Per Jeff's suggestion, I am re-sending my email as a "discussion" item so we can engage in a group e-conversation.  I am interested in hearing what others think about a few issues I've been pondering....

 

 Sec. 6(5) of the FFA provides that housing counselors are not liable for civil damages for acts or omissions unless the acts or omissions constitute gross negligence or willful or wanton misconduct.

 

As you all know, the Act does not provide mediators with similar protection  (see Sec.7). 

 

I am worried that a disgruntled borrower or lender may sue the mediator if the mediator's certification has indicated a failure to participate in good faith (because there are legal, adverse consequences to the party found to have breached the duty of good faith).

 

So my questions are --

(1) Should we ask the WSBA via the ADR section to look into seeking an amendment to FFA that provides mediators with protection similar to that afforded housing counselors?

(2) Does the lack of legal protection affect our duty to be neutral?  Will we think twice before certifying either party's breach of duty of good faith  (because we face being named in a  lawsuit or getting caught up in discovery if the affected party is looking for a scapegoat.) 

 

I confess I have not looked at other states' programs to see if mediators are treated similarly to WA law and, if so, whether parties found not to be in good faith have sued mediators for negligence or other reasons.  Anyone know? 

 

[I'll add here that I have read the blog about the NV supreme court decisions (see Discussion Forum -- Serena Lee,  July 26).  This reinforces my concern that parties adversely affected by mediator certifications may look for ways to set it aside including filing claims of negligence, misconduct, etc. against the mediator.]   

 

I am interested in  hearing your thoughts.

 

Kind regards, Marilyn

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Replies to This Discussion

(Douglas Brown commented on Marilyn's message on the group page; now that she's posted this discussion I'm posting it here as a comment so his remarks can be part of this conversation.)

Marilyn has asked the question that many of us have pondered individually for several weeks.  Lack of Good Faith is a big hammer for the mediator.  What is our individual exposure if we believe one of the parties has not participated in good faith, and one of the Big 5 Lenders decides to make an example of one of us just to intimidate us and the entire process?

Marilyn, well-put and important.

The Nevada opinions show that these findings of lack of good faith do in fact get the parties' attention. It raises the question of what evidence they may want to generate on the issue and whether they'd seek the mediator's testimony - even if not as a "live witness" (whatever the heck that is). Not far behind is this issue of liability/immunity.

The ADR Section's Executive and Legislative Committees are interested in this and other issues that may suggest possible legislative improvements to the FFA. These two issues - privilege and immunity - seem to be the two big ones we keep coming back to.

I know one of the stated public policy values behind the FFA was that mediators would offer to provide their services - at the statute's artificially-low and fixed price - as a matter of pro bono publico public service. Setting aside for now that issue of whether one providing a valuable service should be paid the value of it - if our services are wanted for the public good, then in the very least the legislature could protect us from getting sucked-into satellite litigation or getting sued ourselves.

You've suggested one model for immunity, Marilyn, and that's in the FFA already for housing counselors. That's a good one. Another is the DRC's statutory immunity which, though it doesn't seem to grant their mediators immunity when making FFA certifications, might provide a model for an immunity clause in the FFA.

What do you folks think? Is this important to you? Or not so much? Anyone thinking contrarily: are there any arguments for not granting mediators immunity here? Or may be you're just sanguine about telling parties they're not negotiating in good faith and then having foreclosures either proceed or get enjoined on your say-so? Just happy to let whatever chips fall wherever they may?

(FYI: WSBA is in the process of bringing together the various organizations within the bar to see what interests they may have jointly, in preparation for larger discussions with other stakeholders. So if you're interested in participating in this process and are a member of the ADR Section, feel free to join the ADR Section Legislative Committee and participate in the ADR Section's activities to improve the FFA and mediation program!)

I would be surprised if this were not an important issue for all mediators participating in this program. (Sorry for the double negative.) In other words, I think all would agree that this issue needs correction by the legislature. I would urge WSBA to address this, and Jeff, I'm glad to hear that this will be happening.

 

I agree that the implication has been that this foreclosure mediation work is pro bono, or almost pro bono, given the limited fees allowed. If so, the liability risk may end up discouraging this pro bono work.

 

And Jeff, could you clarify what you said above about the DRCs? Am I correct in understanding you to say the the DRCs' statutory immunity does not apply to foreclosure mediations? I was not aware of that.

Selden, I can explain further what I meant about the DRC's statutory immunity, sure.

First, it's an issue. To be clear, I'm not taking the position. It's a matter of statutory interpretation, and anyone who's made those arguments knows those aren't decided until the judge has ruled and appeals have run!

It's enough to note that someone wanting to challenge immunity has a colorable claim that the DRC's enabling statute's immunity may not apply here. So here's the argument that the current DRC enabling statute, Chapter 7.75 RCW, may not provide immunity for FFA mediations:

DRCs must operate under plans approved by the counties or municipalities. RCW 7.75.020. Those plans must provide that DRC mediators "shall make no decisions or determinations of the issues involved" during the dispute resolution process. RCW 7.75.020(2)(g). This provision in the enabling statute makes sense, because it was contemplated DRCs would be providing consensus-based mediation dispute resolution services in which the mediators there "shall facilitate negotiations by the participants themselves to achieve a voluntary resolution of the issues." Id. The DRC enabling act envisions DRCs providing these dispute resolution services, consistent with the mediations they historically provide, and not dispute resolution processes where the neutral makes decisions, e.g., arbitration.

Yet under the FFA, a mediator isn't just providing mediation services. When making their certifications under the FFA, mediators are in fact making decisions and determinations of the issues involved. So DRC mediators doing FFA mediations are providing a service prohibited by the DRC's enabling act and their approved plans.

There are other aspects provisions that support the idea that doing what the FFA requires takes the mediator beyond what was envisioned in the DRC enabling act. E.g., pay for services (RCW 7.75.030), confidentiality (RCW 7.75.050), withdrawal (RCW 7.75.060), and tolling of statutes of limitation (RCW 7.75.080). All of these provisions of the DRC's enabling act are in some way contrary to the FFA's provisions.

Therefore, the DRC's immunity provision, RCW 7.75.100, arguably doesn't apply because, in providing services under the FFA, the DRCs are acting both a) outside the authority of their county/city-approved plans and b) beyond the legislative authority of their enabling act.

Again, I'm not taking this position here - this is how the argument might go. What's important isn't whether we agree with the argument or not. What's important is the DRCs would like it more clear that they are immune when doing mediations under the FFA.

Just articulating this argument is clarifying the issue for me. The problem is that FFA's process isn't, strictly speaking, the mediation envisioned in the DRC enabling act. It is a hybrid process. The DRCs were created to provide mediation services, not for the kind of hybrid process the FFA provides. So the solution may include revising the DRC enabling act to clarify that DRCs are enabled to do this work, even though it involves the mediator making determinations on the issues involved.

Jeff,

Thanks for taking time to put forth your analysis.  I am a DRC Director and getting clear about RCW 7.75, immunity and liability are very important and being discussed by Resolution Washington, the association of dispute resolution centers and Commerce, and Bruce Neas, among others.  So, we definitely need to coalesce around these issues.

I know some mediators believe the ultimate  liability risk is minimal; however the cost of defense and energy around defending claims (and actually having claims made) seems to be prohibitive, I agree, of providing what is essentially a public service. 

 

I am interested in whether  private practitioners and retired judges are going to require Agreements to Mediate, indemnification and hold harmless agreements?

 

How are you handling the issues around liability?

 

 

Nancy, it was Andrew Kidde I was talking with about the immunity issue. I told him I thought private practitioners would be just as interested as DRCs in a broad immunity.

Good question about agreements: are private practitioners thinking they'll be asking parties to sign agreements to mediate that obligate the parties to obligations that are not enumerated in the FFA? For example, as you mention, Nancy, indemnifications/hold harmless, maybe a broader testimonial waiver, etc.

But I'd ask the question of DRCs, too: do you think you can have the parties sign an agreement that has provisions that aren't in the FFA?

Though I think a lot of parties wouldn't balk at standard mediation agreements, I can easily imagine someone would. As a statutory program, one could claim they are entitled to a mediation under only the enumerated rights and obligations specified in the FFA.

So to reframe the question, does any mediator/DRC think they have a basis for requiring a party to sign a mediation agreement that obligates them to something that isn't already provided in the FFA?

I'd especially be interested in hearing from someone from Commerce on this. If you got a call from a party saying "the mediator/DRC says I have to sign this mediation agreement that has all sorts of stuff that isn't in the FFA, or they won't mediate - can they do that?" What would you tell them?

Jeff,

 

I'm following your thinking and would ask,  "Do you think the UMA provides mediators with immunity or hold harmless protection?"   (I don't think the statute does.  Am I missing something?)

 

So, what happens if you apply your same question to the UMA, i.e.,  what is the basis for requiring a party sign a mediation agreement that obligates them to something  (e.g., hold harmless release or immunity) that is not provided for in the UMA?   By inference, doesn't this mean one could require parties to agree to hold the mediator harmless for acts and omissions occurring in the provision of mediation services under the FFA (as routinely is done under the UMA)?  What's your read?

 

I agree that we need to hear from Commerce.   As an EEOC contract mediator, I am required to use the EEOC's forms including its Agreement to Mediate.  Thankfully, the form includes a hold harmless clause.   I'd like to suggest that we ask the Commerce staff to revise its forms to include a  provision that the parties agree to  release and hold the mediator harmless for acts and omissions occurring during the course of the mediation process.

Marilyn,

Really good point. And I don't have an analysis, really, other than this: the UMA and the FFA seem to be significantly different statutory creatures. The FFA establishes a program - creates rights and obligations that didn't exist. The UMA puts a structure around a process that already existed, imputing rights and obligations should persons choose to participate in it. The UMA is still based on the basic foundational principle of mediation of voluntary participation. For the UMA to apply it takes both parties to agree. The FFA applies if the statutory conditions are met and one party requests the mediation. It is not voluntary.

So I don't have the same reaction to a mediator basically doing the same thing under two different statutes. So under the UMA, a mediator chooses only to offer to do mediations with parties if they sign a mediation agreement that has certain provisions, like indemnity/hold harmless, that the UMA doesn't address. Seems okay. Like offering to do only divorces and not commercial cases or mediate with people with brown eyes and not blue. But when that same mediator, in an FFA mediation, asks parties to sign a mediation agreement that has those same provisions, when the FFA explicitly enumerates what the mediator may ask for, I have a very different reaction.

Maybe my reactions are based in some experience with statutory interpretation, the specifics of which are beyond me now, and somebody can come buck me up here with a real legal analysis. Or maybe I'm just making it all up.

You're right to think about focusing on Commerce. They're the agency tasked with implementing the statute. If they by rule or guidance or just in administering the program would hold the approved mediators to not adding provisions in a mediation agreement, in support of standardization and ease and economy in administering the program, it's hard to imagine anyone being able to challenge that successfully.

Yet I question whether they could put that indemnity/hold harmless in? Can an agency place more requirements on the parties than the statute allows, when the statute has already explicitly enumerated the conditions for participation in the program? I know if I were representing a party I'd balk at that.

But here's the deal: If we're having so many questions, and the Legislature really wants to encourage basically volunteer pro bono publico service, the least they could do is just give us a little cover for Pete's sake. Immunity, privilege, and while they're at it, allowing us to add a contractual indemnity and hold harmless in our mediation agreements wouldn't hurt either. I'm always coming back to the legislative solution.

Thanks, Jeff. That definitely clarifies the issue for me. Thanks.



Jeff Bean said:

Selden, I can explain further what I meant about the DRC's statutory immunity, sure.

First, it's an issue. To be clear, I'm not taking the position. It's a matter of statutory interpretation, and anyone who's made those arguments knows those aren't decided until the judge has ruled and appeals have run!

It's enough to note that someone wanting to challenge immunity has a colorable claim that the DRC's enabling statute's immunity may not apply here. So here's the argument that the current DRC enabling statute, Chapter 7.75 RCW, may not provide immunity for FFA mediations:

DRCs must operate under plans approved by the counties or municipalities. RCW 7.75.020. Those plans must provide that DRC mediators "shall make no decisions or determinations of the issues involved" during the dispute resolution process. RCW 7.75.020(2)(g). This provision in the enabling statute makes sense, because it was contemplated DRCs would be providing consensus-based mediation dispute resolution services in which the mediators there "shall facilitate negotiations by the participants themselves to achieve a voluntary resolution of the issues." Id. The DRC enabling act envisions DRCs providing these dispute resolution services, consistent with the mediations they historically provide, and not dispute resolution processes where the neutral makes decisions, e.g., arbitration.

Yet under the FFA, a mediator isn't just providing mediation services. When making their certifications under the FFA, mediators are in fact making decisions and determinations of the issues involved. So DRC mediators doing FFA mediations are providing a service prohibited by the DRC's enabling act and their approved plans.

There are other aspects provisions that support the idea that doing what the FFA requires takes the mediator beyond what was envisioned in the DRC enabling act. E.g., pay for services (RCW 7.75.030), confidentiality (RCW 7.75.050), withdrawal (RCW 7.75.060), and tolling of statutes of limitation (RCW 7.75.080). All of these provisions of the DRC's enabling act are in some way contrary to the FFA's provisions.

Therefore, the DRC's immunity provision, RCW 7.75.100, arguably doesn't apply because, in providing services under the FFA, the DRCs are acting both a) outside the authority of their county/city-approved plans and b) beyond the legislative authority of their enabling act.

Again, I'm not taking this position here - this is how the argument might go. What's important isn't whether we agree with the argument or not. What's important is the DRCs would like it more clear that they are immune when doing mediations under the FFA.

Just articulating this argument is clarifying the issue for me. The problem is that FFA's process isn't, strictly speaking, the mediation envisioned in the DRC enabling act. It is a hybrid process. The DRCs were created to provide mediation services, not for the kind of hybrid process the FFA provides. So the solution may include revising the DRC enabling act to clarify that DRCs are enabled to do this work, even though it involves the mediator making determinations on the issues involved.

Good points Jeff and Marilyn, and I really appreciate your thoughtful analysis.  I agree that at least for one party, participation under the FFA is not voluntary and without an explicit requirement from the statute or a rule from Commerce, a party could refuse to sign the agreement.  Our center has made the decision that the agreement is important from a policy standpoint (and statutory standpoint RCW 7.75)  and we choose to do business with those parties who can agree with its terms.  This puts us in the quandary of wanting to provide this valuable public service and also needing to  protect our organization's well-being and standards.    I am hopeful that a solution can be reached among Commerce and the legislature around this.  In my experience and from studies I have reviewed, the best mediation programs within a court or government agency are a result of the collaboration and integration of court/government agency/party needs and mediator ethical standards and best practices. 

A bit late but some additional background.  I'm a non-attorney mediator, trainer who volunteered with two retired attorneys to draft "agreement to mediate" documents for a working group within Res Wa.  As a Board member of the Kitsap DRC I became alarmed mid June by the lack of immunity and in July our Board adopted a holding pattern on FFA mediations until adequate protections for DRC's and our mediators were developed.  

We originally thought we would develop a "sign at table" agreement acknowledging 7.75 immunity.  However, we agree with Jeff's analysis above that FFA requirements may compromise full compliance with 7.75 which could probably only be resolved in litigation.  Therefore we chose not to cite 7.75.  Instead the larger working group developed a Waiver of Claims document.  

Since beneficiaries are likely to be significant corporate bureaucracies we did not believe that the personnel sent to the table would likely have sufficient authority to waive claims against the mediator.  We therefore believe it needs to be mailed in advance.  The Waiver of live witness also needs to be mailed in advance and the two documents are the responsibility of the mediator and will likely need to be signed at the same level in the bureaucracy - seems logical for them to travel together. 

That left us with no "agreements" needed at table to start the mediation; however, the mediator community is used to some kind of opening statement and documents to "set the stage" for the mediation.  We elected to create a narrow summary of FFA required issues to be discussed in the actual mediation (assuming documents have been addressed prior to coming to table).  That summary was subsequently added to with language related to typical values practiced in the course of dialog.  We did not perceive a need for signatures since we were simply stating law and practice, but a signed acknowledgment would be a nice beginning. We subsequently left reference to "agreement " out of any titling of the summary and practices.

The UMA, 7.07 is specifically denied.  We omitted reference to privilege and confidentiality except in the summary to indicate that mediators will keep the confidence unless required by law to disclose.  We suspect that the FFA is intentional in making mediation content accessible in subsequent legal proceedings.  

Can we get beneficiaries to sign a waiver of claims since it is not called  for in the FFA?  Res Wa folks are talking to Commerce this week regarding the issue.  In 7.75.040 DRC's are required to have a written agreement regarding method of resolution which the Waiver of Claims identifies as the FFA in its introduction.  That might be a justification for seeking a signed agreement.  If not, plain old existential choice may apply - I don't have to do it if we can't agree on the terms and conditions.  That sends it back to Commerce to find a mediator with higher risk tolerance than we have.  

From our DRC's standpoint there are also serious questions about the lack of defined relationships under FFA between Commerce, the DRC's, and their mediators.  Some of those questions bear on insurability under DRC liability and may raise questions for individual mediators about their uninsured risk exposure even if they claim DRC affiliation.  Not so much a concern for attorneys who insure independently.  

 

 

Well it has started.  I certified a mediation bad faith last week.  I got a call from the Beneficiary attorney today. Furious and threatening: Bar complaint, Mediator bias, Law suit naming me.  This is a Big 5 Lender attorney. Gave me time to think it over.

Hope one of you will mediate this!

Worried

 

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