The Relevance and Reasonableness of Destructive Testing

David Adelstein | Florida Construction Legal Updates | August 12, 2017

Destructive testing is a routine investigatory procedure in construction defect disputes.   The destructive testing is necessary to determine liability (causation), the extent of damage, and the repair protocol.   Destructive testing is designed to answer numerous questions:  Why did the building component fail?  Was the building component constructed incorrectly?  What is the magnitude of the damage caused by the failure? What specifically caused the damage?  What is the most effective way to fix the failure and damage?  There are different iterations to the same questions, but in many instances, destructive testing is necessary to answer these questions.

 

Claimants sometimes prohibit destructive testing.  Of course, destructive testing is intrusive.  In many instances, it is very intrusive.  But, this testing is a necessary evil.  Without this testing, how can a defendant truly analyze their potential exposure and culpability?  They need to be in a position to prepare a defense and figure out their liability.  This does not mean destructive testing is warranted in every single construction defect dispute.  That is not the case.   However, to say it is never warranted is irrational.

 

Florida Statutes Chapter 558 (the pre-suit notice of construction defects process) addresses the issue of destructive testing when parties are participating in this obligatory pre-suit notice of construction defect process:

 

(a) If the person served with notice under subsection (1) determines that destructive testing is necessary to determine the nature and cause of the alleged defects, such person shall notify the claimant in writing.

(b) The notice shall describe the destructive testing to be performed, the person selected to do the testing, the estimated anticipated damage and repairs to or restoration of the property resulting from the testing, the estimated amount of time necessary for the testing and to complete the repairs or restoration, and the financial responsibility offered for covering the costs of repairs or restoration.

(c) If the claimant promptly objects to the person selected to perform the destructive testing, the person served with notice under subsection (1) shall provide the claimant with a list of three qualified persons from which the claimant may select one such person to perform the testing. The person selected to perform the testing shall operate as an agent or subcontractor of the person served with notice under subsection (1) and shall communicate with, submit any reports to, and be solely responsible to the person served with notice.

(d) The testing shall be done at a mutually agreeable time.

(e) The claimant or a representative of the claimant may be present to observe the destructive testing.

(f) The destructive testing shall not render the property uninhabitable.

(g) There shall be no construction lien rights under part I of chapter 713 for the destructive testing caused by a person served with notice under subsection (1) or for restoring the area destructively tested to the condition existing prior to testing, except to the extent the owner contracts for the destructive testing or restoration.

If the claimant refuses to agree and thereafter permit reasonable destructive testing, the claimant shall have no claim for damages which could have been avoided or mitigated had destructive testing been allowed when requested and had a feasible remedy been promptly implemented.

Florida Statute s. 558.004(2).

 

Under this pre-suit process, if a claimant refuses to permit reasonable destructive testing, the claimant shall have no claim for damages which could have been mitigated or avoided had destructive testing been allowed and had a feasible remedy been promptly implemented.  In my opinion, this has very little teeth as it raises too many factual issues such as 1) was the destructive testing reasonable, 2) what damages could have realistically been mitigated and how do you prove this, 3) what is a feasible remedy and how is one to know whether the defendant would have even proposed or implemented a feasible remedy, 4) is the feasible remedy a remedy that mitigates future damage or fully addresses the root of the problem, and 5) what is the quantum of damages that could have been mitigated or avoided.   Establishing the reasonableness of the destructive testing is likely easy as an expert would support this.  But the same expert would have to establish the other requirements as a basis to establish an affirmative defense that some of the claimed damages the plaintiff is seeking could have been mitigated had the claimant allowed pre-suit destructive testing.

 

Oftentimes, however, a defendant wants to undertake certain destructive testing after a lawsuit has been initiated.  What happens if the plaintiff refuses such testing in this scenario?  In a recent products liability case, Westerbeke Corp. v. Atherton, 42 Fla.L.Weekly D1741c (Fla. 2d DCA 2017), a defendant wanted to perform destructive testing on a gas generator that caused an explosion on a boat.  The plaintiff did not want this testing to be performed.   In support of the testing, the defendant relied on a federal district case that applied four factors to consider whether the destructive testing is warranted:

 

1) Whether the proposed testing is reasonable, necessary, and relevant to proving the movant’s case; 2) Whether the non-movant’s ability to present evidence at trial will be hindered, or whether the non-movant will be prejudiced in some other way; 3) Whether there are any less prejudicial alternative methods of obtaining the evidence sought; and 4) Whether there are adequate safeguards to minimize prejudice to the non-movant, particularly the non-movant’s ability to present evidence at trial.

 

Westerbke Corp., supra, quoting Mirchandani v. Home Depot, U.S.A., Inc., 235 F.R.D. 611, 614 (D.Md. 2006).

 

The trial court did not apply these four factors and denied the defendant’s request to perform destructive testing on the gas generator.  On appeal (through a petition for writ of certiorari), the appellate court reversed.  Unfortunately, the appellate court punted without providing specific guidance as to what standard the trial should follow when granting or denying a request for destructive testing.  The appellate court simply held that the four factors above may provide guidance to the trial court, but are not controlling in Florida.  The appellate court further summarily pointed to the Florida’s Rules of Civil Procedure to address the issue:

 

The Florida law regarding discovery in general provides that a party in a civil case is entitled to discover evidence that is relevant to the subject matter of the case and that is admissible or reasonably calculated to lead to admissible evidence. Fla. R. Civ. P. 1.280(b)(1); Allstate Ins. Co. v. Langston, 655 So. 2d 91, 94 (Fla. 1995). In addition, “[a]ny party may request any other party . . . to inspect and copy, test, or sample any tangible things that constitute or contain matters within the scope of rule 1.280(b) and that are in the possession, custody, or control of the party to whom the request is directed.” Fla. R. Civ. P. 1.350(a)(2). “The discovery rules . . . confer broad discretion on the trial court to limit or prohibit discovery in order to ‘protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.‘ ” Rasmussen v. S. Fla. Blood Serv., Inc., 500 So. 2d 533, 535 (Fla. 1987) (citing Fla. R. Civ. P. 1.280(c)). We conclude that the trial court departed from the essential requirements of the law in failing to apply the proper discovery standard…..

 

 

The four factors outlined above are reasonable factors that comport with Florida law – whether the testing is relevant to the subject matter of the case. The factors provide guidance as to how to determine relevancy of destructive testing during the course of a lawsuit.  Plus, the court can always impose limitations or restrictions to reduce any intrusion and protect the claimant’s interests while allowing testing to be performed.   By the appellate court punting and not even ruling on whether the destructive testing would be relevant in the underlying action, the court is simply inviting another appeal.

The Ten Most Widely Used Alternative Dispute Resolution Methods

Matthew R. McCubbins | Faegre Baker Daniels | August 9, 2017

Over the past two decades, arbitration has lost some of its luster as the best method to resolve construction industry disputes. The perceived “judicialization” of arbitration is at the heart of the industry’s recent dissatisfaction. Arbitration frequently assumes the hallmarks of a judicial proceeding — unlimited discovery, extensive motion practice, heavy expense and long delays.

Construction industry executives and counsel are now giving more thought about which alternative resolution methods are best suited for particular types of disputes on particular projects, recognizing that one size does not fit all. New initiatives favor resolving disputes early and quickly under the control of the parties themselves, with or without the help of neutral experts. Sophisticated owners and construction managers devote significant pre-contract planning with counsel to develop and incorporate various dispute resolution strategies into contract documents.

So, what are the alternative dispute resolution methods now accepted by the construction industry? Below are the ten most widely used methods, available for use alone or in conjunction with others:

1. Informal Discussion/Partnering

Direct communication through informal discussion is the beginning of every effort to resolve a dispute. The “rules” applicable to this method include principled negotiation, patience, ethical conduct, careful listening and a reasoned approach to evaluating risks. “Partnering” — and establishing a long-term relationship of trust and teamwork with industry participants — assists greatly in informally resolving disputes by promoting good working relationships among the parties. Prompt resolution of disputes is a fundamental precept of the “spirit of partnership.”

2. Structured Negotiations

Various factors cause informal negotiations at the project level to break down. Therefore, construction contracts often include an alternative dispute resolution clause that imposes, as the first among various methods, a “structured negotiation” process. Structured negotiation establishes a formal procedure for (1) full and prompt disclosure and exchange of information, (2) timely commencement and conduct of project level negotiations, and (3) senior management participation before turning a dispute over to a neutral third-party (if needed).

3. Standing Project Neutral

A standing project neutral is a person, or number of persons, identified in the contract documents to be “on-call” should a dispute arise. The standing project neutral assists the parties in agreeing upon dispute resolution procedures, mediating disputes and providing recommendations for resolution.

4. The “Initial Decision Maker”

The American Institute of Architects construction contract documents now allow parties to remove the architect from its historic role as professional peacekeeper and initial arbiter of disputes. Contracting parties may now appoint their own “initial decision maker.” This recent change in practice allows the parties to select a third-party who they believe is better equipped to resolve disputes.

5. Standing Dispute Review Board

Many civil projects in the United States are awarded under contracts that require the parties to establish a standing dispute review board at the beginning of the project. Board members are designated by the parties. Disputes arising on the project are submitted to the board for non-binding determinations.

6. Expert Determination

Expert recommendation and determination of disputes may prove beneficial in some cases. The expert listens to the parties or allows them to make written submissions regarding the project issue. The expert prepares a written report, which is typically non-binding unless otherwise agreed by the parties.

7. Mediation

Parties often seek a third-party mediator to assist them in construction dispute resolution. Mediation allows the parties to retain control over settlement, but affords the parties the benefit of the mediator’s neutral perspective. Success frequently depends on the quality and experience of the mediator, the parties’ preparation and commitment to the process, and the exchange of documents and information before the mediation. Effective construction dispute mediators typically have in-depth knowledge of the construction industry, provide meaningful risk analysis, and offer insight into the legal and practical considerations concerning the dispute.

8. Adjudication

The “adjudication” method is utilized in the United Kingdom, where law requires construction disputes to be submitted to an “adjudicator” for an initial decision. The adjudicator’s decision is binding until the completion of the project and can only be challenged thereafter. Therefore, adjudication keeps the parties working and the money flowing without stalling project completion. Adjudication has had a warm reception in the U.K., prompting some to recommend its adoption in the U.S. In a broad sense, the same advantages of adjudication can be offered by the “project neutral” and “initial decision maker” methods listed above, if the parties so agree.

9. Mini-Trials/Mini-Arbitrations

To help resolve a construction dispute, the parties may agree to participate in a mini-trial or mini-arbitration. Judges or arbitrators offer recommended, non-binding decisions on select dispute issues or the entire matter. These methods are called “mini” because the dispute is heard on the limited admission of evidence and arguments of counsel. Often, the dispute is simply submitted to the judge or arbitrator on memoranda, affidavits, expert reports and limited testimony.

10. Arbitration

While arbitration is no longer the default option in construction industry contract forms, it is still widely utilized in resolving construction project disputes. Parties who continue to use arbitration know how to assure its efficiency and cost-effectiveness. A few critical elements in successfully utilizing arbitration as a dispute resolution method include (1) pre-contract planning with competent counsel, (2) drafting a well-thought-out arbitration agreement that sets forth the applicable law and rules, and (3) selecting arbitrators with the requisite skill and expertise in construction industry practices, construction law and case management.

For over a century, the construction industry has been at the forefront of American utilization of alternative dispute resolution. Selecting appropriate dispute resolution methods will help industry participants continue to find success through non-judicial procedures.

Thinking Beyond the Dispute Resolution Provision in Construction Disputes

Benjamin Pollock | King & Spalding | June 5, 2017

When parties cannot resolve a claim during a major construction project, the contracts dispute resolution provisions do not always need to read as step-by-step instructions. To the contrary, the situation may warrant a different approach that can be negotiated after the dispute arises. While agreement certainly is required to deviate from the contractual obligations which themselves reflect the parties prior and current agreement other options can be considered and proposed whenever they would be beneficial to the Project or parties needs. This article discusses alternative methods by which a resolution to a construction dispute concerning costs or delays can be found in ways not necessarily proscribed by the contracts dispute resolution provisions.

Contracts Do Not Predict Every Situation

As an initial point, by no means is this article suggesting that the contract should be ignored or disregarded. Indeed, the contract provisions should be the embodiment of the good faith negotiations of the parties, often hard-won through sophisticated bargaining. But this does not mean that one size fits all, and the individual situation and claims should be considered when an actual dispute must be managed.

This can be particularly true when circumstances change between the parties, or when the companies develop a business relationship outside of the one specific project. To be sure, the contracts dispute resolution provisions establish the original framework by which the parties are to resolve disputes arising from construction of that individual project. But the realities can change when those companies subsequently enter into additional contracts regarding multiple projects, or agree to an Operation and Maintenance Agreement that binds them to each other at the same site for multiple years following completion. Suddenly, the prospect of filing for arbitration over the one construction dispute can become a challenging or unacceptable option. Indeed, preserving the relationship and maintaining peace may prove more valuable than escalating a dispute to a jury or an independent panel. And with arbitration or litigation seen as a last-ditch option, the parties may do well to think beyond the contracts instructions in order to get the dispute resolved.

Conditions Precedent Can Be Mutually Waived or Changed

In many ways, a contracts dispute resolution provision can be seen as the designation of the ultimate deciderarbitrator, judge, or juryand a series of conditions precedent that must be followed before reaching the final stage. These conditions serve various purposes, like promoting party communication in an attempt to avoid costly litigation, or ensuring notifications are being effected internally at appropriate levels of management. These interim steps can include formal notice, a mediation or other non-binding proceeding, various waiting periods, and/or a meeting between management personnel. When a particular dispute reaches impasse, however, these actions may not always serve their intended purpose. In such scenarios, the contract provisions do not always need to be strictly adhered to, but instead should be evaluated for their perceived effectiveness under the circumstances. When it serves both parties or the Project to take different action, consider seeking a mutual agreement to waive or adjust certain of these conditions.

Take waiting periods. It is not uncommon for a contract to mandate that arbitration cannot be filed until a certain number of days after a formal notice letter is served (or other triggering event). But what if the dispute is impacting critical path activities, and a quick resolution would allow the parties to mitigate the impact or at least would provide the parties more certainty regarding the risks of a situation already affecting cost and schedule? As an initial matter, the owner may do well to instruct the contractor to continue working, or enter into a temporary agreement that maintains Project progress while the claim is addressed. But in this scenario, both parties may wish to consider waiving the required waiting period and submitting the dispute on an expedited schedule. Similarly, both sides may benefit from adding strict time limits on the selection process of nominating one arbitrator eachwho then nominate a chairpersonor even forgoing this timely process in favor of selecting a single fact-finder.

Another example is mandatory meetings between managers. Sometimes it may be patently obvious that certain disputes will not be resolved at such meetings. Perhaps the representatives designated by the contract have personality conflicts, the parties positions are extreme and irreconcilable, or the contemplated meeting would present other challenges that may actually exacerbate the situation. If the parties are entrenched in their positions, more might be at stake than a waste of time and resources: ill will can result if one party believes the other is not participating in good faith. In certain circumstances, a discussion by the designated persons about the dispute can do more harm than good.

Agreeing not to hold such a meeting is an option, although generally speaking, parties engaging in discussion before launching litigation is a good thing. If the contract requirements do not create an environment for success, they can be tweaked. Notwithstanding contractual restrictions on attendees, the parties can agree to select personnel best suited to attend, usually so long as there is someone present with decision-making authority. The presence of a mediator, expert, or third party neutral to facilitate discussions and offer opinions can be considered, regardless of whether the contract requires such a presence. And rather than meeting to discuss the merits of the disputewhich likely is encapsulated already in opinionated change documentation and argumentative claims letterscommercial settlements can be discussed instead. Indeed, such proposalsbonus milestones, additional resources, overtime, changes to the payment schedule, etc.may resolve the dispute without having to discuss, much less decide, the contentious issues, and can also benefit project progress itself. In these ways, parties can still hold the required meeting but tailor it to best position themselves for success.

Conclusion

A dispute resolution provision identifies the final arbiter of a dispute and contains other requirements meant to facilitate discussion and negotiation so that litigation can be avoided. Sometimes, however, the specific provisions will not best serve those purposes. In these situations, prudent parties will study the contracts requirements but also consider options that might more effectively resolve the particular dispute at issue, get the project back on track, and improverather than harmthe business relationship. Rather than view the various required stages as items on a checklist, parties can agree to waive or alter certain provisions and thereby adopt a procedure that may better facilitate resolution the specific dispute.

Resolving Disputes Regarding Value of the Loss through the Appraisal Process

J. Robert Keena | Hellmuth & Johnson PLLC | June 13, 2017

With an increase in storm damage events throughout the Midwest, insurers are becoming increasingly frugal when adjusting storm damage losses. In the past, disputes regarding the value of the loss typically involved disagreements on pricing. Today more aggressive practice by insurers on even the most basic hailstorm can result in complex arguments regarding scope of repair, and cost of repair coverage.

Under Minnesota law a process exists to resolve disputes regarding the value of the loss which, theoretically does not require Court involvement. This process is known as the “appraisal process.” The typical insurance appraisal provision can be found in Minnesota Statute §65A.01 et seq. or in the language of the insurance policy. Traditionally disputes regarding coverage (i.e. whether or not a loss is covered or whether or not the insured has complied with the terms of the policy) are not resolved under the appraisal process.

The appraisal process is not supposed to be complex. It is very much like an arbitration about the cost of repair. Each side (the insurer and the insured) appoint an appraiser to represent their interests. These two appraisers select a neutral umpire. If the two appraisers agree on the value, the umpire’s role is limited. If however the two appraisers do not agree on the value of the damage, the umpire acts as the tiebreaker. The insured and the insurer each pay for their own appraiser and one half of the cost of the umpire.

Appraisals can sometimes be very informal whereby the appraisers meet to discuss the value of the damage and hopefully come to an agreement. If they cannot agree they bring in an umpire to make a decision. The process can also be more formal whereby the panel hears evidence presented by the insured and the insurer regarding the value of the loss. This can sometimes involve lawyers presenting the evidence in a manner very similar to an arbitration and even involve testimony and cross-examination.

There are several trends in first-party insurance claims which should concern individuals involved in the Community Association industry. One trend is an increase in outright denials of the right to appraisal wherein insurers argue that the issue is not one of value but of scope of damage. They then argue that scope is not the same as value and therefore appraisal is not appropriate. Often insurers will argue that they do not agree that some aspect of the property is damaged and, therefore since they say there is no damage, the dispute is not about value of the loss but instead is a question of coverage. Throughout the Midwest insurers are taking this stand in an effort to limit the size of property insurance claims presumably under the theory that only a limited percentage of insureds will commence a lawsuit in order to compel the appraisal process.

Another disturbing trend that insurers are pursing more regularly is an insistence that a non-neutral umpire be appointed. Historically the two appraisers could easily select a neutral umpire and move forward. Today insurers are increasingly suggesting a non-neutral umpire to act as the tiebreaker and forcing insureds to commence a lawsuit seeking court appointment of a neutral umpire. Presumably, the insurers are hoping that the additional cost of commencing a lawsuit to petition the court to appoint an umpire will weed out some insureds who need to maximize their funds in order to repair damages. These trends are troubling for insureds in that many claims which would have been easily resolved in the past are now requiring Petitions for Appointment of Umpires or lawsuits seeking to compel appraisal.

In the past few years, there have also been more disputes regarding the scope of the appraisal panels’ role. Insurers have argued that appraisal panels cannot decide issues such as whether or not policies require them to provide matching materials for a damaged building. Insurers have also argued that causation of the damage is not a proper consideration for an appraisal panel either. Courts are generally coming down in favor of an expanded role for appraisers. They are finding that appraisers can make decisions regarding the reasonableness of product matches for materials to be installed and acknowledging that at least some limited causation analysis is needed by an appraisal panel to properly evaluate a claim.

When deciding whether a demand for appraisal is proper, there is a simple question that one must ask themselves. The question is this: Has the insurance company offered to pay an amount sufficient to repair the damage? If they have not offered a sufficient amount to repair damage but instead are simply seeking to find arguments to diminish the adjusted total, the appraisal process is likely quite ripe. The difficulty for property owners occurs when the dispute is smaller than the cost of paying for an appraiser and half of the umpire. Very often insurers are gaining the benefit of this apprehension against tacking costs upon an already diminished adjustment amount.

It is important to remember when information is presented to an appraisal panel that it should be clear, concise and descriptive. If the insurance company claims that the damage does not include damage to features on the building such as soft metal, gutters, downspouts, or window frames, photographic evidence and an opportunity to inspect the property by the appraisal panel can be an asset for the insured. It is equally important, that the insured acquires estimates which plainly include the full scale of the damage rather than the scale of the damage claimed by the insurance company.

One other extremely important and relevant insurance policy consideration in working on property damage claims is the deadline for making a legal claim. Often times people make the mistake of believing that the “right to suit” provision under an insurance policy (typically two years pursuant to Minnesota Statute §65A.01 et seq.) begins to run from the date of denial of a claim or the date a dispute arises regarding the value of the claim. It does not. That deadline runs from the date of the loss itself whether or not there has been a denial.

There are several basic steps which must be followed when a property damage claim arises. They include: 1) Immediately notifying the insurer that a loss has occurred; 2) Mitigating damages to the property by protecting any aspect of it which has been exposed to the elements; 3) Cooperating with the insurer pursuant to policy cooperation clause. (Failure to cooperate with an investigation can be a separate basis for denial of the claim); and 4) Acquiring independent estimates for damages. If these steps are followed and there is a difference between the value of the loss as purported by the insurer and the value of the loss based on the insured’s own investigation, and negotiation is unsuccessful, the next step is appraisal.

Anyone assisting an Association with an insurance claim should be aware of the limitations period and the appraisal provision contained in the policy. The appraisal provision in particular offers a neat, clean and distinct way to resolve disputes regarding the value of the loss. If the insurance company is not offering enough to fix the damage the first thing that should come to mind is the appraisal process.

Using Mediation to Save Time and Resources Spent on Disputes

Kent Scott | Babcock Scott & Babcock | June 8, 2017

Mediation is an effective alternative dispute resolution method that allows disputing parties more say in the outcome while cutting down on the time and resources spent on resolving disputes. The mediation process includes opposing parties sitting down with a neutral third party who facilitates a way for the opposing parties to reach an agreement. The agreement requires both parties to consent to the terms before the agreement is finalized. The signed agreement binds both parties and can be enforced by the courts.

 

Why Use Mediation?

 

Owners in today’s economy expect completed construction projects faster and cheaper than before. Not meeting these expectations often leads to misunderstandings and disputes that may require legal action. A drawn out legal dispute diverts resources and time away from the project while reducing the profit margin for contractors, design professionals, and owners. Mediation reduces costs and time spent on dispute resolution due to the following reasons.

 

Limited Discovery. One of the most expensive parts of a legal dispute is the discovery process where the courts require both parties to produce documents, files, or other information relevant to the dispute. In mediation both parties simply agree to exchange the relevant information used to support each side’s case.

 

Faster Results. Often both parties hope for a fast resolution to the dispute, so an agreement is typically reached faster than going through the courts. A faster agreement means a faster return to normal business routines.

 

More Efficient Legal Strategy. Mediation centers on solving the dispute and therefore the legal strategy shifts from building a case with overwhelming evidence to coming up with possible ways to resolve the dispute. Additionally mediation does not require motions and written arguments to support motions. This long process requires valuable resources spent on attorney’s fees while mediation typically requires shorter summaries of the dispute that are submitted to the mediator.

 

Privacy. Mediation is conducted privately which can help protect parties from potential embarrassment and lost business if a supplier or customer learns about a lawsuit. Disputes resolved in Court are published, potentially putting one or both parties in an un-favorable light. Before mediation begins both parties will sign a confidentiality agreement and submit it to the mediator.

 

How Successful is Mediation? The mediation success rate is roughly 80%. Even if the mediation process fails to result in an agreement, parties can still benefit from narrowing the issues in dispute or possibly reaching a partial settlement.

 

 

 

What to Expect in Mediation

 

When and Where. One of the most appealing aspects of mediation is that parties can agree to mediation at any time before a jury reaches a verdict, a judge issues a ruling, or an arbitrator declares a reward. Mediation often starts after filing a claim and some limited discovery already done. Parties should plan on either a half-day or a full day. Mediation may require more time depending on the complexity of the claim or the difficulty of reaching an agreement.

 

Dealing with the Opposing Party. Typically a brief opening statement allows for both sides to tell their side of the story with the other party and mediator present. If this creates an uncomfortable setting for one or both parties, the mediator can change the format of the meeting. The mediator should have enough information and communication at this point to make the best judgment call on how much interaction the parties need to have a successful mediation.

 

Party Participation. The parties should bring their attorneys and a very limited number of employees or persons with relevant information regarding the dispute. Usually this requires no more than two employees or witnesses for each side. Having a decision maker for each side is crucial for an efficient and binding mediation.

 

Day of Mediation. The mediator starts by setting out the ground rules and expectations for professional conduct. Then each party will direct an opening statement to the opposing decision maker that briefly describes the dispute and their ideal resolution. After opening statements the parties separate and the mediator caucuses with both sides. Private caucuses allow the mediator to gather information, negotiate, and find consensus. The mediator will discuss strengths and weaknesses of positions and if needed help parties re-evaluate their position.

 

Settlement, Recess or Termination. Once a settlement is reached, the main terms of the agreement are summarized and signed before either party leaves mediation. If mediation fails to produce an agreement, the mediator can help determine if another meeting will potentially achieve an agreement or if the mediation should be terminated back to litigation.

 

Successful Mediation Tips

 

  • Decision making parties and attorneys who are very familiar with all aspects of the dispute.
  • Strong commitment from both parties to resolving the dispute. A party who is half-interested in resolving the dispute can become too entrenched in their position to compromise.
  • Choosing a reputable and skilled mediator.
  • Parties refraining from getting firmly entrenched expectations or demands.
  • Willingness to see big picture solutions from compromises.
  • Honest and good faith participation from both parties.

 

Conclusion

 

Mediation will cut down the necessary resources spent on disputes while increasing the chances of moving on from a dispute with a business relationship intact. The mediation process allows for a private setting and direct input by the parties in the final outcome of an agreement. Finding a resolution through mediation instead of litigation will improve the speed and efficiency in solving disputes.

 

 

Kent B. Scott is a Shareholder in the construction law firm, Babcock Scott & Babcock PC in Salt Lake City, Utah. He currently serves on several mediation panels and mediates commercial and construction disputes.