ADR/MEDIATION A REAL ESTATE LAWYER'S ADR TOOL BOX · ADR/Mediation - A Real Estate Lawyer's ADR...

ADR/MEDIATION

A REAL ESTATE LAWYER'S ADR TOOL BOX

Presented by:

THOMAS JAY SMITH, San Antonio Law Office of Thomas J. Smith

Written by:

GARY HENRICHSON, Edinburg Law Offices of Gary L. Henrichson

State Bar of Texas 27TH ANNUAL ADVANCED REAL ESTATE LAW COURSE

July 7-9, 2005 San Antonio

CHAPTER 12

THOMAS J. SMITH

Thomas J. Smith attended the University of Texas where he received both his Bachelor of Arts and LL.B. degree. He practices law primarily in the Business and Real Estate areas. He is licensed to practice in all Texas courts, as well as the Federal Courts in the Western District of Texas. He is a member of the American Bar Association, San Antonio Bar Association, San Antonio Bar Foundation, Texas College of Real Estate Attorneys, the College of the State Bar of Texas and the American Inns of Court. Mr. Smith was certified as a mediator/arbitrator in 1992, is a past member of the Board of Directors of the National Association of Attorney-Mediators, is the immediate past President of the San Antonio Chapter of the Association of Attorney-Mediators, and is a member of the Texas Association of Mediators. He is currently the Chairman of the ADR Section of the San Antonio Bar Association."

Most of his experience over the past thirty years has been in commercial real estate and business law. A deep dark secret about his past is that for the first five years out of law school he did mostly litigation. It was because of this litigation background that he started assisting his firm's litigation section in the late 1980's when real estate matters moved from the closing table to the court room. He became interested in arbitration/mediation at that time and has been an arbitrator/mediator since 1992. He has mediated over 800 cases and has participated in many mediations as an attorney for one of the parties. He is convinced that the process works and has become a strong advocate for both mediation and arbitration. He is a frequent speaker and panelist at conferences on ADR.

Gary L. Henrichson LAW OFFICES OF GARY L. HENRICHSON

The Leideker Building 200 East Cano/P.O. Box 1258

Edinburg, TX 78540-1258 Tel: (956) 381-4529 Fax: (956) 381-4589

Web: 381-4law.com

Gary L. Henrichson’s law practice has been located in Hidalgo County, Texas for over 30 years. He is in the general practice of law with an emphasis in the fields of Real Estate, Governmental Entities, ADR, and Civil Litigation. He holds a board Certification in Residential Real Estate Law. He is a qualified Arbitrator and Mediator who has been mediating disputes since 1991. EDUCATION: B. A. – University of Texas at Austin J. D. – St. Mary’s University PROFESSIONAL CERTIFICATIONS, HONORS AND ACTIVITIES:

1. AV rated attorney by Martindale-Hubbell (1999-present) 2. Certificate of Special Competence in the field of Residential Real Estate Law by

Texas Board of Legal Specialization (December 1983, recertified December 1988, recertified December 1993, re-certified December 1998, re-certified December 2003)

3. Certificate of Membership in the College for the State Bar of Texas (1986, 1987, 1991, 1993, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004 and 2005)

4. President of the Hidalgo County Bar Association (1995 – 1996) 5. Co-chair of the Real Estate Section of the Hidalgo County Bar Association (2004-

2005) 6. Graduate of the F.B.I’s 15th National Law Institute (1993) PROFESSIONAL PRESENTATIONS INCLUDE: 1. Author and Presenter on “Developers, Property Owners

Associations, and Homeowners” – Building Blocks for a Successful Law Practice – Hidalgo County Bar Association (May 2005)

2. Panel Presenter and Co-author on “Pitfalls and Common Problems in a Standard Real Estate Transaction – From Contract to Closing” – Nuts & Bolts Seminar for the Solo & Small Law Firm Practitioner – Hidalgo County Bar Association (May 2004)

3. Author and Presenter on “Construction Documentation” Texas Construction Contracting for Public Entities- Lorman Education Services (August, 2001).

4. Author/Lectures on “Guardian/Attorney Ad Litems” –2nd Annual Court Appointed Trusts/Ad Litem Certification Seminar-Hidalgo County Bar Association (October, 2000)

5. Panel-Presenter on Water Supply Corporations and Certificates of Convenience and Necessity – Summer Texas City Attorneys Conference (June, 1999)

ACKNOWLEDGMENTS The author acknowledges the help and assistance provided by Thomas Smith and Marissa C. Hernandez in the preparation of this paper. It should be particularly noted that most of the sample ADR clauses included herein were “borrowed” from the San Antonio Real Estate Discussion Group’s May 14, 1998 paper, “A.D.R.& Mediation – A Real Estate Transactional Lawyer’s Perspective”.

ADR/Mediation - A Real Estate Lawyer's ADR Tool Box Chapter 12

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TABLE OF CONTENTS

I. SCOPE .................................................................................................................................................................... 1

II. INTRODUCTION................................................................................................................................................... 1

III. EXPANSION OF ADR IN REAL ESTATE .......................................................................................................... 1

IV. TYPES OF ADR ..................................................................................................................................................... 1 A. The required ADR: .......................................................................................................................................... 1 B. Not Required: .................................................................................................................................................. 1

V. MOST APPROPRIATE ADR (MEDIATION VS. ARBITRATION) ................................................................... 1 A. Advantages of mediation over arbitration: ...................................................................................................... 1 B. Advantages of arbitration over mediation: ...................................................................................................... 2 C. Why not both? ................................................................................................................................................. 2

1. Med/Arb: ................................................................................................................................................. 2 2. Arb/Med: ................................................................................................................................................. 2

VI. MEDIATION CHECKLIST ................................................................................................................................... 2 A. Be familiar with the process:........................................................................................................................... 2 B. Educate your client to the process: .................................................................................................................. 2 C. Select the mediator: ......................................................................................................................................... 2 D. When to mediate:............................................................................................................................................. 2 E. Where: ............................................................................................................................................................. 2 F. Manner: ........................................................................................................................................................... 2 G. Prepare your documents: ................................................................................................................................. 2 H. Pursuade the decision maker: .......................................................................................................................... 2 I. Write it down:.................................................................................................................................................. 3

VII. ARBITRATION CHECK LIST.............................................................................................................................. 3 A. Number and selection of the arbitrators: ......................................................................................................... 3 B. Limits on jurisdiction: ..................................................................................................................................... 3 C. Disclosures: ..................................................................................................................................................... 3 D. Hearings and Pre-Hearings:............................................................................................................................. 3 E. Rules:............................................................................................................................................................... 3 F. Basis for the decision: ..................................................................................................................................... 3 G. The award: ....................................................................................................................................................... 3 H. Enforcement: ................................................................................................................................................... 3

VIII. ROLE OF THE REAL ESTATE LAWYER IN ADR........................................................................................... 3 A. Contract Drafter:.............................................................................................................................................. 3 B. Advisor: ........................................................................................................................................................... 3 C. Advocate:......................................................................................................................................................... 4 D. Third-party neutral: ......................................................................................................................................... 4

IX. ADR DRAFTING CHECKLIST ............................................................................................................................ 4 A. Agreement: ...................................................................................................................................................... 4 B. Scope: .............................................................................................................................................................. 4 C. Selection: ......................................................................................................................................................... 4 D. Type of ADR:................................................................................................................................................. 4 E. Rules:............................................................................................................................................................... 4 F. Disclosures: ..................................................................................................................................................... 4 G. Costs: ............................................................................................................................................................... 4 H. Confidentiality:................................................................................................................................................ 4 I. Other:............................................................................................................................................................... 4


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X. CONCLUSION ....................................................................................................................................................... 4 APPENDIX 1 - Glossary ................................................................................................................................................ 7 APPENDIX 2 - ADR Reading List............................................................................................................................... 13 APPENDIX 3 - Sample ADR Provisions ..................................................................................................................... 17


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ADR/MEDIATION A REAL ESTATE LAWYER'S ADR TOOL BOX I. SCOPE

The scope of this paper is to take a look at the impact of ADR on the real estate practice and to give the real estate practitioner the tools to represent his client in this expanding area. II. INTRODUCTION

Alternative Dispute Resolution (ADR) is becoming a part of every lawyer’s practice. Real estate lawyers are no exception. In the past, frequently transactional lawyers would send the client to a litigator “when things became adversarial". ADR offers some alternatives to the courthouse for which the real estate practitioner may be well-suited. III. EXPANSION OF ADR IN REAL ESTATE

Forms of ADR have been used in the real estate practice for many years. The industry has seen an expansion in recent times. Construction contracts have particularly made use of arbitration provisions. The AIA contracts have had arbitration clauses in them for decades.

Texas Real Estate Commission (TREC) forms have included mediation addendums since the early '90s. The current One to Four Family Residential Contract (Resale) (TREC No. 20-6) and the Unimproved Property Contract (TREC No. 9-5) include a mediation paragraph that calls for a decision by checking a box.1

The National Association of Realtors (NAR) in the late '60s encouraged ADR, by putting out a Homebuyer/Homesellers Dispute Resolution Kit. Their Code of Ethics and Standard Practice Article 14 indicated that controversies between Realtors must be settled by arbitration

Today, we see that ADR has been brought forward by the Texas Legislature in statutes such as the Residential Construction Liability Act that intended mediation provisions,2 and the Residential construction Commission Act that calls for Arbitration of Disputes.3

This expansion of ADR is driven by a skeptical view of litigation. It is perceived by the public and probably the majority of the legal community that litigation is too costly, takes too long, can have bad results, can cause embarrassment and damage reputations. ADR is frequently the proposed antidote to perceived problems. IV. TYPES OF ADR

Although arbitration and mediation are by far the most used forms of ADR, there are many other types. A more comprehensive list would include:

Mediation4 Mini-trials5 Moderated Settlement conference6 Summary Jury Trials7 Arbitration8 Case Evaluation, and Rent-a-Judge

Like most areas of practice, ADR has developed its own jargon (Attached as Appendix 1 is a glossary of ADR terminology). A. The required ADR:

Sometimes ADR is required in a particular situation. It is frequently ordered by a court. Judges are fond of ordering cases that had been filed before them to mediation in hopes of clearing their docket. Local rules in many venues require mediation before a jury trial will be set.

In the real estate field, many, if not most disputes arise out of a contract. If the contract has an ADR clause, it is likely that the parties are required to pursue the appropriate ADR process. B. Not Required:

If ADR is not required, is it advisable? It has been argued that ADR is the dispute resolution for the poor. It is suggested that only the wealthy will be able to bear the cost in time, money and other resources to litigate. The poor are forced to resolve their disputes in a streamlined fashion. It has been argued that ADR provides a second class of justice. Ultimately this is a decision for the client.

When faced with the client with a dispute there is an approach short of ADR that some people fail to consider. Negotiate. Remember when lawyers used to talk to one another? The use of a third party neutral may not always be necessary or even advisable. If the parties with or without their lawyers can sit down and discuss the matter, sometimes it can be resolved without the use of any additional procedure.

It is important to advise the client of an ADR option. The “Lawyer’s Creed” states: “I will advise my client regarding the availability of mediation, arbitration and other alternative methods of resolving and settling disputes”.9 V. MOST APPROPRIATE ADR (MEDIATION

VS. ARBITRATION) Once the decision has been made that ADR

should be considered, you have a choice as to which form of ADR is most appropriate for your situation. A. Advantages of mediation over arbitration:

Mediation is generally faster and less expensive and has more control and flexibility built into it. If continued relationships between the parties is


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important, mediation which tends to lead to an accommodation is therefore preferable. Even if mediation does not result in a settlement it frequently can narrow the issues and give the parties a free look at the other sides view of the dispute. This is relatively inexpensive discovery. B. Advantages of arbitration over mediation:

Arbitration results in a decision. Sometimes you just need a quick resolution. Arbitration is generally believed to be faster and less expensive than the courthouse, with its streamlined procedures and flexible rules of evidence. It allows for a no holds barred presentation by each side but it is more time-consuming and more expensive than mediation. It also has the advantage of finality. Typically it does not even allow for an appeal. C. Why not both?

There is no reason that the two procedures cannot be combined. 1. Med/Arb:

The American Arbitration Association, the most experienced arbitration provider in the world, frequently recommends that before an arbitration takes place, the parties mediate the case. If the mediation is unsuccessful they will furnish an arbitrator to assist in resolution. It is noteworthy that because of the confidential nature of information supplied during the mediation it is not appropriate for the mediator to also serve as the arbitrator. 2. Arb/Med:

However, if the procedure is reversed the issue is not a problem. In Arb/Med the parties make a presentation to neutral third party who writes up a decision as an arbitrator. Then before he publishes it, he changes hats and serves as a mediator in an effort to see if the case can be resolved. The confidentiality issue is not a problem. VI. MEDIATION CHECKLIST

If mediation is the type of ADR for your situation, the following is a list of things to consider to improve your representation of your client. A. Be familiar with the process:

Observe mediations, undergo mediation training, and read up on the subject. Familiarize yourself with applicable ADR statutes. (Attached as Appendix 2 is an ADR Reading List) B. Educate your client to the process:

Meet with your client and discuss what will happen in the mediation. Prepare the client for the negotiation. Encourage him to not put his “bottom

line” on the table immediately and to remain flexible for creative alternatives. The other side may evaluate their case based on their impression of the client so prepare him as you would for a court appearance or deposition. C. Select the mediator:

You want someone who is impartial, has subject matter knowledge, and has mediation training and experience: Most lawyers are more comfortable with an attorney mediator, although legal education is not necessarily a requirement to be a competent mediator. D. When to mediate:

Litigators are fond of saying “it's too early to mediate, we haven't completed discovery”. Discovery may not be necessary if the mediation is a success. On the other hand, if you don't have all the necessary information then mediation could be premature. For example, if the dispute revolves around a soil condition issue, it may be necessary to get an expert report before the mediation is “ripe”. E. Where:

Ideally, mediation should take place in a neutral setting. Even if the attorneys are not overly concerned, the client may feel more comfortable if the mediation takes place in the mediator’s office as opposed to the office of opposing counsel. F. Manner:

Before the mediation, get the ground rules established. Be sure that people with authority to make decisions are at the mediation. Clarify start times, travel issues, childcare and who should be allowed to be at the mediation. Most mediators prefer an agreement that there is no “cap” on the time. This allows the mediator to determine when to recess or terminate the mediation. G. Prepare your documents:

Real estate lawyers understand the importance of documentation. Before the mediation starts you need to have drafted a confidential position paper for the mediator summarizing your view of the case. You need to synthesize the key documents. Bring to the mediation copies of all the critical documents with the important parts marked or highlighted. Plans, specifications, maps, photos, all need to be prepared prior to mediation. H. Pursuade the decision maker:

Remember, the mediator does not make the decision. Design your presentation to persuade the other side. If the case justifies the attendance of two attorneys, one can play the role of presenting the client's position while the other or can play the role of


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the reasonable accommodating negotiator. During opening statement, it is sometimes helpful to address the adverse party directly. I. Write it down:

Mediation has a successful resolution when the settlement is reduced to writing and is signed by the parties. If that process is postponed, “buyer’s remorse” can unravel a settlement. The well-prepared lawyer comes to the mediation with an outline of the settlement agreement. VII. ARBITRATION CHECK LIST

Arbitration is a matter of contract, and one cannot be forced to arbitrate unless he agreed to do so.10

The sophistication and complexity of arbitration is purely a matter of the intent of the parties. The arbitration may be as simple as two parties telling their story to a neutral third party who writes a decision letter. It also may be so complicated as to require the use of a panel, with multiple pre-hearing conferences. Generally speaking, the more money involved and the more complicated the dispute, the more sophisticated the process.

All arbitration should consider most of the following issues: A. Number and selection of the arbitrators:

Some arbitration agreements name an arbitrator. Others name a provider of arbitrators, such as, AAA. Some require one arbitrator, some require a panel of three. Some agreements provide for a methodology by which the arbitrators can be interviewed and selected by the parties. Some have the arbitrator selected by an administrator or case manager. B. Limits on jurisdiction:

Can non-signatories to the agreement be brought in the arbitration?11 As a general rule, they cannot be compelled.12 Are there some aspects of the dispute that are beyond the arbitration? Would the parties like to carve out part of the dispute? All these and related questions need to be thought about early in the process. C. Disclosures:

Most arbitrations allow for some discovery. In order to save money there are limits typically placed on the discovery process. For example, it is not uncommon to limit the number of depositions. D. Hearings and Pre-Hearings:

Are pre-hearing meetings appropriate? Is a hearing necessary or can the dispute be resolved on written documents? Many disputes today are arbitrated over the Internet.13 Do the parties need to be present or can it be done by telephone or video conferencing?

E. Rules: Typically the rules of procedure and evidence are

handled loosely. Hearsay information and opinions are frequently considered. Be sure that you can present your side under the rules of the arbitration. Equally important, however, is to not rely on the belief you can keep the “smoking gun” out of the case. In most cases, the arbitrator will listen to anything someone insists be considered.

F. Basis for the decision:

Is the arbitrator required to follow the law? If he does not what are the ramifications? Generally, an arbitrator need not follow the law, or apply them to the facts to render an arbitration award.14 Frequently an arbitrator makes a decision on what he thinks “is right”. This tends to lead to compromise and is often viewed as “splitting the baby”. If the agreement does not require the arbitrator to follow the law be prepared for an arbitrator with great discretion.

G. The award:

What is the arbitrator required to put in writing? Once again this question is controlled by the agreement to arbitrate. In many jurisdictions, unless otherwise provided in the agreement, an arbitrator may award any remedy reasonably contemplated by the parties, even though a court could not have done so.15

H. Enforcement:

After the award is presented what happens next? Is there no right of appeal? Is there a limited right of appeal? In most jurisdictions, the parties to binding arbitration give up their right to appeal the arbitration order except on very limited grounds.16 One commentator observed … “in many jurisdictions, an arbitrator can get it totally wrong, apply the law incorrectly (or simply ignore it) and render an adverse award against the party that correctly should have won, and there is nothing anyone can do about it (absent a showing of extrinsic fraud in the arbitral process)”.17 Are there remedies available without court action?

VIII. ROLE OF THE REAL ESTATE LAWYER

IN ADR The real estate lawyer may be involved in ADR in

a variety of roles.

A. Contract Drafter: Typically transactional lawyers prepare contracts

and need to consider the effect of an ADR clause on their clients. They should also consider the effect if not included.

B. Advisor:

Real estate lawyers need to be knowledgeable enough about ADR to properly advise their clients of


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the effect of the process. They may want to advise their clients to use the ADR option early in a dispute in an effort to save time and money.

C. Advocate:

A real estate lawyer that may not be comfortable in courthouse litigation may be a very effective advocate in the world of ADR. Negotiation skills, accommodation skills, and communication skills are all essential in an ADR context. Whether the attorney is the sole or lead counsel, or he is a second-chair assistant, a real estate lawyer can play a valuable role for the benefit of the client.

D. Third-party neutral:

Real estate lawyers frequently make very effective arbitrators and mediators, especially in areas of their expertise. Most people in the real estate business are looking for subject matter expertise that frequently they will not discover in the courthouse.

IX. ADR DRAFTING CHECKLIST

When preparing real estate documents consider ADR clauses. Some of the issues that you may want to consider are listed below:

A. Agreement:

It is helpful if it is clear that the parties are agreeing to use ADR in the appropriate case. The language should indicate an agreement.

B. Scope:

The ADR clause should indicate what disputes the agreement covers.

C. Selection:

The ADR clause should either designate a third party neutral or provide a procedure to select the neutral.

D. Type of ADR:

The agreement should clearly indicate the form of ADR to be used. Sloppy drafters have used terms like “binding mediation” which frequently leads to confusion.18 E. Rules:

The ADR clause should identify the rules and procedures to be followed. F. Disclosures:

The clause should indicate what kind of disclosure or discovery is authorized. G. Costs:

The ADR clause should indicate how the cost of the process will be paid.

H. Confidentiality: The clause should indicate the extent to which

confidentiality and privacy shall be maintained.

I. Other: The ADR provisions should indicate if the parties

intend that the law be followed, how the award be enforced, and if, under some circumstances, the process can be terminated.

(Attached as Appendix 3, are sample ADR clauses.)

X. CONCLUSION

The use of ADR in a real estate context shall continue to expand. The checklists and other materials presented with this paper should provide a real estate lawyer with a starting place to navigate the waters of ADR. Both the real estate litigator and the real estate transactional attorney need to be familiar with ADR in order to better serve their clients. 1 Texas Real Estate Commission (TREC), Promulgated Forms (TREC No. 20-6) One to Four Family Residential Contract (Resale) and (TREC No. 9-5) Unimproved Property Contract; www.trec.state.tx.us (Forms may be obtained at no charge from the TREC Web Site),

2 Texas Property Code § 27.0041 (2005)

3 Texas Property Code § 436.001 et.seq. (2005)

4 Civil Practices & Remedies Code § 154.023 (2005)





9 The Texas Lawyer’s Creed – A Mandate for Professionalism, Supreme Court of Texas and Court of Criminal Appeals (November 7, 1989) (Primarily Aspirational).

10 Belmont Construction, Inc. v. Lyondell Petrochemical Co.,896 S. W. 2d 352,356 (Tex. App. – Houston 1995).

11 Kelly v. TriCities Broadcasting, 147 Cal.App. 3d 666, (1983).

Melchor Investment Co. v. Rolm Systems, 3 Cal. App. 4th 587 (1992).

12 Freis v. Canales, 877 S. W. 2d 283, 284 (Tex. 1994).

13 Emmet Pierce, Virtual Give and Take: Mediation of Real Estate Disputes Heads for Cyberspace, San Diego Union-Tribune, Nov. 11, 2001.

14 Wilko v. Swan, 346 U. S. 427, 435-36 (1953)

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=TX_caselaw&volume=896&edition=S.W.2d&page=352&id=80470_01

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=ca_caselaw&volume=147&edition=Cal.%20App.3d&page=666&id=80470_01

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=TX_caselaw&volume=877&edition=S.W.2d&page=283&id=80470_01

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=US_supremeopinions&volume=346&edition=U.S.&page=427&id=80470_01


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15 Advanced Micro Devices, Inc. v. Intel Corp., 885 P. 2d 994, 1005-06 (Cal. 1994)

16 Moncharsh v. Heily & Blasé, 832 P.2d 899, 904 (Cal. 1992)

17 Michael F. Donner, Thinking Through the Use of Boilerplate Provisions for Arbitration, Mediation and Attorney Fees in Real Estate Contracts, A.B.A. Prob. & Prop. 19 (2003).

18 High Valley Homes, Inc. v. Fudge, No. 03-01-00726-CV, 2003 Tex. App. WL 1882261 (Tex. App. – Austin. April 17, 2003).

http://www.TexasBarCLE.com/CLE/PMCasemaker.asp?table=CA_caselaw&volume=885&edition=P.2d&page=994&id=80470_01




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APPENDIX 1

GLOSSARY


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GLOSSARY Adjournment To delay or suspend until a later time. Also called a postponement. ADR Agreement An agreement between a business and an owner to submit disputes to mediation, arbitration, or other ADR processes. ADR Process A method of resolving a dispute out of court. Mediation and Arbitration are the most widely used ADR processes. ADR Program Any program or service set up or used by a business to resolve disputes out of court. Answering Statement A written response of the respondent(s) stating their position in the dispute. Advisory Arbitration In most respects, mirrors traditional arbitration. It differs, however, in that it focuses on specific issues in a dispute and decides them in an award that is not binding on the parties. It is sometimes referred to as non-binding arbitration.

Arbitration (CPRC 154.027)

a) Nonbinding arbitration is a forum in which each party and counsel for the party present the position of the party before an impartial third party, who renders a specific award.

b) If the parties stipulate in advance, the award is binding and is enforceable in the same manner as any contract obligation. If the parties do not stipulate in advance that the award is binding, the award is not binding and serves only as a basis for the parties’ further settlement negotiations.

Arbitrator An impartial person chosen to decide an issue between parties involved in a dispute or controversy. Arbitrator Strike List A list of names of potential arbitrators from which the parties will mark their choice for arbitrator(s). Award The written decision of the arbitrator. Calendar Form A form used for scheduling the hearing. Case Administrator An employee who manages a dispute through the arbitration process.


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Case Manager The Case Manager is an employee assigned to handle the administrative aspects of the case. He or she does not decide the case. He or she only manages the case’s administrative steps, such as exchanging documents, matching schedules, and setting up hearings. The Case Manager is the parties’ contact point for almost all aspects of the case outside of any hearings. Claim or Relief The sum of money or specific performance requested by the claimant. Claimant A Claimant is the party who files the claim or starts the arbitration. Either the owner or the business may be the Claimant. Desk Arbitration In a desk arbitration, the parties submit their arguments and evidence to the arbitrator in writing. The arbitrator then makes an award based only on the documents. No hearing is held. Demand A formal claim. Dispute A disagreement between two or more parties. Fact-finding Fact-finding is investigation of the dispute by a third party who examines the issues and facts in a case. In an arbitration context, sometimes the third party issues a report on his findings, which might or might not recommend settlement procedures. Findings The written response given for a decision. Hearing An opportunity for parties in a dispute to present facts and evidence for a decision. In-Person Hearing During an in-person hearing, the parties and the arbitrator meet in a conference room or office and the parties present their evidence in a process that is similar to going to court. However, an in-person hearing is not as formal as going to court. Independent ADR Institution An independent ADR institution is an organization that provides independent and impartial administration of ADR programs for owners and businesses. Mediation (CPRC 154.023)

a) Mediation is a forum in which an impartial person, the mediator, facilitates communication between parties to promote reconciliation, settlement, or understanding among them.

b) A mediator may not impose his own judgment on the issues for that of the parties. c) Mediation includes victim-offender mediation by the Texas Department of Criminal Justice

described in Article 56.13, Code of Criminal Procedure.


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Mediation-arbitration (Med-arb) As the name implies, med-arb is a blend of both mediation and arbitration. The parties agree to first attempt to resolve the dispute through mediation. If this fails to produce a settlement within a specified time period, then the matter is referred to arbitration for a final-and-binding decision by an arbitrator. Mini-Trial (CPRC 154.024)

a) A mini-trial is conducted under an agreement of the parties. b) Each party and counsel for the party present the position of the party, either before selected

representatives for each party or before an impartial third party, to define the issues and develop a basis for realistic settlement negotiations.

c) The impartial third party may issue an advisory opinion regarding the merits of the case. d) The advisory opinion is not binding on the parties unless the parties agree that it is binding

and enter into a written settlement agreement.

Moderated Settlement Conference (CPRC 154.025)

a) A moderated settlement conference is a forum for case evaluation and realistic settlement negotiations.

b) Each party and counsel for the party present the position of the party before a panel of impartial third parties.

c) The panel may issue an advisory opinion regarding the liability or damages of the parties or both.

d) The advisory opinion is not binding on the parties.

Nature of Dispute A written itemization of what the disagreement is about. Notice of Hearing The document which is sent to each party stating the location, date and time of the hearing. Neutral A word that is used to describe someone who is a mediator, arbitrator, or other independent, impartial person selected to serve as the independent third party in an ADR process. Respondent A Respondent is the party against whom the claim is filed. If a Respondent states a claim in arbitration, it is called a counterclaim. Either the owner or the business may be the Respondent. Subpoena A legal writ requiring appearance at a hearing to give testimony. Subpoena Duces Tecum


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A legal writ requiring the release of specific documents in your possession.

Summary Jury Trial (CPRC 154.026)

a) A summary jury trial is a forum for early case evaluation and development of realistic settlement negotiations.

b) Each party and counsel for the party present the position of the party before a panel of jurors.

c) The number of jurors on the panel is six unless the parties agree otherwise.

d) The panel may issue an advisory opinion regarding the liability or damages of the parties or both.

e) The advisory opinion is not binding on the parties.

Telephone Hearing In a telephone hearing, the parties have the opportunity to tell the arbitrator about their case during a conference call. Often this is done after the parties have sent in documents for the arbitrator to review. A telephone hearing can be cheaper and easier than an in-person hearing. Third Party Neutral An impartial person selected to serve as an ADR provider. Mediators and Arbitrators are third party neutrals.


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APPENDIX 2

ADR READING LIST


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A.D.R. READING LIST

Alberts, Robert J., “The Use Of Mediation In The Real Estate Industry,” Real Estate Law Journal Volume 20, Number 4 (Spring 1992). Bainum, Linda J., “Mediation: The Process – The Profession,” Landman (July/ August 1997). Bennight, Kenneth L., Jr., “Drafting ADR Clauses,” Mediation: Changes and Applications “It’s Not Just for Litigation Any More” (May 16, 1996). Cartwright, Charles N., “ADR: A Lawyer’s Tools of the Trade,” 5th Annual Advanced Real Estate Drafting Course (February 1994). Coselli, John A., Jr., “Drafting A.D.R. Clauses in Contracts & Loan Documents,” 9th Annual Advanced Real Estate Law Seminar. Dillard, D. Diane, “Drafting A.D.R. Provisions,” Advanced Real Estate Drafting Course (State Bar of Texas, January 1991). Galton, Eric, “Mediation: A Texas Practice Guide,” American Lawyer Media, L.P. (1993). Glasser, Mark K., “Mediation and Arbitration of Oil and Gas Disputes,” The Houston Landman’s Institute (American Association of Professional Landmen, 1997). Hochman, Stephen A., “Model Dispute Resolution Provisions for Use in Commercial Agreements Between Parties with Equal Bargaining Power,” Advanced Mediation Symposium- Hot Topics in Mediation (ABA Section of Dispute Resolution, January 1997). Kovach, Kimberlee K., “Mediation: Principles And Practice,” West Publishing Co. (1994). Pierce, Emmet, “Virtual Give and Take / Mediation of Real Estate Disputes Heads for Cyberspace,” The San Diego Union- Tribune (November 2001). Reed, Rick, “ Pros and Cons of A.D.R. in Construction Loan Documents: Construction Loan Agreements and Title Insurance Policies,” 27th Annual Mortgage Lending Institute (The University of Texas School of Law and the Texas Mortgage Bankers Association) (September/ October 1993). Reavley, Tom, “Alternative Dispute Resolution of the Oil and Gas Case,” 13th Annual Advanced Oil, Gas and Mineral Law Course (State Bar of Texas, 1995). Sheehan, J. Scott, “Alternative Dispute Resolution in the Banking Industry, “ 15th Annual Banking Law Institute (March, 1992). Sheehan, J. Scott, “How Alternative Dispute Resolution Can Be Used For Business Lawyers,” 5th Annual ADR Institute (State Bar of Texas, September/ October 1993). Sherman, Edward F., “ Alternative Dispute Resolution in Mortgage Lending Transactions,” 26th Annual Mortgage Lending Institute, (University of Texas School of Law, Austin, Texas) (September 1992).


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Sochynsky, Yaroslav, “Mediating Real Estate Disputes,” Probate and Property: American Bar Association (July – August 1998). Spolter, Jerry, “Checklist For Successful Mediation,” Dispute Resolution Journal (March 1994). Smith, Thomas J., “Enforceability of Mediation/ Arbitration Provisions in Contracts,” Mediation Skills Course (AAM- San Antonio Chapter, March 1998). Stahl, Sidney, “Opportunities for the Use of ADR Techniques in Oil and Gas Disputes,” 9th Annual Advanced Oil, Gas and Mineral Law Course (State Bar of Texas, 1991).


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APPENDIX 3

SAMPLE ADR PROVISIONS

Mediation/Arbitration. If a dispute arises out of this contract and such dispute cannot be settled through direct negotiations between the parties, the parties agree to endeavor to resolve the dispute through mediation. If the parties cannot agree upon the selection of a mediator, the Association of Attorney-Mediator’s Inc. (“AAM”) shall be asked to provide a list of three (3) AAM members in good standing. Within ten (10) days of receipt of such list, each party shall have the right to strike one (1) name from the list and the name remaining on the list (or the first available name if both parties strike the same name) shall be the mediator. The mediation shall take place within thirty (30) days from the date such mediator is selected. In the event that such dispute cannot be resolved by mediation, the parties agree to submit the matter to arbitration, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. If the parties cannot agree upon the selection of an arbitrator, a member of AAM shall be selected using the same process as used in selecting the mediator.

OR If a dispute arises out of this contract and if such dispute cannot be settled through direct negotiations between the parties, the parties agree to endeavor to resolve the dispute through mediation. If the parties cannot agree upon the selection of a mediator, the parties shall jointly request that a local State District Judge appoint a mediator qualified under Section 154.052 of the Texas Alternative Dispute Resolution Act. In the event that such dispute cannot be resolved by mediation, the parties agree to submit the matter to arbitration, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. If the parties cannot agree upon the selection of a arbitrator, the parties shall jointly request that a local State District Judge appoint an arbitrator qualified under Section 154.052 of the Texas Alternative Dispute Resolution Act, which arbitrator shall not be the same person who previously mediated the dispute.

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ADR/MEDIATION A REAL ESTATE LAWYER'S ADR TOOL BOX · ADR/Mediation - A Real Estate Lawyer's ADR...

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