{"id":894538,"date":"2018-07-12T12:01:50","date_gmt":"2018-07-12T18:01:50","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=894538"},"modified":"2018-07-12T12:01:50","modified_gmt":"2018-07-12T18:01:50","slug":"special-issues-multi-party-construction-mediations","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/special-issues-multi-party-construction-mediations\/","title":{"rendered":"Special Issues in Multi-Party Construction Mediations"},"content":{"rendered":"

Thomas I. Elkind, Esq. | Global Construction Solutions<\/a> | July 3, 2018<\/p>\n

Typical construction projects usually involve an owner, an architect, consulting engineers, a general contractor, subcontractors, suppliers, sureties and insurers. These parties may not all have contracts with each other. The owner may have separate contracts with the architect and the general contractor, and each of those may have separate contracts with subcontractors, suppliers and consultants. Often, when a dispute arises, the plaintiff will be forced to bring multiple arbitrations or a complex litigation unless all parties involved agree to participate in one proceeding.<\/p>\n

Mediation, and particularly early mediation, is one way to prevent the cost and uncertainty of multiple proceedings and enable all parties to continue working without the dispute\u00a0affecting the project schedule. If all parties agree to mediation, the legal issues of liability, damages and agency can all be resolved in one proceeding. A voluntary, non-binding and confidential process, mediation offers quick and cost-effective resolution. If that fails, parties can revert to arbitration or litigation having lost only a small amount of time and money.<\/p>\n

One example of a complex construction dispute resolved by mediation was the construction of a 35-story office building in downtown Boston. Structural steel girders were attached with steel bolts that broke during the construction of the steel frame. The structural engineer determined that the bolts used were not strong enough, and issued a directive to change to larger and stronger bolts. The steel fabricator issued a change order for $1 million to change the fabrication of the girders to accommodate the larger bolts, but the change order was denied by the owner. The steel fabricator then sued the owner, architect, structural engineer and general contractor in federal court in Boston to recover its cost of correcting this deficiency. The steel fabricator was from Texas, the owner was from Massachusetts and the rest of the defendants were from other states as far away as Oregon. The judge indicated in the first pretrial conference that he had no intention of ever trying the case, so the parties agreed to mediation, which was successful.<\/p>\n

Through that experience and others, I have identified the following special issues that arise in such multi-party cases.<\/p>\n

Pre-Mediation Submissions and Conferences<\/strong><\/p>\n

Parties expect significant work to be done before all parties get together in the same room. In a multi-party construction mediation, this pre-mediation work includes sharing detailed position statements in order for everyone to know where each party stands. Otherwise, a significant amount of time will be spent during the mediation just communicating the parties’ positions.<\/p>\n

The mediator must also determine whether insurers and sureties will attend the mediation, as well as which parties will caucus together at the mediation. Often, these mediations involve multiple issues with different defendants and their insurers. It is important that everyone agree on the process before the mediation starts, including how many rooms will be needed.<\/p>\n

Opening Joint Session<\/strong><\/p>\n

Opening sessions are used far less often now because the attorneys want to avoid arousing emotions, which can make it more difficult to resolve a dispute. However, a relatively short, amicable opening joint session can set the stage for a productive negotiation. The key to a positive opening joint session is planning in the pre-mediation phase. The mediator and the parties should determine whether opening statements should be made and, if so, whether by counsel and\/or by principals. It is not always necessary for every party to make an opening statement. One statement each by representatives of the plaintiff and the defendants may suffice.<\/p>\n

Caucuses<\/strong><\/p>\n

In multi-party cases, it is essential to focus first on reaching agreement on a reasonable verdict range. If all parties can agree that the case has a certain value range, the defendants can then begin to discuss how to share in contributing to the settlement. However, if the defendants as a whole and the plaintiff cannot agree on a reasonable verdict range, the mediation is not likely to be successful. This process does not preclude further negotiation of the actual settlement amount, but it sets the stage for<\/p>\n

the defendants to have fruitful negotiations among themselves regarding the amount or percentage that each defendant will contribute to the settlement.<\/p>\n

Mediator’s Proposals<\/strong><\/p>\n

Increasingly, parties ask the mediator to propose a settlement when they have been unable to reach an agreement. This option is used even more often in multi-party cases, especially within defendant groups, to determine the degree to which each defendant will contribute to the settlement. It is also common for the plaintiff to reach separate settlements with one or more of the defendants if all the defendants cannot agree to meet the plaintiff’s demand. In these situations, the mediator must try to assist the parties in reaching agreements without appearing to favor one side over the other.<\/p>\n

Documenting the Settlement<\/strong><\/p>\n

Once an agreement has been reached, it is especially important in a multi-party case for a detailed written settlement agreement to be produced, preferably before the parties leave the mediation. In addition to the risk that one or more parties may try to alter the terms after the mediation is over, is the risk that in complex settlements parties may not fully understand all of the terms. Thus, even after an agreement appears to have been reached, the parties and the mediator must be willing to invest the additional time necessary to document every agreed-upon term in detail as soon as possible.<\/p>\n","protected":false},"excerpt":{"rendered":"

Thomas I. Elkind, Esq. | Global Construction Solutions | July 3, 2018 Typical construction projects usually involve an owner, an architect, consulting engineers, a general contractor, subcontractors, suppliers, sureties and insurers. These parties may not all have contracts with each other. The owner may have separate contracts with the architect and the general contractor, and… Continue reading Special Issues in Multi-Party Construction Mediations<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[13],"tags":[9895,79,10527],"class_list":["post-894538","post","type-post","status-publish","format-standard","hentry","category-mediation","tag-advise-consult","tag-mediation-2","tag-multi-party-construction-mediation","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nSpecial Issues in Multi-Party Construction Mediations - 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