By John P. Paone, Jr., Esq. and John P. Paone, III, Esq.*

When attempting to settle issues in a divorce case, parties frequently employ the services of a mediator. In many cases, mediation works as a successful alternate dispute resolution tool allowing parties to settle their matters without the necessity and costs of a trial. However, often times parties attend mediation without having independent counsel. This is usually a mistake, as the mediator (even if he or she is an attorney) does not and cannot represent either party. Therefore, it is important that parties understand the consequences of their actions when going into mediation without an attorney.

If the parties come to an understanding in mediation, the mediator will usually draft a document known as a “Memorandum of Understanding” or otherwise called a “MOU.”  While a MOU lacks the detail and specificity of a full-blown, formal settlement agreement, it is recognized as a binding agreement if and only if it is signed by the parties. If parties want the benefit of independent advice of counsel before entering a binding and enforceable agreement, they must be careful not to sign a MOU.

Recently, the New Jersey Appellate Division weighed in on this very subject in the case of Glowzenski v. Glowzenski.  In Glowzenski, the parties attended mediation which resulted in the mediator preparing a MOU. The parties, with counsel present, signed the MOU. Although the Husband believed that the matter was resolved, the Wife did not. As a result, the Husband filed an application with the trial court to enforce the terms of the MOU.

After a three-day plenary hearing regarding the enforceability of the terms of the MOU, the trial court ruled that the MOU was a binding and enforceable contract between the parties. The Wife appealed to the Appellate Division and argued that the term sheet's lack of a title and the absence of the parties' attorneys' signature on the term sheet evidenced that no agreement was reached between the parties. These arguments were rejected by the Appellate Division, which determined that “a contract does not need to be labeled a contract to be a contract” and that the fact that the attorneys did not sign the MOU was immaterial as “it is the client's assent that is relevant.” 

The lesson to be learned from Glowzenski is that once a MOU is signed by the parties, the document becomes a binding agreement. An MOU is not enforceable, however, if only the mediator signs the MOU. 

It goes without saying that negotiating a divorce settlement can be a difficult, stressful, and tedious process. Each party must make compromises and concessions on issues that may be extremely emotional and personal to them. There are also many relevant issues which arise in the course of divorce litigation which could be swept under the rug if spouses sign a hastily drafted agreement without taking the time to contemplate all potential issues. Or, as the adage goes, settle in haste – repent in leisure. If you are attempting to negotiate a settlement agreement at mediation as part of a divorce action, remember the age old adage: “don’t sign anything” without first consulting an experienced family law practitioner who can review your agreement to ensure that it is fair and complete.

*John P. Paone, Jr., Esq. and John P. Paone, III, Esq. are divorce and family law attorneys with the Law Offices of Paone, Zaleski & Murphy, with offices in Red Bank and Woodbridge.