Sanctions for "Bad Faith" Failure to Attend Mediation?
Thanks to Diana Skaggs of the Kentucky Divorce Law Journal for alerting us to the Kentucky Law Blog's post Court of Appeal Affirms Trial Court's Award of Mediation Fees for Party Failing to Attend
Here in California, and I suspect in many other states, the Court cannot sanction "bad faith" negotiations because all of the parties' communications at a mediation are confidential.
I've often had attorneys ask me, however, whether they can bring to the Court's attention the fact that a claims adjuster, for instance, did not "show" at the mediation. Can't they seek sanctions for that "bad faith" they ask.
This is the question the Ky Law Blog asks and answers today under Louisiana law as interpreted in a nonpublished appellate opinion, Sullivan v. Anderson. In that case, writes attorney and blogger Michael Stevens,
the defendant's attorney . . . arranged for the date, time, location, and mediator and notifed the pro se litigant who did nothing.
[A]ffirming [the trial court] . . . a Jefferson Circuit Court . . . held that although a party was not obligated to attend the "agreed" upon mediation, he was obligated to notify the other side he would not attend so as not to waste the mediator's time. . . [The appellate court opined]
We agree with [the pro per plaintiff] Sullivan and the trial court that Sullivan was not obligated to attend the mediation since it was not ordered by the court. However, [defense counsel] did not have any reason to know that the parties had not agreed on mediation since Sullivan did not inform her that he did not agree to the arranged mediator and mediation date. [*]
A Kentucky court “may invoke its inherent power to impose attorney's fees and related expenses on a party as a sanction for bad faith conduct, regardless of the existence of statutory authority or remedial rules.” (citations omitted).
The Parade of "Bad Faith" Mediation Horribles
Mr. Stevens justifiably marches out the following parade of horribles that this opinion could lead to, such as awards of sanctions when:
the insurance defense lawyer shows up at mediation without the adjuster or the insured and rel[ies] upon the adjuster's attendance by telephone[;]
the adjuster in attendance . . . not hav[ing] settlement authority extending to the policy limits[;]
the adjuster ha[ving] to leave early[; and,]
the adjuster with higher authority [not being] available by phone, or . . . delays in contacting the adjuster by telephone[.]
Are Sanctions Available in California for "Bad Faith" Mediation Practices?
Because Evidence Code section 1120 expressly exempts any "agreement to mediate a dispute" from the protections of section 1119, a California court could presumably sanction a party for failing to appear at an agreed upon (or court ordered) mediation.
Here in California, however, an award of such sanctions presumably could not include all or part of the mediator's fee because our Supreme Court has held that a party may not be ordered to pay a private mediator in the first instance.
Moreoever, a party''s mediation conduct, such as a defendant's failure to bring a claims adjuster or the plaintiff's attorneys failure to bring his client, would not likely subject either party to sanctions.
Section 1119(c) prohibits a party from disclosing "[a]ll . . . negotiations . . by and between the participants in the course of a mediation or a mediation consultation." Interpreting this section broadly and strictly as our Supreme Court requires would likely result in the denial of sanctions because the choice of individuals to represent party interests is an integral part of the "negotiation" between the parties. **
Finally, section 1119(a) most certainly forecloses an award of sanctions based upon offers made or not made during -- or authority possessed or not possessed at -- a mediation. Those facts could only be learned as a result of something "said . . . for the purpose of, in the course of, or pursuant to a mediation" and therefore fall squarely within section 1119(a).
** We find this one of the strangest and most illogical formulations we've heard from any appellate court anytime, anywhere -- a dangerous one at that -- and contrary to the law of contracts. Since when does an agreement exist when party A proposes X to party B, who does not respond? Since when is an agreement formed when party B neither accepts nor rejects it?*** The American Heritage Dictionary (2000) defines the verb "to negotiate" to mean and include, inter alia, "[t]o arrange or settle by discussion and mutual agreement: negotiate a contract."