Davis v. US Airways Group, I.C. NO. 951908.

Plaintiff and Defendant-Employer had a June 1, 2008 employment relationship under the North Carolina Workers' Compensation Act.
New Hampshire Insurance Company was the workers' compensation carrier on June 1, 2008.
Plaintiff filed forms and hearings began, leading to mediation on July 9, 2009 with experienced counsel for both sides.
During mediation, Plaintiff allegedly intoxicated and/or mentally incapacitated, potentially affecting capacity to contract, according to Plaintiff and supported by defense expert testimony.
Two written instruments were created at mediation: a Mediated Settlement Agreement and a handwritten side agreement; both signed by the parties and transmitted by fax.
Defendants later prepared a formal Agreement of Final Settlement and Release and a Separation Agreement; Plaintiff refused to sign, counsel withdrew, and Defendants sought enforcement of the mediated agreement.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Mental capacity to contract at mediation	Plaintiff lacked capacity due to intoxication/mental state.	Sumwalt's expertise supports capacity; Plaintiff understood the act and its consequences.	Plaintiff had sufficient capacity; no lack of capacity shown.
Enforceability of the Mediated Settlement Agreement under Rule 502	Handwritten side agreement and circumstances undermine enforceability.	Mediated Agreement complies with Lemly/Chaisson; valid and enforceable with proper terms.	Mediated Settlement Agreement is valid and enforceable subject to approval.
Validity and fairness of the ultimate Agreement of Final Settlement and Release	Agreements may be invalid due to misapprehension of retirement benefits and drafting inconsistencies.	Agreement complies with §97-17 and Rule 502; fair and just in best interests.	Final Settlement and Release is fair, just, and approved.
Appropriate attorney's fee for Sumwalt	Fee requested by Sumwalt was excessive or inappropriate.	Sumwalt's services warranted a $10,000 fee under §97-90.	Attorney's fee of $10,000 approved for Sumwalt.

Lemly v. Colvard Oil Company, 157 N.C. App. 99, 577 S.E.2d 712 (2003) (mediated settlements can be valid if compliant with Rule 502)
Chaisson v. Simpson, 195 N.C. App. 463, 673 S.E.2d 149 (2009) (enforcement of mediation agreements; three key elements)
Ridings v. Ridings, 55 N.C. App. 630, 286 S.E.2d 614 (1982) (burden on party alleging mental incapacity; sane until contrary proof)
Northington v. Michelotti, 121 N.C. App. 180, 464 S.E.2d 711 (1995) (capacity to contract requires understanding the nature of the act)
Glenn v. McDonald's, 109 N.C. App. 45, 425 S.E.2d 727 (1993) (fraud/misrepresentation not proven; standard evidentiary considerations)
Holden v. Boone, 153 N.C. App. 254, 569 S.E.2d 711 (2002) (general principle of jurisdiction over settlements)
Bryant v. Dougherty, 267 N.C. 545, 148 S.E.2d 548 (1966) (statutory framework for commission approval of settlements)