The number of mediations is increasing while the number of trials is dropping through the floor. Oftentimes mediation is ordered by the trial judge, and either local rules or the court order contains requirements for attendance and arranging for mediation.
In court-ordered mediation, many lawyers agree that the court may order attendance at mediation, and the rub comes regarding the payment for mediation when one side feels it's a waste of time. Nonetheless mediation is usually held, and the mediator paid.
The next rub for some is if mediation is ordered, and the court cannot compel you agree to a settlement at mediation, then what happens if one side believes the other side has not entered mediation in good faith?
Or the insurance adjuster or the insured fail to personally appear at the mediation?
Although these may be interesting questions, they are not yet answered by any published or nonpublished decision in Kentucky that I have discovered or uncovered yet. [And if there is, then please by all means post it as a comment!]
However, one question has been the subject of a nonpublished Court of Appeals decision, styled Sullivan v. Anderson, 2006-CA-000586.pdf, in which the defenant's attorney apparently believed the parties had agreed to mediation but the pro se litigant did not attend the mediation. The insurance defense lawyer then arranged for the date, time, location, and mediator and notifed the pro se litigant who did nothing.
Judge Vanmeter in affirming a Jefferson Circuit Court decision by Judge Stephen Mershon held that although a party was not obligated to attend the "agreed" upon mediation, he was obligated to notify the other side he would not attend so as not to waste the mediator's time.
What is interesting in this decision is the opening given to the lower court's inherent authority.
We agree with Sullivan and the trial court that Sullivan was not obligated to attend the mediation since it was not ordered by the court. However, Anderson did not have any reason to know that the parties had not agreed on mediation since Sullivan did not inform her that he did not agree to the arranged mediator and mediation date. A Kentucky court “may invoke its inherent power to impose attorney's fees and related expenses on a party as a sanction for bad faith conduct, regardless of the existence of statutory authority or remedial rules.” Lake Village Water Ass'n, Inc. v. Sorrell, 815 S.W.2d 418, 421 (Ky.App. 1991) (citing Chambers v. Nasco, 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)).
Could this inherent authority be used in the other direction when
- the insurance defense lawyer shows up at mediation without the adjuster or the insured and relying upon the adjuster's attendance by telephone?
- the adjuster in attendance does not have settlement authority extending to the policy limits?
- the adjuster has to leave early?
- the adjuster with higher authority is not available by phone, or there are delays in contacting the adjuster by telephone?
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