Case Study 1
PreMediation - Mediator held Pre-Hearing Conferences with Parties to enlist buy-in from all stakeholders
Use of Jointly Retained Technical Expert to establish Remediation Scope of Work, and Approve Remediation
Defaulting Contractor permitted to perform Remediation Scope of Work
Mediator as Standing Neutral to monitor compliance with Settlement
Background on the Case: The dispute between the Municipal Owner of a 40,000 sq. foot industrial building and the General Contractor was filed as a Demand for Arbitration with the American Arbitration Association. The largest issue dealt with defects to the standing seam metal roof system. Each party engaged experts that were clearly biased and hardened the positions of the parties: the Owner’s position required a complete removal and replacement, the Surety for the General Contractor presented an expert claiming there was no structural defect, and denied the claim under the bond. The parties agreed to Mediate prior to any formal discovery.
Mediator Leadership: The Mediator conducted a site visit with the Owner’s Expert Witness and the General Contractor (the Mediator refers to this practice as “PreMediation”). Sensing extreme positions being asserted by each side, the Mediator suggested that the parties agree on the selection of an unbiased Neutral Expert, with agreement to share the costs of the expert, to be used for Mediation Purposes Only. The Mediator undertook a search to locate the Neutral Expert on standing seam metal roof defects, provided the outline and scope of work for the Neutral Expert and over several sessions, mediated a schedule and series of work tasks that were to be undertaken by the General Contractor, along with a detailed budget and some cost sharing by the Contractor, the Owner, Architect and Owner’s Rep.
Outcome: The Settlement Agreement established a budget, a work schedule and required the Contractor to complete the agreed up on work tasks under the supervision and subject to acceptance by the Neutral Expert. As part of the Settlement, the parties engaged the Mediator to act as Standing Neutral to resolve field issues that might arise during the construction activity as well as final inspection and acceptance of the remediation Work by the Neutral Expert.
Insight: The Mediator recognized that an independent expert could be used to successfully overcome the mutual lack of trust between the Owner and the General Contractor. The Mediator understood that the General Contractor had strong incentive to cooperate and use its resources for remediation considering its obligation for indemnification of the Surety if a substitute contractor was retained to perform any work.
Arbitrator: John M. Sier, Kitch Drutchas Wagner Valitutti & Sherbrook, Detroit, MI (No Hearing convened)
Owner’s Counsel: David Lick, Foster Swift, Collins and Smith, Lansing, MI
Contractor’s Counsel: Mark D. Sassak, Deneweth Dugan & Parfitt, Troy, MI
“Owner’s Rep” Counsel: R. Edward Boucher, Kotz Sangster Wysocki, Detroit, MI
Architect’s Counsel: Craig S. Thompson, Sullivan, Ward, Asher & Patton, Southfield, MI
Postscript: The Mediator has been successful in getting parties to agree on the selection of an independent Neutral Expert, with an agreed upon scope of services, presented in an unbiased manner, with costs shared by the parties. As necessary, the Mediator suggests qualified expert candidates for review and agreement by the parties, and assists in the preparation of the scope of services to ensure that the resulting report is presented in a factual, unbiased manner. This effort is designated as “For Mediation Purposes Only”, and forms a foundation to support negotiations in the Mediation process. The Mediator has prepared a “Model” setting forth the discrete steps that should be followed to greatly improve the opportunity for successful resolution of similar cases. This “Construction Dispute Resolution Model Involving Contractor Self-Preformed Remediation” is available upon request.
Mark Sassak, Counsel for the Defendant Contractor offered the following assessment:
“One of the most important things that you accomplished as mediator was selecting an unbiased third-part expert. As part of the “buy-in” that you mention in the Model, the parties (particularly the Owner and Contractor) bought in to the neutral expert. The Owner was assured that the deficiencies would be properly remedied while at the same time the Contractor was assured that the expert would not have “his thumb on the scale”. The neutral expert as able to negate the biases of the Owner/s expert that were thwarting negotiations, and he also built trust in the Contractor that the self-performed remedies would not result in an unending series of repairs. The Owner was able to get the building repaired, and the Contractor was able to get fairness and finality. Importantly, the skill of the Mediator is essential to get the parties to set-aside their respective experts and trust that the third-party neutral expert will truly look after their legitimate interests. I think that this issue was critically important to building the trust that enabled the matter to be settled.”