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Court finds mediation not so confidential

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A decision earlier this year from the Indiana Court of Appeals has shaken the conventional wisdom that holds what is said in mediation stays in mediation and has raised the issue of how important confidentiality is in the alternative dispute resolution process.

The ruling came in Dennis Jack Horner v. Marcia (Horner) Carter, 34A02-1111-DR-1029. In the filing, the husband contended a mistake was made in the drafting of the mediated settlement divorce agreement and that the trial court erred in excluding the extrinsic evidence of this mistake.

soshnick-drew-mug.jpg Soshnick

On this point, the COA agreed that the trial court did err because the husband wanted to offer the mediation communications as evidence for a purpose other than those prohibited by the Alternative Dispute Resolution Rule 2.11.

The Horner case, decided by the COA in June, is headed to the Indiana Supreme Court.

Noting that the Horner decision has caught the attention of family law attorneys and judges across the state, Drew Soshnick, partner at Faegre Baker Daniels LLP, called it one of the two most significant decisions in family law within the last year. The other, he said, is Tricia L. Sexton v. Travis Sexton, 34A02-1111-DR-01059, which dealt with emancipation.

Attorneys and mediators have operated under the assumption, and caselaw has supported, that everything in a mediation is confidential. In the decision, Pamela S. Fackler v. Melvin J. Powell and M. Jack Powell Jr., Living Trust, 891 N.E.2d 1091, 1096 (Ind. Ct. App. 2008), the COA held the Alternative Dispute Resolution Rule 2.11 “expressly provide(s) that the parties may not waive the confidentiality requirement.”

With Horner, the court more narrowly construed ADR Rule 2.11 than in previous rulings. This, in Soshnick’s view, makes the Horner ruling more about what the court did not say rather than what it did say.

Specifically in Horner, the COA focused on the first sentence of Ind. Evidence Rule 4.08 which states, “Evidence … is not admissible to prove liability for or invalidity of the claim or its amount.”

The second sentence states that, “Evidence of conduct or statements made in compromise negotiations is likewise not admissible.” And the final sentence notes that compromise negotiations include alternative dispute resolution.

Soshnick believes the second and final sentences of Indiana Evidence Rule 4.08 could have been consequential to the decision.

Michael Kohlhaas, partner at Bingham Greenebaum Doll LLP, added that even if a mediated discussion does not directly address the validity or amount of claim, it is the whole reason why parties are in mediation. Still, he sees the decision as perhaps approaching the question of how can the court address possible mistakes because of miscommunication.

Writing for the court, Judge Nancy Vaidik stated, “Although confidentiality is an important part of the mediation, strict adherence to confidentiality would provide an undesirable result in this context – parties would be denied the opportunity to challenge issues relating to the integrity of the mediation process, such as a mistake, fraud, and duress.

“Allowing the use of mediation communication to establish these traditional contract defenses provides parties their day in court and encourages, rather than deters, participation in mediation.”

Family law lawyers see an opposite effect.

“I think for attorneys going into mediation with their clients, it’s going to cause them to be more thoughtful about how they communicate, what they say to the mediator or allow their client to say to the mediator,” Kohlhaas said.

Confidentiality is essential

The idea of opposing sides working together to reach a solution to their dispute was not initially given a warm acceptance. People still wanted to see someone in a robe making the decision, Soshnick said.

kohlhaas-michael-mug.jpg Kohlhaas

Over time, however, the use of mediation has become extremely common and almost preferred to a trial. The practice is utilized in a large percentage of personal injury cases, business contract disputes and family law cases.

“It’s good for families because it’s an easy, better way to resolve disputes,” Soshnick said. “It’s less expensive, more creative and typically provides unique solutions.”

Mediation is almost always suggested by one or both of the attorneys in these cases, or the court will likely order that the parties take a stab at reaching a settlement themselves, Kohlhaas said.

The advantage to mediation is that the parties can, as Soshnick pointed out, reach a unique solution that fits their particular situation.

Deborah Farmer Smith, managing partner at Campbell Kyle Proffitt in Carmel, describes being a mediator as her most favorite thing. The brainstorming that leads the parties to explore options and listen to each other can render creative solutions that the individuals and their lawyers might not have found. Moreover, the final agreement can contain elements that a court could not order.

“Judges can care a lot about people and they do,” Farmer Smith said. “Judges want to do their best but it remains that judges don’t have the luxury of being as detailed in an order as lawyers have in an agreement.”

smith-deborah-mug.jpg Farmer Smith

When both parties want to settle a matter and want the conflict to be over while accepting they are not going to get everything they want, the result of the mediation has pretty good staying power, Farmer Smith said. It is when the parties are not done with each other emotionally that disputes can arise after an agreement is signed.

A key in the process is the confidentiality that surrounds mediation. With limited exceptions, such as those for an admission of a crime or child abuse, all statements made in mediation are private.

In agreeing with Soshnick’s view of the Horner decision, Andrew Mallor, of Mallor Grodner LLP in Bloomington, emphasized the importance of confidentiality.

He is concerned that Horner could open a door allowing individuals to raise issues with the settlement after the agreement has been signed. It is contrary to previous court decisions on the confidentiality of mediations and could bring about more litigation as disgruntled parties, citing Horner, say the language in the document is not what they intended.

The protection of confidentiality encourages individuals to “take extreme steps to compromise,” Soshnick said. If the parties are worried that taking the extra step could come back to hurt them if the case lands in court, they might be more cautious.

“It may have a chilling effect on what people say and how they say it,” he said.

Farmer Smith agreed with the other attorneys that the Horner ruling could make the parties less open in mediation sessions but, at present, she said, the COA decision served as a reminder to attorneys to make certain when an agreement is drafted that both sides understand what the words say.

Mediation sessions can go on for hours and the parties can get tired, which heightens the possibly of rushing to just get something done. Clients, frequently overwhelmed and stressed by the process, easily can become confused and sign an agreement while not fully aware of all the terms in the document.

Even if the Supreme Court upholds Horner, mediation will still be a valuable tool for dispute resolution, the attorneys said.

Farmer Smith does not see the decision as the first step on a slippery slope. Nothing is in the opinion, she said, that gives her a reason to believe the court will continue down the Horner path. •

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  • Truth
    The truth ought always trump confidentiality. It can't be the purpose of mediation to help one party to trick anorher or to profit from a mistake.

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  1. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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