Revisions to the Foreclosure Fairness Act: Mediator Immunity from Liability

Here's a place for us to collect and discuss a particular possible "fix" to the Foreclosure Fairness Act: how to provide for mediator immunity from liability?

(Here's a different discussion to discuss ideas about mediator privilege.)

What are your ideas on how this might be done?

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Here's a shot at providing mediator immunity. I still haven't heard of this being codified, so I'm using the language of SHB 1362, the enrolled act/session law, which is also posted above:

(b) Prior to scheduling a mediation session, the mediator shall require that both parties sign a waiver stating that neither party may call the mediator as a live witness in any litigation pertaining to a foreclosure action between the parties and that the mediator is immune from suit in any civil action based on any proceedings or other official acts performed in his or her capacity as a mediator under this section, except in cases of wilful or wanton misconduct. However, the mediator's certification may be deemed admissible evidence, subject to court rules, in any litigation pertaining to a foreclosure action between the parties.

I cobbled the language directly from RCW 7.75.100 which provides immunity to DRCs. Pretty simple, huh?  Whaddya think?

Jeff,

 

I agree with your proposed language and reasoning.   Nice job!

 

As you know, the language of this proposed amendment differs from the protection given housing counselors under Sec. 6 of the FFA, which reads in part: "Housing counselors... are not liable for civil damages resulting from any acts or omissions in providing assistance, unless the acts or omissions constitute gross negligence or willful or wanton misconduct." 

 

It's my opinion that the difference is appropriate given the difference in roles and responsibilities between housing counselors and mediators and the existence of the UMA.  There probably are other rationales, too, all of which should be identified and explained in the cover memorandum to the WSBA Legislative Committee that will accompany the proposed legislation.

 

Again, the WSBA Legislative Committee will want assurance that the ADR section has thoroughly vetted the proposed amendment to all key stakeholders and will inquire about the nature of the feedback received.  Without this information, it is likely that the proposed legislation will be tabled.  

 

As an aside, is there any time there will be more than two parties present at a FFA mediation?  If so, I'd suggest we clean up the provision by striking "both" and then "neither" substituting "all"  and "no" respectively in (b) below.

 

Thanks again for taking the lead on this effort!

Thanks for the input, Marilyn.

I used the DRC's enabling statute, Chapter 7.75 RCW, as a model for the immunity, figuring it's a statutory mediator's immunity that already exists that is more likely to pass muster.

As for the vetting question, for others following this discussion, I'll just link here to the other discussion where there's more detail on how the WSBA lobbyist Kathryn Leathers is leading us in the process that will result in discussions with all stakeholders.

I think by statute there can only be two parties - the beneficiary and the borrower. And that's not our amending language but the original FFA.

(Here is a comment from Professor Alan Kirtley in an email exchange between him and Jeff Bean. It's been moved here to keep all comments regarding the issue of mediator immunity together. For the full email exchange, and his comments on mediator privilege, see this discussion here. - Ed)

Jeff's Email: If you're interested, you can also see the language we're considering to provide immunity from liability for mediators. That uses the immunity provided to DRCs in their enabling act as a model.

Alan's Comment: Many FFA mediators, under the statute, will be paid mediators. As a general rule I don’t favor any immunity for paid mediators. Our professionals, as with others, should be held responsible when a practitioner is negligent. And, if mediators are being paid they can afford to purchase (very inexpensive) mediator malpractice insurance. The FFA context is unique however. FFA mediators must take on out of the ordinary statutorily required duties. That does provide an argument for the type of limited immunity found in your draft language. [Although I still not sold as to paid mediators.].

Alan, I'm glad you're seeing the argument for limited immunity. Here we do have a unique context.

The problem here for which immunity is a solution is this: that mediators will be sued - not necessarily for negligence - but over good faith. The beneficiaries' counsel are already implicitly threatening to bring them into the fight. As one mediator put it, "why do I feel like someone just slapped a target on my back?"

The FFA is designed with the threat of post-mediation litigation to create economic incentives for the parties to participate and settle. We just don't want to get in the middle of that fight.

That insurance can be bought is not assuaging the concern. Most have it already anyway. As another mediator put it to me "I'm insured - I just don't want to be the guinea pig."

I can also put it in immunity in an ethics context. Immunity is necessary to preserve the context for the foundational principles of impartiality and competence. It would be difficult to remain impartial and effective if she's thinking that she could get drawn into the parties' post-mediation litigation over good faith. And because the finding of good faith is rebutable, there's simply no need for the mediator to be in on it.

As for the pay, it's well-below market. The sponsors, the legislature and Commerce are all very clear they want mediators to see FFA mediation as a "public service," not a commercial profit center. And at only $400 a pop, I personally find this very easy to do!

Most importantly, overriding all is a practical matter: Commerce simply doesn't have enough mediators. Without immunity many are opting-out of the program. To get the mediators they need immunity is necessary as a quid pro quo for this public service.

Click here to download the language that was unanimously adopted by the ADR Section Executive Committee.

There will still likely be more work on this when we start talking to other stakeholders, most likely a tee-up to another approval by the Executive Committee. So we're not done by a long shot. But this is a great first step.

Thanks, folks!

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