NJ Appellate Division: No signature, no settlement

On March 28, 2023, in a published decision in Gold Tree Spa, Inc., v. PD Nail Corp., the New Jersey Appellate Division extended the New Jersey Supreme Court’s seminal decision in Willingboro Mall, Ltd. v. 240/242 Franklin Ave., LLC, and confirmed that settlements reached at mediation are unenforceable when the parties don’t sign a term sheet before mediation comes to a close, irrespective of whether mediation is voluntary or court-ordered. Although the Gold Tree case involved a commercial dispute, the decision contains important lessons for employers and employment law practitioners.

Facts

Gold Tree Spa, Inc., agreed to sell two nail salons to PD Nail Corp. After PD Nail made a down payment to purchase the salons, negotiations fell apart, and the sale couldn’t be finalized. Gold Tree filed a lawsuit alleging, among other things, breach of the purchase agreement, and the parties voluntarily agreed to mediation.

At mediation, the parties reached a settlement, and a draft agreement was written by the mediator. Under the terms of the settlement, Gold Tree would retain the down payment and PD Nail would retain possession of one of the nail salons, subject to the landlord’s consenting to assign the lease to PD Nail.

A few hours after mediation, Gold Tree informed its attorney it no longer wished to settle and didn’t sign the agreement. As a result, PD Nail asked the trial court to enforce the settlement.

Trial court decision