with Jilco and reasoned that the trial court departed from the essential requirements of law in finding that no agreement existed unless approved by the court in order for discovery to commence. The parties reached an agreement that was reduced to writing, signed by all involved, and therefore was a contract. Moreover, the proper course was for the court to resolve the dispute regarding the validity of the agreement before ruling on the request for discovery because it may cause irreparable harm. The settlement agreement bars discovery regarding settled matters no longer at issue in the litigation. Therefore, an order compelling discovery while the settlement agreement was still in effect constituted a departure from law.
Accordingly, the 4th DCA agreed with Jilco, and quashed the order denying his motion for a protective order. The trial court did not make a determination that the discovery was relevant to any issue in the case.
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