THIRD DISTRICT COURT OF APPEAL WARNS PARTIES TO APPELLATE MEDIATIONS—NOTIFY INSURERS TO ATTEND AND ATTEND YOURSELF OR RISK PAYING THE ATTENDING PARTY’S WASTED ATTORNEY’S FEES

Court of Appeal Construes Its Power to Sanction and Award Fees For Noncompliance with Local Mediation Program Dictates.

            Many appellate courts, including the Third District Court of Appeal (Sacramento), have appellate mediation programs by which parties to an appeal can try to informally resolve the case either before or after briefing is complete.  The Third District’s program has been very successful, with over 50% of the matters ordered to mediation settling before record preparation, briefing, or oral argument.  The Third District’s Local Rule 1 provides that all parties and their counsel of record, as well as germane insurance carrier representatives, must attend the mediation sessions in person. 

            In Campagnone v. Enjoyable Pools & Spas Service & Repairs, Inc., Case No. C055050 (3d Dist. May 30, 2008), a homeowner obtained a jury verdict of almost $2.5 million when he was injured after a home swimming pool filter exploded.  Defendants appealed, and disclosed a parent company’s excess insurance carrier as an interested party.  This carrier should have attended a mediation, but failed to participate.  Homeowner filed an appellate motion to recover $14,200 in fees (for his attorneys participating in an unproductive mediation) and $4,845.25 in mediation fees. 

            The Third District, in a published opinion, refused to award the requested sanctions but did announce prospective rules of interest.  Specifically, this Court of Appeal held that (1) the insured defendant and its counsel has a duty to notify the carrier about the court-ordered mediation, and (2) the carrier must send a representative to the mediation session.  The appellate court warned that sanctions, including an award of fees to the parties who waste time on a noncompliant mediation, would be issued for future violations.

            PRACTICE POINTER--Because of the nature of the local Third District rule specifically governing court-ordered mediation, it is more problematic that the same result would occur because there is case law indicating that a trial court cannot order parties to complex litigation over $50,000 into mediation where the parties must pay for the process.  (See Jeld-Wen v. Superior Court, 146 Cal.App.4^th 536 (2007).)  Jeld-Wen leaves untouched the trial court’s ability to order a case under $50,000 into mediation if the parties do not have to bear the costs and it is done pro bono through the court system.  (See Cal. Rules of Ct., rule 3.870 et seq.)