Food for Thought – Ten Post ADCNC Construction Defect Meeting Comments on “the System” by CD Practitioners:
Low, Ball & Lynch
May 13, 2015
- The process still works if everyone cooperates. That means plaintiffs, developers, subcontractors and insurance companies.
- A breakdown exists in the following areas: Plaintiffs are not being uniformly required to provide actual defect analyses – only a theoretical list of defects, subcontractors are not honoring contractual indemnity obligations, additional insured endorsements are often illusory, and insurance companies for the subcontractors are not participating in the settlement process in good faith, holding off until the very end, resulting in a lot of unnecessary legal expense for all parties.
- It would be interesting to see if we could develop some uniform guidelines for the special master process that could be promulgated state-wide so that at least all the courts would have access to information showing how the process is supposed to work. A presentation at the annual meeting could be a step in that direction.
- Parties should move to appoint a separate Judicial Referee with power to adjudicate legal issues – particularly coverage and express indemnity concerns so that the litigants could press these issues to fix the relative contributions, if any prior to entering negotiations under mediation.
- The special master process – as initially designed -was well conceived. But, it has become rather ineffective at accomplishing its’ intended purpose to bring early resolution; and has otherwise proven to be nothing more than a boondoggle for everybody. Carriers may complain about the attorneys, the attorneys about the carriers, and both groups about the mediators/special masters. But, until all can acknowledge that its’ broke, it will never get fixed.
- Entities with contractual defense rights are abusing the right both financially (high hourly rates, excessive fees and costs, and unproductive law and motion), and in terms of moving a matter to resolution.
- Carriers who insure an entity with contractual defense rights are taking advantage by not participating in settlement efforts in good faith. This also is true for excess carriers whose limits clearly are implicated where a primary carrier has unlimited defense obligations -time value of keeping money as long as possible by defending (at another party’s expense) instead of settling even though they know money must be spent at some point.
- Doing most work under the mediation cloak may result in “evidence” that is not admissible (for any purpose under a couple recent cases) if a party decides to play hard ball.
- The Bramalea decision appears to have become meaningless when evaluating contract damages where a contractual defense is/might be owed.
- It makes sense to separate the discovery referee and mediator functions, perhaps using the judicial referee statutes.
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