WOULD YOU CHOOSE TO GO TO WAR -|
IF YOU HAD A CHOICE?
by Beth A. Grimm, Esq.
iling a lawsuit is a declaration of war! If you are a peace-loving individual, or don't have the resources to fund a war, then you certainly ought toconsider all options before issuing your proclamation. It is very difficult to turn back the processes once a lawsuit is filed. This article is all about ADR. There are several types: 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 ADR outside the court system.
Condominiums, Townhouses, Common Interest Developments and Neighborhood Disputes in California
Talk about war - maybe you have seen recent articles in the newspapers in SMART MONEY magazine or The Daily Journal Legal Newspaper, and even The American Legion Magazine (my mother from Iowa sent me that one!), about the battles that go on in homeowners associations. This one area of life that can use a little ADR. And very appropriately, the California Legislature stepped in in 1997 (with encouragement from industry groups like the CaliforniaLegislative Action Committee of which I am statewide Public Relations Chair) and strongly encouraged homeowners associations and homeowners in them to seek resolutionof their disputes outside of the courts.You can "Just Say No" , 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.
Speaking from experience, homeowners association cases are not always well received by the judiciary, and besides being the subject of a statutory mandate (Civil Code Section 1354), ADR is simply a good idea. Many judges would much prefer that the association and thehomeowners stay home and resolve their disputes, and they are not afraid to say so. Civil Code Section 1354, which is part of the Davis-Stirling Common Interest Development Act, requires homeowner associations (usually incorporated as nonprofit mutual benefit corporations and run by a Board) 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 ordeclaratory relief, coupled with damages of less than $5,000.00, (standard service as in a small claims court action) the other party with "Request for Resolution" prior to filing a lawsuit. 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 to enforce CC&Rs; before filing a lawsuit. (CC&Rs; are the common acronym for the 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 party does not respond, the Request is deemed rejected and the lawsuit may be filed. If the Request is accepted by the other party, the parties together have 90 days to resolve the dispute.
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 Requestfor Resolution to the other party, but files a lawsuit instead, the judge has various options. He or she may dismiss the lawsuit without prejudice, 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 attorneys fees.
Since the prevailing party in an enforcement action is entitled to recover attorneys fees pursuant to Civil CodeSection 1354, the implication is that the judge could reduce the attorneys 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. With this approach, there is less opportunity for a battle 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, but in the majority of the cases, if the other party is amenable to ADR (or is not but wants to satisfy the statute and passjudicial scrutiny unscathed) the strategy will work. If the recipient of a Request for Resolution does not respond in 30 days, the Request is deemedrejected and the claimant can go forward with litigation. 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 areavailable, not just lawsuits or traditional arbitration.
As for choosing an ADR process, mediation, which consists ofuse of a trained 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 ownresolutions to the problems, and tends to cost substantially less money than arbitration. It provides a forum that is less threatening and allows the parties to release some of the emotional steam that creates the real barriersto settlement. There is much more room for creativity in the mediation settingthan in an arbitration or court setting. Since mediation is interest based rather than fact or law based, the parties' interests are better served. Many of the decisions of ahomeowners association appear to the homeowners to be subjective and sounderstanding the interests becomes critically important. However, there are some disputes that are better suited toarbitration.
For example, a homeowners board of directors may be facing a tough decision that would possibly set a difficult precedent. The board might preferto submit the dispute to arbitration and let an impartial arbitrator make the decision. (The Board can then pass the buck.) As for choosing a specific process or provider, there aremany options. Parties have long beenable to engage the services of arbitrators or mediators through privateproviders such as J.A.M.S. (Judges Arbitration and Mediation Services) andA.A.A. (American Arbitration Association). These services have high training standards for the mediators and arbitrators they provide (using their owntraining programs). The cost of using J.A.M.S. or A.A.A. mediator or arbitrator ranges from about $275 per hour and up, according to expertise and specialization.(Youmust generally deposit at least 8 hours worth of fees plus an administrative charge.) The Contra Costa County Bar Association has an ADR Provider Program which involves the keeping of a list of ADR providers (arbitrators and mediators) with their qualifications, training,hourly rates, and specialties. The cost of this program includes a small administrative fee for the Bar Association plus the provider's hourly rate. The provider list may be reviewed at various locations in Contra Costa County (at the Bar office and the courts) or obtained through the provider program by paying the administrative fee.
Similar programs probably exist in most counties in California. In addition to those options, there are many private individual providers like myself who have received training from well-known and respected groups. In addition to these options, most Counties have more than one group that share public funds provided by a surcharge on courtfiling fees through the DRPA [Dispute Resolution Protection Act]. For disputes involving individual homeowners in an association, or landlords and tenants, or disputants in neighborhood matters, etc., a party may contact the Conflicts Resolution Panel of Contra Costa County - "CRP" (offering mediation services)and obtain the services provided, or similar services in other counties, of a case worker to get the other party or parties involved and a volunteer panel of mediators to hear the dispute - for free! Governmental groups, schools, and other non-profit type groups can obtain services through the (CRP).
In Contra Costa County, if a homeowners association is involved, the next step up is the Contra Costa County Real Estate Mediation Services (CCREMS) which is affiliated with CRP. These services provide trained mediators at an affordable cost (in the case of CRP -free). There are many other conflict resolution services besides those described here that are suited to every kind of dispute imaginable: people, pets and parking (known as the 3 P's in the condo world), family matters, accident and personal injury cases, commercial disputes, and workplace issues including harassment, wrongful termination, hiring and firing, etc. 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. The legislature has recognized its value with recent legislation like CC 1354 and courts are beginning to recognize its value and impressive statistically-supported success rates with recent moves toward offering mediation as an alternative to judicially ordered arbitration. Just remember - before you issue the final proclamation of war - you have a choice!
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By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.