The opinion
KENNARD, J., Concurring and Dissenting.
Under subdivision (b) of Evidence Code section 1119 (section 1119(b)), documents prepared during mediation are not admissible in evidence. There is an exception to this rule under subdivision (b) of Evidence Code section 1123 (section 1123(b)), which applies to a “written settlement agreement” when it is signed by parties and “provides that it is enforceable or binding or words to that effect.”
Here, the parties signed a document during mediation that contained settlement terms, including a provision for arbitration of “[a]ny and all disputes.” I agree with the majority that the mediation document is inadmissible under section 1119(b), and that it is not within the settlement agreement exception under section 1123(b). Unlike the majority, however, I do not reach that conclusion by holding that an arbitration clause can never constitute “words to [the] effect” that a settlement agreement is “enforceable or binding.” Rather, I conclude that substantial evidence supports the trial court’s implied finding that the mediation document at issue here was not a “written settlement agreement.”
I
R. Thomas Fair (plaintiff) sued Maryanne E. Fair (his former wife), Karl E. Bakhtiari, and three corporations, alleging that they had wrongfully excluded him from real estate syndication businesses and engaged in various other misconduct. On March 21, 2002, during the second day of mediation, plaintiff’s counsel wrote a document entitled “Settlement Terms,” containing *201 nine provisions. (See maj. opn., ante, at pp. 192-193, fn. 2.) The document stated that plaintiff would receive a “[c]ash payment of $5.4 [million] . . . w/in 60 days” and that the payment would be “treated as purchase of all [plaintiff’s] stock & interests (as capital gain to [plaintiff]).” The document’s final provision stated: “Any and all disputes subject to JAMS arbitration rules.” The parties signed the mediation document.
On April 3, 2002, defendants’ attorneys submitted case management conference questionnaires to the court in which they stated, in identical language, that “the case has settled” but also that a formal settlement agreement “is being circulated for approval.” At a hearing on April 17, 2002, defendants’ counsel told the court that the parties had “reached a settlement agreement” but also that they were “now in the process of exchanging settlement agreements.” At the same hearing, plaintiff’s counsel assured the court that “the case is going to settle.” (Italics added.)
Despite these assurances, a dispute arose concerning the mediation document’s provision that the cash payment to plaintiff would be “treated as purchase of all [plaintiff’s] stock & interests (as capital gain to [plaintiff]).” Plaintiff’s attorney asked one of defendants’ attorneys whether defendants would be interested in also purchasing plaintiff’s interests in certain limited partnerships related to the corporate defendants. Defendants took the position that those interests, alleged to be worth as much as $500,000, were already included. Plaintiff adamantly insisted they were not included.
On June 6, 2002, defendant Bakhtiari’s attorney submitted a case management conference questionnaire to the court stating that “[a]though the Case Management Questionnaire submitted on April 3, 2002 by defendant Bakhtiari’s former attorney indicated that the dispute had settled after mediation, it in fact, has not” and that “[t]he parties were ultimately unable to reach agreement as to the scope and subject matter of the proposed settlement terms.”
On June 20, 2002, plaintiff brought a motion to compel arbitration under the mediation document. Defendants opposed the motion on the ground that there was no admissible evidence of an agreement to arbitrate. Defendants argued that the parties had not intended that the mediation document, which defendants referred to as a “term sheet,” would be binding and that they never came to a meeting of the minds on key provisions. Thus, according to defendants, the mediation document was inadmissible under section 1119(b) and not within the settlement agreement exception under section 1123(b). The parties submitted declarations and other documentary evidence in support of their respective positions. The trial court denied the motion to compel arbitration, stating: “There is insufficient demonstration of an arbitration agreement given the inadmissibility of the Term Sheet.”
*202 II
The controlling legal principles were stated by the Court of Appeal in Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793 [ 71 Cal.Rptr.2d 265 ] (Weddington), as follows: “A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts. [Citation.] An essential element of any contract is ‘consent.’ [Citations.] The ‘consent’ must be ‘mutual.’ [Citations.] ‘Consent is not mutual, unless the parties all agree upon the same thing in the same sense.’ [Citations.] Q] ‘The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe.’ [Citation.] Outward manifestations thus govern the finding of mutual consent required ... for contract formation. [Citation.] The parties’ outward manifestations must show that the parties all agreed ‘upon the same thing in the same sense.’ (Civ. Code, § 1580.) If there is no evidence establishing a manifestation of assent to the ‘same thing’ by both parties, then there is no mutual consent to contract and no contract formation.” ( Weddington, supra, 60 Cal.App.4th at pp. 810-811; accord, Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 208-209 [ 45 Cal.Rptr.3d 692 ].) “Where the existence of a contract is at issue and the evidence is conflicting or admits of more than one inference, it is for the trier of fact to determine whether the contract actually existed.” (Bustamante v. Intuit, Inc., supra, at p. 208.)
This case is similar to Weddington. There, mediation resulted in a one-page memorandum stating that “ ‘[a]ll parties agree to settle and dismiss on the following terms’ ” and then providing for a cash payment, the transfer of certain property, and a licensing agreement. (Weddington, supra, 60 Cal.App.4th at p. 799 .) The mediation memorandum also contained a provision for its enforcement under Code of Civil Procedure section 664.6, which provides for the entry of judgment under the terms of a stipulated settlement. (Weddington, supra, at p. 800 .) The Court of Appeal observed: “The reference to enforceability pursuant to section 664.6 suggests that the parties subjectively thought they had formed a settlement contract. Nevertheless, subsequent events illustrate quite vividly that they had never agreed on the same terms for a Licensing Agreement.” (Id. at pp. 800-801.)
When disputes surfaced about the meaning of the licensing provision, the parties in Weddington returned to the mediator, who attempted to impose terms to which one party never agreed. ( Weddington, supra, 60 Cal.App.4th at pp. 796-797, 804-807.) The Court of Appeal concluded that the parties had never agreed upon the material terms needed for an enforceable license agreement and that the mediator lacked authority to impose material terms to which the parties had never agreed. (Id. at pp. 815-816; see also Terry v. *203 Conlan (2005) 131 Cal.App.4th 1445, 1460 [ 33 Cal.Rptr.3d 603 ] [“like Weddington, the parties left significant ambiguities in . . . material terms that demonstrated there was no meeting of the minds”].)
Here, substantial evidence supports the trial court’s implied finding that, as in Weddington, supra, 60 Cal.App.4th 793 , the parties may have subjectively believed they had reached a settlement agreement, but a key term of the agreement (requiring plaintiff to convey “all [his] stock and interests”) was ambiguous, the ambiguity could not be resolved by consideration of the parties’ outward manifestations, and later events demonstrated that the parties did not understand the term in the same way. This failure to reach a meeting of the minds prevented the formation of a contract. (See Weddington, supra, at p. 811 [“If ... a supposed ‘contract’ does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, there is no contract.”].) Accordingly, there was no “written settlement agreement” within the meaning of Evidence Code section 1123, and the trial court properly ruled that the document the parties signed during mediation was inadmissible in evidence.
III
Instead of relying on the absence of a “written settlement agreement,” the majority relies on the absence of a provision in the mediation document “that it is enforceable or binding or words to that effect” (§ 1123(b)). The majority holds that the arbitration clause was not, and could never be, such a provision. I disagree.
Of course, as this case illustrates, an arbitration provision does not necessarily mean that a document prepared during mediation is a binding agreement rather than merely a list of partial or tentative contract terms. But once a court has determined that a document prepared and signed by the parties during mediation is actually a “written settlement agreement”—that it embodies a meeting of the minds on all material terms needed for settlement—the inclusion in that settlement agreement of a provision for arbitration—which is an enforcement mechanism—may properly be viewed as an acknowledgement by the parties that their settlement agreement is binding and enforceable. A statement that any dispute over a settlement agreement’s terms will be subject to arbitration means that the agreement is “enforceable” through the arbitration process.
To be sure, the wording of the arbitration provision will make a difference. The wording of the provision must be consistent with the conclusion that the document is actually a settlement agreement and that it is to be enforced by *204 arbitration. When these requirements are satisfied, however, an arbitration provision should, in my view, satisfy the statutory requirement that the “written settlement agreement” expressly provide “that it is enforceable or binding or words to that effect.”
Although I do not agree with the majority’s holding that an arbitration clause can never satisfy the requirement of section 1123(b) that a written settlement agreement “provide[] that it is enforceable or binding or words to that effect,” I agree with the majority that the trial court here properly ruled the mediation document inadmissible under section 1119(b). Accordingly, I join in the reversal of the Court of Appeal’s judgment, which reversed the trial court’s order denying the motion to compel arbitration.