Understanding and Successfully Utilizing the Mediation Process for Resolving Disputes

Most states impose requirements and/or encourage members of homeowners’ associations who are involved in a dispute pertaining to alleged violations of covenants in governing documents to engage in efforts to resolve their dispute through an informal dispute resolution process before becoming embroiled in costly court proceedings. One such informal process of dispute resolution is “mediation.” Mediation is a process whereby an independent neutral party works with the parties to the dispute to encourage and facilitate a resolution. The process does not involve a formal adversarial hearing and if a resolution of the dispute is reached in mediation, it is based on a voluntary agreement of the parties, and not decision by the mediator.

The mediation process generally begins with either an order from a court that directs mediation, or an agreement between the disputing parties to participate in mediation. In many instances an association’s governing documents, or some other document, will contain a provision that constitutes the agreement to submit disputes to mediation. If there is no order or existing agreement that requires mediation, any party to the dispute can request that the other parties agree to utilize the mediation process to attempt to resolve their dispute. If all of the parties agree to mediate, they must then decide on who the actual mediator will be.

Sometimes the mediator, or the mediation firm (as opposed to the specific individual mediator), will be specified in the controlling document that provides for the mediation of disputes, but frequently the decision on who the mediator will be is left to the parties to decide. In addition to private firms that provide mediation services with experienced mediators, some jurisdictions have governmental agencies that maintain lists of mediators that the parties can select from. Most professional mediation service providers charge an administrative fee in addition to the mediator’s fees. The amount of the mediator’s fees varies with the experience level of the mediator that is selected and, in most instances the costs and fees associated with the mediation are share equally by the parties who are participating in the mediation. The list of the potential mediators will generally include the name, address, and phone number of the available mediators along with their hourly rates and some background information about the mediator. That list is provided to all of the parties who are going to participate in the mediation for their evaluation. Each of the parties then informs the other parties of the mediator(s) that is/are acceptable to them. If the parties are unable to agree on a proposed mediator, the mediation firm will generally have an established procedure for the parties to follow in order to designate a mediator that all parties will agree to.

Once a mediator is selected, he or she will be provided with information about the parties to enable the mediator to confirm that he, or she, does not have any conflict of interest and would be an impartial neutral. All prior relationships or connections with any of the parties to the dispute should be disclosed to all of the parties who would then have an opportunity to reject that mediator based on the prior relationships or connections that were disclosed which might cause the mediator to be biased in favor of, or against, one of the parties to the dispute.

Following the selection of the mediator, the parties are generally given an opportunity to submit a written mediation statement to the mediator in advance of the actual mediation proceeding. That statement can be shared with the other parties, or be kept private between the party submitting the statement and the mediator, at the option of the party submitting the statement. The mediation statement is designed to give the mediator background facts and the parties’ contentions about the issues that are in dispute and is generally limited by the mediator to a maximum number of pages (i.e. 5 pages).

The actual mediation is an informal meeting that generally takes place in the offices of the mediator or the firm that provides the mediation services (a neutral environment). Some mediators will start out by meeting with all of the parties together to explain the mediation process and then separate them into private areas where they can talk freely among themselves, or with the mediator, outside the presence of the other parties to the dispute. Other mediators will have each of the parties in separate rooms from the outset. The mediator will then talk to each of the sides to get their respective positions and then go back and forth to confer with each side in an effort to reach some middle ground that all parties can agree to relative to each issue that is in dispute. Unless a party specifically authorizes the mediator to disclose certain information to the other side, the specifics that a party conveys to the mediator are confidential and are not disclosed to the other parties. The mediator’s role is to facilitate communication between the parties and to assist them in understanding the various factors that should be taken into consideration and the pros and cons relative to their respective positions. Good mediators will also offer alternative settlement considerations that the parties may not have previously thought of on their own. If the parties are able to reach an agreement with the assistance of the mediator, that agreement is generally reduced to writing on a form provided by the mediator that all of the parties then sign. The writing becomes a binding contract that can be enforced by the courts if necessary. If a settlement is not reached in the mediation, the parties are not permitted to introduce evidence of what was said in the mediation in any subsequent court proceedings relative to the dispute.

There are many advantages to attempting to resolve disputes through the mediation process including: (i) reduced costs associated with resolving the dispute; (ii) minimization of the adversarial nature of the dispute resolution process; (iii) expediting the dispute resolution process; and (iv) having direct involvement in the terms of the resolution of the issues (the mediator does not order anything and all terms of the settlement must be agreed upon by the parties); (v) avoiding potentially disastrous consequences of losing at a trial.

Because mediation is a voluntary process in which the mediator does not make a decision, the parties to a dispute that is submitted to mediation must understand going into the process that they are going to have to negotiate with the other parties in order to reach a resolution of the issues. Parties should not go into mediation with an inflexible position and a closed mind. The mindset should be one of recognizing the need for, and the benefits of, a resolution of the issues. The parties should go into the mediation with an open mind and be willing to considering reasonable alternatives in order to find a satisfactory solution that all parties can agree to. If all parties to a dispute are fair and reasonable (which takes the other parties’ positions into consideration), most any dispute can be resolved through the mediation process.