ADR CORNER
ADR CORNER
Preparing for Construction Mediation
WILLIAM J. CEA
Construction disputes typically involve multiple claims and parties. Additionally, design professionals, contractors and subcontractors often have liability insurance policies that participate in the defense. While insurers are not parties to the litigation involving insured defendants, they play a significant role in mediation. Thus, when preparing for mediation in a construction case, careful attention needs to be paid to ensuring the parties and their insurers have all relevant information – and well in advance.
The way I look at a case when preparing for mediation involves several layers. Who are the parties? What are the claims? Have the claims been investigated and evaluated by the insurers? Have the claims been quantified / liquidated? Are there issues that have not been fully investigated? Are all parties joined to the suit and / or participating in mediation? With multiple defendants, third party defendants, and even fourth party defendants, has the party prosecuting the claims adequately segregated and defined the scope and / or damages that are being sought from those defendants?
No party should come to mediation not understanding why they are joined to a case, and the specific claims against them. No carrier should come to mediation unclear as to what their insured is being sued for. Plaintiffs and Third-Party Plaintiffs, etc., should make sure that they have sufficiently laid out the various claims based on each party’ s scope of work on the project, as well as what damages are attributable to that party. If defendants and insurers come to mediation asserting that they do not understand why they have been joined to a case, what damages are being sought as to their work / insured’ s work, and sufficient lead time to evaluate whether there is coverage for the damage claims, settling will be an uphill battle.
Plaintiffs often believe that if they sue a developer or general contractor then it is not on them to prove who did what or be concerned about the various parties’ scope or insurance coverage. That may be true for the pleadings and what they intend to present at trial, but if the goal of the mediation is to settle the case, I recommend that plaintiffs’ counsel work with the primary defendant( s) to make sure that those parties have sufficient information to make demands upon the parties that they have brought into the case. I often hear from plaintiffs that“ they are not suing the subcontractors directly”. Again, that may be true. At mediation, however, it is generally those parties that the developer and / or general contractors expect to fund a settlement. Thus, it is imperative that plaintiffs and the party( ies) that they have sued communicate well in advance of mediation to make sure all parties have the information they need to come prepared. Having a group of defense side parties attend a mediation does not necessarily mean that a lot of money will be available. If those parties are saying they don’ t know what they are being sued for, or that the claims are not covered by insurance, it could result in a very frustrating day.
This is why I look at construction mediations as a process that should start well in advance of the mediation itself. I welcome the opportunity to have conference calls and help in defining what is needed by the parties before mediation. If plaintiffs are looking for money from defendants, they should look at mediation as a collaborative effort. Being on opposite ends of the spectrum at every hearing or deposition is expected. Success at mediation, however, requires parties, their experts, and insurance to collaborate with respect to their positions and the information they need to fully evaluate claims and come prepared. Playing hide the claim or defense will not yield a settlement.
Playing surprise with facts or issues at mediation is also counterproductive. Providing a breakdown of damages for the first time at mediation is generally not well received. Similarly, parties should not announce for the first time at mediation the litany of facts and information they lack in order to make meaningful settlement offers.
Preparation and collaboration are necessary; however, plaintiffs also shouldn’ t expect that the defense will simply agree with the claims and pay full demands. Being prepared does not necessarily mean that defendants and carriers will agree to pay what plaintiffs expect. Attending mediation“ with authority to settle” does not mean that a party is obligated to agree with the amount of damages sought or that they will offer to pay that amount. From my standpoint, it means that the party has fully evaluated a claim and has full authority to execute a settlement agreement in accordance with terms with which it is prepared to agree.
In the end, if you want a resolution at mediation, then collaboration and preparation are key. With the assistance of the mediator, parties can exchange information, conduct site inspections and otherwise make sure each other are prepared within the mediation privilege without compromising their positions in court.
William J.(“ Bill”) Cea. Esq. is a Florida Supreme Court Circuit Certified Mediator and Florida Bar Board Certified Construction Attorney. Bill was admitted to practice law in Florida in 1992 and Certified as Mediator in 2011. He may be contacted via email: wjc @ inkedmediation. com or phone( 954) 494-3239, or via Inkedmediation. com.
For additional ADR tips and resources, visit www. palmbeachbar. org / alternativedispute-resolution-committee.
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