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Mondelli v. Kendel Homes Corp.

With regard to the Mondellis' appeal, we conclude that the district court abused its discretion in excluding the testimony of Drs. Pour and King. This exclusion of evidence was prejudicial error. The district court did not abuse its discretion in refusing to allow joinder of the claims of the Mondelli family.

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Trial is legal surgery, the narrowest specialty, and it requires unique skills. Our clients want our service and hope they never need it again- like surgery.

Are There Alternatives to Trial?

Our professional endeavors consist principally of " Trial Practice. Not Just Talk." This is the Firm's motto. We take it seriously. Yet, a conventional "trial" is not right for every case, or every client. Alternative forms of dispute resolution are available. These have advantages and disadvantages. Our lawyers have strong feelings about these advantages and disadvantages, and we are quite hesitant to encourage ADR in a broad setting.

What are the Alternative Dispute Resolution Methods?

The two most prominent methods of alternative dispute resolution are mediation and arbitration. These terms may sound much alike to a lay person, but they describe significantly different procedures.

What is Mediation?

Mediation has been described as the active involvement of a neutral third party in a dispute. The goal of this involvement is to resolve the case prior to trial. Mediation may occur either before or after the filing of a lawsuit, or a demand for arbitration.

The terms "mediation" and "settlement conference" may be used interchangeably. Often, though, a "settlement conference" is thought of as occurring after litigation has started. In mediation, parties may request that the mediator facilitate resolution of the case by either:

  • Injecting the mediator''s view of the merits;
  • Refraining from injecting the mediator''s view of the merits.

Mediation does not produce harmful evidence. State and federal evidentiary rules prohibit use of settlement negotiations as substantive evidence, if settlement is not effectuated. (Of course, if a dispute arises about the settlement agreement, what occurs in the mediation that produced it might be admissible.)

Mediation is not binding until an agreement is reached and implemented by the parties. Then, the mediated outcome results in a binding agreement that compromises the original dispute.

Mediators are immune from civil liability for good faith acts and omissions within the scope of their duties. They are expected to be impartial, disclose conflicts, and act completely impartial and honorably.

Minimum Procedures for Mediation

Minimum procedures for mediation often include at least these items:

  • Only parties, representatives, and the mediator attend. Proceedings are not public. Occasionally, an expert witness will attend on each side if the subject matter is highly technical.
  • Mediation proceedings are not recorded.
  • Notes maintained by the mediator do not constitute a record of proceedings.
  • There must be no disclosure of materials or comments made during mediation except to the extent set forth above.

Memorializing a Settlement and Enforcing It

If mediation produces a settlement, then the settlement is memorialized by a written agreement, executed by the parties. It may even be preserved orally, and dictated, recorded fashion by the mediator, pending a written settlement agreement in some instances. This is often done when settlement terms are reached during actual trial proceedings too.

Mediation's goals may vary from case to case. Generally, they include at these matters:

  • A decision to invite the mediator or settlement judge to comment on the merits or refrain from doing so.
  • Permitting the parties to express themselves to the mediator and the opposing party with less formality than trial.
  • Education by each party about his or her case, and of each party about the positions of all other parties.
  • An independent view of the merits of the case.
  • Time parameters for the conference.
  • Awareness of how the conference is to proceed.
  • Overall education about expectations for mediation, and for case resolution.
  • Confidentiality.
  • Expense limitation, and stress reduction for participants.

Mediation can be quite good. It must be prepared for and considered seriously to be successful. Mediation seldom works when it is ordered or forced and, therefore, becomes involuntary.

An actual third-party mediator can be helpful. This is especially true where one party or the other has unrealistic expectations, or where some genuine need for an independent voice to moderate a dispute is necessary.

What is Arbitration?

Arbitration is a binding legal procedure. Mediation is not binding until an agreement is reached. Arbitration is an actual alternative to court that produces a binding outcome. There is no appeal, generally, from an arbitration award.

Arbitration has the status of federal and state law. The Federal Arbitration Act, 9 USC § 1 et seq., applies to arbitration proceedings involving contracts that affect interstate commerce, as most do. Where parties agree by contract to arbitrate, they consciously choose to forego resolution of their disputes through the judicial system. United Steel Workers of America v. Warrior & Gulf Navigation Co, 363 US 574, 582 (1963).

The courts have frequently said that public policy encourages dispute resolution through arbitration. Circuit City Stores, Inc. v. Adams, 532 US 105 (2001). A valid and enforceable arbitration agreement divests a court of jurisdiction over a dispute and must be enforced.

Contents of Arbitration Clauses

Arbitration clauses may be extremely broad, provide that arbitration of all disputes be submitted to an arbitrator, and preclude the right to go to court. Arbitration clauses can define specifically what issues will and which, if any, will not be arbitrated. The number of arbitrators, how they are to be selected, and what pre- hearing or hearing procedures are to be used, may all be set forth in the arbitration clause.

Frequently, arbitration agreements refer to procedures or rules adopted by organizations such as the American Arbitration Association ("AAA"). The AAA''s rules, and its jurisdiction are extremely expensive, and onerous. Arbitration filing fees, alone, can equal or exceed all court costs in major suits, and arbitration fees to AAA arbitrators can be tantamount to hiring three new lawyers to work on a case.

In short, one must not assume that arbitration will be cheaper. In fact, DOMINALAW Group pc llo's observation has been that arbitration virtually always favors the wealthier party in a dispute.

How Does Arbitration Begin?

Arbitration begins with a demand to commence arbitration. If the arbitration clause identifies the AAA, the demand must be sent there. Notice must be given to the other party. Congress has provided that arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of a contract." 9 USC § 2. This statute provides, succinctly, what general attacks may be made upon arbitration agreements. An arbitration clause must be attacked before arbitration begins; the attack must occur in Court.

Sometimes arbitration clauses come about after an original agreement is made. For example, credit card companies may try to add arbitration clauses to bulk mailings. Where this occurs, there must be clear proof that both parties intended to agree to arbitrate.

Where arbitration clauses are negotiated unconscionably, they are not enforced. Sosa Paulos, 924 P2d 357 (UT 1996). Some arbitration agreements may be part of contracts that are, overall, void because they violate public policy. Such agreements are unenforceable. Dudding v. Norton Frickey & Assoc., 11P 3d 441 (Colo 2000).

Arbitration costs, as noted above, can be enormous. One US Court of Appeals has ruled that arbitration clauses in employment agreements are unenforceable if the cost of arbitration is to be shared by the employee. Shankle v. B-G Maintenance Management of Colorado, Inc, 163 F3d 1230 (10th Cir 1999).

The Arbitration Hearing

Arbitration cannot occur without notice. Notice of a hearing must be given, generally a reasonable time in advance. This is usually defined by state law. After a hearing, an arbitrator issues an arbitration award. The award must be paid. If it is not, the prevailing party may take the arbitrator''s award to the trial court of the state in which the dispute arose, register the award and enforce it like any other court judgment.

Court Vacation or Correction

Courts may vacate or correct arbitration awards only for:

  • Corruption, fraud or other undue means of procuring the award.
  • Evident impartiality by the arbitrator, or corruption or misconduct by the arbitrators.
  • Exceeding powers granted by the arbitration agreement.
  • Refusal to postpone the hearing when good cause existed.
  • Refusal to hear material evidence to the controversy, or conducting the hearing in a way that prejudice rights of the party.
  • Where no arbitration agreement existed.

Court corrections to an arbitration award may be made for:

  • An evidence miscalculation of figures, or an evidence mistake in the description of a person or property.
  • The award decides matters not submitted for arbitration.
  • The award is imperfect as to form, but the imperfection does not affect the merits.

Advantages and Disadvantages of Arbitration

Arbitration has advantages and disadvantages. We believe the disadvantages generally outweigh the benefits.

Arbitration's advantages include:

  • The possibility of quicker resolution than court litigation;
  • The possibility of a less expensive method of resolution if pre-hearing procedures are limited;
  • Privacy, as arbitration is not a public process;
  • Potentially less stress, as arbitration may not involve hearings that are as formal as a court proceeding;
  • Limited control over selection of the arbitration versus no control over selection of a judge.

Arbitration's disadvantages include:

  • There is no right to appeal from an arbitrator''s award;
  • There is no right to trial by jury in an arbitration;
  • The rules of evidence do not apply to arbitration;
  • The rules of procedure designed to assure fairness, prevent surprise, and compel disclosure do not apply in arbitration;
  • Rules of discovery may not apply in arbitration, and if they do, there is no meaningful way to enforce them;
  • There is no quality check against the selection of an arbitrator with an undisclosed conflict of interest, and arbitrators are not required to comply with mandatory codes or rules of judicial conduct. This is important, because judges are required to put the law first. Arbitrators are not. In fact, arbitrators are not even required to follow the law.

Conclusion

Our clients are encouraged to discuss the advantages and disadvantages of alternative dispute resolution with our lawyers. Where appropriate, these alternative methods should be given serious consideration.

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