Make the Most of Your Mediation: The Single-Family Construction Defect Case

By Hon. Lynn Duryee (Ret.)

How can you economically and effectively settle the single-family construction defect case?  In a recent mediation involving a homeowner, contractor and 15 subs, the participants used the following practices, which resulted in 16 signed settlements at the end of one day:

1. Participate in a focused pre-mediation conference call. All counsel participated in a conference call before setting the mediation.  Each spoke knowledgably about what was needed to prepare the case to optimize resolution.  The homeowner needed to do an urgent repair.  The contractor needed his expert to finish a report.  The subs needed an allocation demand well in advance so that their clients could respond.  Some participants expressed a need to speak privately with the mediator.  A frank discussion was had about why the case had stalled and what was required to successfully move it forward.  It bears mentioning that while the attorneys had experienced a fair amount of frustration in the litigation up to that point, they all bent over backwards to be respectful and friendly in the call.  Following the call, a case management order was prepared setting forth all future dates and obligations.

2. Visit the property. Even though the homeowner had permitted a property inspection early in the litigation, she allowed a second inspection so that the neutral could view the property and all participants could take a second look.  Her lawyer was thoroughly prepared for the inspection.  He created a bulleted list from his expert’s report, and he led the parties through the house, pointing out the defects while referencing the list.  Helpfully, he had included photos on the list along with expert’s estimate for the fix.  Seeing the property and remembering it with pictures was critical to having an informed discussion at the mediation.  The bulleted list became the basis for settlement discussions.

3. Alert the neutral to obstacles in advance. In private pre-mediation calls, several lawyers identified specific obstacles to settlement:  lack of insurance, indignant parties, ridiculous demands, personality clashes and the like.  The lawyers gave the neutral suggestions as to how to best handle their issue.  For example, one uninsured sub was outraged that he’d been sued, because the owner had repeatedly told him how satisfied she was with his work.  Armed with this information, the neutral spoke with the sub in advance, diffusing the emotion and avoiding an emotional and lengthy talk during the mediation day.