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WOULD YOU CHOOSE TO GO TO WAR - IF YOU HAD A CHOICE?

Republished March 2013

©Beth A. Grimm Publications All Rights Reserved

Filing a lawsuit is a declaration of war! If you are a peace-loving individual, an open minded-board, and/or don't have the resources to fund a war, then you certainly ought to consider all options before issuing your proclamation. It is very difficult to turn back the processes once a lawsuit is filed. You need to know that if you find out sometime during the process that you are done, you don't want to spend any more money, you find out that your case is not strong, you find out the attorney overestimated your chances of success, or anything else happens that makes you sorry you jumped into court, dismissing the lawsuit may lead to a request from the other side to cover reimburse their attorney fees. There is case law supporting the concept that dismissal of a lawsuit before it plays out can be considered in the same category as admitting failure, or losing the case, when the prevailing party is entitled to recover fees and costs. This article is about choosing the process that often proves far superior to suing a party ­ and that is ADR. And more emphasis is put on mediation than the other processes ­ because it is absolutely the best forum in the most HOA disputes between board members or the board and owners, or owners vs. owners. There are several types of ADR: contractual, voluntary, statutory and court-ordered (which occurs after a lawsuit is filed). ADR means Alternative Dispute Resolution - exploring alternatives to litigation for resolving disputes. ADR can be a way to avoid war. Yes, Virginia ... there is a way to resolve disputes outside the court system.

Condominiums, Townhouses, Common Interest Developments  and Neighborhood Disputes in California

A little history: in 1996 ADR legislation was written by one of your speakers ­ James P. Lingl. The bill passed both the houses but some was believed the Governor's veto that followed was the result of "politics", a payback of some kind. Then, in 1997, the bill was re-introduced and the California Legislature approved it (with strong encouragement from the Community Associations Institute - California Legislative Action Committee). This time the Governor signed it. The bill strongly encouraged homeowners associations and homeowners in them to seek resolution of their disputes outside of the courts. You can "Just Say No" to ADR, but you run the risk of having your lawsuit dismissed or having a judge punish you - hitting where it hurts (in the attorneys' fees) if you refuse to participate.

Speaking from experience, homeowner association cases are not always well received by judges. When I used to do litigation, sometimes it seemed like the judge was punishing the parties by delay after delay in setting trial dates. One time I sat through proceedings all afternoon with a full board of working people who took the afternoon off to seek a request for an injunction relating to a threatening dog, to have the judge send word out at 4:30 that she did not hear requests for injunctions related to dogs because she was on the board of the SPCA! What a waste of time. And besides that kind of risk, the legal mandate to try and engage each other in ADR is simply a good idea. California law (Civil Code Section 1369.510 etc.) requires homeowner associations and homeowners in them, who have a dispute with each other or their neighbor, to first attempt to engage the other side in ADR before filing a lawsuit. The statute says that the homeowner or association that wants to bring a complaint for injunctive relief or declaratory relief, coupled with damages of less than $5,000.00, it has to serve the other party with "Request for Resolution" prior to filing a lawsuit asking them to participate in an ADR proceeding. There are exceptions if there is a statute of limitations that may expire or a need for immediate relief, but the intent of the statute is to get associations and/or homeowners to try ADR in CC&Rs disputes; before filing a lawsuit. (CC&Rs = Declaration of Covenants, Conditions and Restrictions that regulate a common interest development). This Request for Resolution should name the parties, state the dispute in simple terms, and request that the other side engage in ADR. The opposing party has 30 days to respond to this Request for Resolution. If the other party does not respond or rejects the offer within 30 days, the Request is deemed rejected and a lawsuit may be filed. If the Request is accepted by the other party, the parties together have 90 days to resolve the dispute, or they can agree to extend the time.

If it is not resolved in 90 days, then the party wishing to file a lawsuit is entitled to do so, having satisfied the statute. If a party with a claim as described does not send a Request for Resolution to the other party, but files a lawsuit instead, the judge has various options. He or she may dismiss the lawsuit without prejudice to going through the steps again and then filing, or allow it to go forward taking into account the parties' compliance with the statute (or noncompliance) when it comes time to consider an award of attorney fees.

Since the prevailing party in an enforcement action is entitled to recover attorney fees, the implication is that the judge could reduce the attorney fees award if either party refuses to participate in ADR.

Some attorneys (including me) advise associations and homeowners - in preparation and serving the Request for Resolution - to specify the type of dispute resolution process and the entity or ADR provider that the serving party desires (preferring mediation). With this approach, there is less of an opportunity for argument over processes. Certainly, the parties could get into a dispute if the suggested process is not acceptable to the other party, and it is possible they could consume 90 days fighting over a process. However, in the majority of the cases, if the other party is amenable to ADR - or is not really but wants to satisfy the statute and pass judicial scrutiny unscathed - the strategy will work. Savvy attorneys who are familiar with association issues and the various ADR processes, often sense that one type of process is better suited to the dispute at hand than another. It is up to us to counsel our clients about all alternatives that are available, not just lawsuits or traditional arbitration.

As for choosing an ADR process, mediation, which involves the use of a trained neutral, a facilitator, is (in my opinion) the better forum for homeowner association, neighborhood and family disputes. It tends to better preserve ongoing relationships, gives the parties more control to formulate their own resolutions to the problems, and tends to cost substantially less money than arbitration (and certainly less than court). It provides a forum that is less threatening and allows the parties to release some of the emotional steam which tends to create the real barriers to settlement. There is much more room for creativity in the mediation setting than in an arbitration or court setting. Since mediation is commonly "interest based" as much as fact or issue based, the parties' interests are better served. Many of the decisions of a homeowners association appear to the homeowners to be subjective and so understanding the interests becomes critically important. To be fair, there are some disputes that are better suited to arbitration but most would be better served in mediation with a good mediator (or at least one or more attorneys trained as a mediator who can help balance out or resolve any process issues that might arise).

For an example of some issue that might be better suited to ADR, a homeowners' board of directors may be facing a tough decision that could set a precedent for future handling of the same type of dispute. The board might prefer to submit the dispute to arbitration and let an impartial arbitrator make the decision. Sometimes a board would rather just "pass the buck" rather than take responsibility for the outcome. Many mediators, myself among them, are very distrustful of arbitration as a rule, because an arbitrator can make an awful decision (for any or all of the parties) or a mistake by misunderstanding or ignoring important facts which is not reversible.

As for choosing a specific process or provider, there are many options. Parties have long been able to engage the services of arbitrators or mediators through private providers such as J.A.M.S. (Judicial Arbitration and Mediation Services) and AAA (American Arbitration Association). These services have high training standards for the mediators and arbitrators they provide (using their own training programs) but they also have a reputation of being very expensive. And, my own experience in training for mediation years ago at Pepperdine was that the "judges-in-training" tended to have a much more difficult time acting as facilitators, having been the decision-makers (or in some cases the egotistical "rulers") throughout their careers. These services may work for you, but it is important to know that there are other viable options for choosing mediators that have HOA savvy and are more affordable. Local Bar Associations generally list low cost ADR programs or providers with identified expertise. Did you know that a portion of all litigation filing fees is set aside and given to low cost mediation services because of the DRPA [Dispute Resolution Program Act]? There is a list of these lower cost services by County available on the California Department of Consumer Affairs webpage found at the following link: http://www.dca.ca.gov/consumer/mediation_programs.shtml. And ,of course, consider independent providers like your speakers. James Lingl was instrumental in creating the homeowner association program through the Ventura Center for Dispute Resolution, which does appear on the Department of Consumer Affairs site. He has served as mediator for many HOA mediations throughout California. Beth Grimm has extensive mediation training which includes volunteer service for the Pleasant Hill Conflict Resolution Panel for a few years (specializing in team mediations with large group disputes) and has served as mediator and also advocated for parties in many mediations, finding that mediation training comes in very handy when advocating for a "party" with multiple participants that may not be perfectly aligned in their opinions or temperaments, such as a board of directors.

Mediation is evolving as a preferable choice in many types of cases. It's the forum most likely to offer the disputants the chance to tell their story and [really] be heard and acknowledged. In my opinion it offers the most creative and flexible forum for the parties. Just remember - before you issue the final proclamation of war - you have a choice!

Come to our seminar and learn all about it and how to prepare so that you can get the most out of a mediation.


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