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A Mediation Structure

By Alexander S. Polsky
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This article discusses creation of a cost-effective method to investigate and resolve construction defect cases through use of a special master who will also serve as a mediator.

The referee (special master) provisions are found in Code of Civil Procedure Sections 638 and 639.

Ideally, all parties should sign a stipulation to appoint the SM. This stipulation should set forth the scope of the responsibilities of the SM. Alternatively, the SM may identify the priorities and responsibilities through the case management order which will be filed and served in all cases.

The SM shall preside over discovery. The SM should also serve as mediator. Discovery, where appropriate, should be staged so that the least costly discovery, against the most peripheral parties, is concluded first. Those parties should then participate in staged mediation conferences designed to remove them from the case via early settlement.

Settlement proceeds may be escrowed or disbursed as agreed. Settlement may be contingent on a global resolution or accompanied by an issues release.

The SM should implement a procedure for timely handling of discovery disputes. Use of pager accessibility ensures access during deposition/testing days to provide immediate telephonic rulings.

The right to appeal discovery rulings to the court, within a tight time frame, should be preserved. Dispositive motions may be brought before the SM, but the ultimate order should be reviewed by the court.

The cost of a discovery procedure should be paid in advance by the party who initiates the procedure. Thereafter, the prevailing-party rule should apply. See also C.C.P. 645.1.

An organizational meeting should be set within 30 days following the order appointing the SM. The goals are to discuss the case, identify pleading and discovery issues, discuss insurance issues and set a preliminary time line. The SM's handling guidelines and proposed case management order should be provided to all parties in advance.

The meeting should include plaintiff's counsel, the HOA representative and counsel for the developer/general contractor. Subcontractors need not participate. The agenda:

• Select the executive committee if appropriate.
• Set a date for final service on all defendants/cross-defendants.
• Identify discovery protocol.
• Set scope and timetable and cost allocation for inspection and destructive testing.
• Set deposition timetable for implementation by executive committee (peripheral parties first where appropriate).
• Set date for joint caucus with all parties.
• Obtain agreement for distribution of defect matrix and distribution of homeowner questionnaire.
• Agree on document depository.
• Agree on case management order.

In very large cases, orderly resolution of disputes during litigation requires an executive committee to serve as coordinator and liaison requires an executive committee to serve as coordinator and liaison with the SM. Any party may request a meeting with the executive committee. The SM may call a meeting with the executive committee at any time. Notification of all meetings and all other calendar matters shall be handled by the document depository.

The Objective is simplification, and this starts at the pleading stage. A date must be set by which all parties are in the action, and Doe amendments are cut off absent leave of Court (or the SM) for good cause. However, if new defects are discovered during the proceedings, any party shall have 30 days to file and serve new defendants.

An order to take default of any party who has not filed an appearance within 45 days of service should be in the case management order. The case management order should be included with service on any newly discovered party. Notice of appearance should be filed with the executive committee.

After the case management order is served on a party, the notice of appearance shall result in the presumption of a general denial, and the assertion of all available affirmative defenses. No other document need be filed (although express indemnity cross complaints must be specifically filed, served and answered). All parties shall be deemed to have filed cross-complaints for implied equitable indemnity and/or comparative fault against all other parties.

The document depository is key to orderly management of documents. Where possible, the depository should be a facility with conference rooms large enough to schedule the depositions. This ensures that documents are readily accessible throughout the litigation process.

The case management order should order that all relevant and non-privileged documents in the possession or control of any party, pertaining in any manner to the property, be deposited. Privileged documents shall be identified by a list to all parties identifying the nature of the document by type, and the basis of the privilege asserted.

"Document" should be defined to include any writing as defined in the Evidence Code. Documents shall include insurance policies/certificates, blueprints, plans and specifications. Documents are accompanied by a summary description and index that identifies the preparer. An insurance coverage chart shall be deposited by all parties identifying who is on the risk, and the dates and limits of coverage.

Parties without documents shall file a certification. Newly discovered documents shall be deposited within 10 days of discovery. New parties must deposit documents within 20 days of their appearance.

The document depository shall establish a system for Bates stamping all documents (including initials of the depositing party). Documents shall be available to any party for inspection and copying at the depository.

As soon as practical to ensure maximum attendance by developer and subcontractor experts, the plaintiff should commence its destructive testing. Written notice should be provided that schedules the testing sites and activities.