A MINUTE WITH FACULTY MEMBERS 

 

 

Holtsford Gilliland   
     
April McKayApril W. McKay    Rick HowardRick A. Howard 

How do you define “Mediating in good faith?”

Mandatory mediation is nothing new to Alabama litigation. Now that the court systems have been closed for several months, I expect mediation to be required in all civil cases, both state and federal. I believe all judges will try to reduce the number of cases on their docket by mediation. In the orders requiring mediation, the judges will state the parties are ordered to “mediate in good faith.”

 

Typically, if a mediation has stalled and one party is not moving, it is not uncommon to hear “you are not negotiating in good faith.” Although this term is frequently utilized, there is no precise definition of “mediating in good faith.” This “good faith” battle happens when one side is very sure of its ability to prevail at trial. For example, if a Defendant and its insurance carrier have good evidence, why should it be forced to offer money at mediation? If no offer is made, or only small offers are made, it is likely that the Defendant and its insurance carrier will see a motion for sanctions or motion for costs, particularly in Plaintiff oriented venues. Although many of these motions are seldom granted, the motions are costly to defend.

In a recent case in Madison County, a judge harshly punished Allstate Property and Casualty Insurance Company. See Harbin v. Stewart, et al. 47-cv-2017-901688. The facts of the case are relatively simple. Allstate, facing a trial date, agreed to continue the existing trial setting and to send the case to mediation. The only representative at mediation for Allstate was defense counsel. Defense counsel did not have the authority to settle the case. The mediation lasted for over three hours and Allstate did not make any settlement offers or counteroffers. The case ultimately was tried and based on the medical bills of $234,206 a verdict was returned in the amount of $690,000. Allstate stipulated to liability at trial and requested the jury to award damage that might be reasonable. Allstate had at risk $75,000 in underinsured motorist coverage. Plaintiff’s counsel spent approximately 92 hours on the case following mediation.

Plaintiff’s counsel filed a motion for sanctions based on Allstate’s conduct at mediation. After analyzing Allstate’s conduct in six other cases where mediation was mandatory, the Court granted the Plaintiff’s motion for sanctions. Although Plaintiff’s counsel asked the Court for a total of $57,516 in sanctions, the Court ordered Allstate Property and Casualty Insurance Company to pay a total of $620,141. The order on the motion for sanctions was entered June 2, 2020. I am sure the Supreme Court will be asked to give its opinion and define “mediating in good faith.”

Click here to download the Order.

 

APCAA works to uphold and strengthen the ethical standards and practices of the property and casualty adjuster profession in the State of Alabama. The future of this profession depends on solid character, integrity, work ethic, and the desire to serve and help others. APCAA is dedicated to support and promote its members in these areas. APCAA has applied for 501 (c) 6 tax exempt status with the Internal Revenue Service.

334-472-4151

apcaaorg@gmail.com

www.apcaa.org