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The Foxgate Case – Good Faith & Confidentiality

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Coincidentally, another California case, Foxgate Homeowners’ Association Inc. v. Bramalea California Inc., 26 Cal. 4th 1 (Cal. 2001) serves as an excellent case on which to base our discussion of other transgressions which can occur during mediation.

As mentioned earlier, the parties to a mediation have an obligation to negotiate and otherwise conduct themselves in good faith throughout the proceedings. In Foxgate, there is a significant question as to whether Stevenson, the attorney for the defendant developer, Bramalea, acted in good faith in the mediation with the condominium association plaintiff. Procedurally, the holding in Foxgate applies only to the breach in confidentiality, but there is extensive discussion of Stevenson’s bad faith as this is what led to the breach of confidentiality at issue.

The specifics are too detailed to recount in full here, but only part of the story need be told in order to illustrate the type of actions which many would consider to be “bad faith” in negotiations. Note that the following excerpts are all recitations from the Foxgate court which are culled from documents filed with the court by the mediator, and that it is these filings which give rise to the confidentiality issue which will be discussed presently.

"The record reflects that, on the morning of September 16, 1997, the first day of a five-day round of mediation sessions of which the parties had been notified and to which the court's notice said they should bring their experts and claims representatives, plaintiff's attorney and nine experts appeared for the session. Stevenson was late and brought no defense experts. Subsequent mediation sessions were cancelled after that morning session because the mediator concluded they could not proceed without defense experts." -Foxgate at 5 (emphasis added).

The motion recited that when asked by the plaintiff's counsel if he would have expert consultants present for the future mediation sessions, Stevenson replied that

"I can't answer that."

When asked why he had arrived without expert consultants, Stevenson replied:

"This is your mediation, you can handle it any way you want. I'm here, you can talk to me.” -Foxgate at 5.

Towards the end of the morning of the first mediation session of September 16, 1997, it became apparent that Mr. Stevenson's real agenda was to delay the mediation process…. (Foxgate at 6).

"As a result of Mr. Stevenson's obstructive bad faith tactics, the remainder of the mediation sessions were canceled at a substantial cost to all parties." -Foxgate at 7.

Note that the first two excerpts recount facts which, if true, would seem to indicate Stevenson’ lack of willingness to cooperate at best, and belligerence at worst. This behavior would alone seem to indicate that Stevenson had no intention of discussing the case with an eye toward settlement. That said, it is not unusual for parties in heated battle to permit themselves to show a bit of anger (as in the second excerpt) or to attempt to engage in tactics designed to delay or inconvenience the opposition or render the opposition off-balance. That said, at a certain point such behavior crosses the line.

The third and fourth excerpts, however, are of a somewhat different nature. These statements by the mediator to the court include at least some of the mediator’s conclusions or impressions. What Stevenson’s “real agenda” was can only be a matter of speculation, and whether Stevenson’s actions rose to the level of a breach of the obligation to negotiate in good faith can only be arrived at as a conclusion drawn by the mediator. Although we are not here interested in these particular instances of the mediator over-stepping his bounds, it is important to note.

Setting aside the question of what constitutes bad faith, we turn now to an examination of the duty of confidentiality which often attaches to the parties and to the mediator during mediation.

Like many other states, California’s court-ordered mediation system imposes an obligation of confidentiality upon those involved. In the Foxgate case, California’s Evidence Code §1115 through §1128 apply. §1119 (Admissibility, discovery, or disclosure of evidence; Confidentiality) reads:

Except as otherwise provided in this chapter:

  1. No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
  2. No writing, as defined in Section 250, that is prepared for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation, is admissible or subject to discovery, and disclosure of the writing shall not be compelled, in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given.
  3. All communications, negotiations, or settlement discussions by and between participants in the course of a mediation or a mediation consultation shall remain confidential.

§1120 contains some exceptions, and different states have passed different rules. Nonetheless, California’s Evidence Code §1119 is a good example of the general requirement of confidentiality which courts place on everyone involved in a court ordered mediation (not just the plaintiff and defendant – the rule also applies to the mediator). Parties who voluntarily enter into mediation might choose, in their mediation agreement, to include a consent to disclosure of certain statements, writing, etc. which take place during mediation. Or, more likely, parties could consent during the mediation itself to permit some limited disclosure.

What about wrongdoing which takes place during mediation, such as Stevenson’s supposed bad faith? Note that in large part the mediator’s report in Foxgate regarded Stevenson’s conduct. Had another party submitted to the court a report regarding his conduct, the rule against disclosure would not have been violated. In other words, while nobody is free to disclose communications or other aspects of the mediation, a party to the mediation may report to the court about the other party’s conduct in mediation. Also, should Stevenson’s conduct rise to the level of criminal conduct, the mediator is authorized to report such to the court. See Foxgate.

In considering the Foxgate case and the table below, we could ask what other situations can arise in mediation which we feel should be exceptions to the obligation of confidentiality. The policy often stated for mandatory confidentiality is that it is intended to encourage parties to be more candid and open in mediation than they might be in a court of law. When developing a strategy as part of a legal team, however, you may want to think twice about showing all your cards simply because you can be sure they will never be admissible in court. After all, it is your adversary, not the court, against whom you are playing. By disclosing facts in mediation, you might render them useless to you if mediation fails and you find yourself back in court.

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