Actions Do Have Consequences

From the Blog of Phyllis G. Pollack.

Several weeks ago, I, again, helped my colleague who teaches mediation by supervising two of her students while they conducted an actual mediation in small claims court.

Typically, when parties are scheduled for trial in small claims court, they go into the courtroom and sit down. The court clerk begins the session by providing instructions and introductory information. At that point, the clerk introduces the student mediators who then say a few words about mediation, indicating that they are available then and there to mediate any case in which the parties are amenable, for free. Some parties take them up on the offer, while others prefer to take their chances at trial.

Initially, only the parties in one matter decided to take the student mediators up on their offer. So, the two mediators began to co-mediate. Suddenly, there was a knock on the conference room door; the Defendant in another case had gotten the plaintiff to agree to mediate; however, the plaintiff’s mother wanted to mediate immediately and not wait for the student mediators to finish the pending matter. So – I requested one of the student mediators to join me so that the student mediator could begin mediating this second dispute in the hallway as there was no private space available!

This mediation turned out be wild and crazy. Plaintiff- whom I will call John- is a 22 year old college student who was accompanied by his mother to court. She- whom I will call Joan- was clearly controlling everything- including her son. Initially- she was willing to mediate, … as long as defendant- whom I will call Steve – met her complete demand as alleged in the complaint and concluded the mediation before her son’s case was called for trial (she did not want to lose her place on the trial calendar. )

The defendant – Steve – held a much different perspective. He had been to mediation before, and it had worked. He was hoping it would work again; that he could come to some resolution short of paying John everything his mother demanded.

The facts were strange. It seems that Steve (defendant) and plaintiff’s mom (Joan) were long time friends. In order to help John improve his credit rating, Steve agreed to list John as a co-holder on one of Steve’s credit card accounts. At the time, Steve was in the real estate business which was booming, and his credit was stellar.

Over the next few months, Steve incurred charges on this credit card of over $20,000. Then, the bottom fell out of both the economy and the real estate market. Steve did not pay on the credit card account, and so the credit card company looked to Plaintiff- John for payments. He hired an attorney (incurring fees of about $3500) to negotiate a settlement of about $4,000 with the credit card company.

When Steve refused to take John’s calls, John (no doubt at the urging of mom) sued in small claims court for the $4,000 negotiated settlement, $3500 in attorneys’ fees and the small claims’ court costs.

So- here we are—mediating. The student mediator tried to explain what mediation was all about, but Joan kept interrupting, stating that the only settlement that was acceptable was for Steve to pay everything that was owed and to agree to it before the court called her son’s case for trial.

At that point, the student mediator attempted to talk to Steve alone, to get his perspective on the matter. Again, mom- Joan – objected – stating that she should be entitled to hear everything that Steve said. Again, the student mediator tried to explain mediation confidentiality and the value of meeting separately with the parties. While not really understanding (or wanting to), Joan relented and gave Steve and the student mediator some privacy.

From Steve’s viewpoint, since John was a co-signer on the credit card, he was responsible for the debt, even if it was Steve who incurred it. The student mediator talked with Steve about whether he, Steve, should ultimately be responsible for the debt since he is the one who actually incurred it. Slowly, Steve began to see the light, and so offered a little money. (In truth, Steve claimed that he was broke! But mom did not care.) The student mediator did an admirable job of talking with Steve and having him begin to acknowledge that he should be the one responsible since he is the one who incurred the charges.

So… Steve offered some money. Surprisingly, mom was willing to accept less than the full sum demanded in the complaint but insisted that it be a lump sum. Steve was unwilling (or more likely, allegedly unable, to pay a lump sum.. and again, mom did not care.)

After a few more rounds of back and forth, an impasse was reached but we also ran out of time as the court was about to call the matter for trial. The student mediator, considering the conditions under which the mediation was being held (in the hallway of a courthouse), did a great job.

Given our interest in this case, we stayed for the trial. After the son made his presentation, Steve spoke, urging that since John was on the credit card, he is responsible for the debt, even if he – Steve – was the one who incurred it. The Court asked Steve the same question that the student mediator did: since Steve incurred the debt, shouldn’t he be the one, ultimately, responsible for payment? Steve said ‘yes” but only partially so.

The Court took the matter under submission. A few days later it issued its judgment, finding for plaintiff in the full sum requested, $7500, plus court costs.

Steve will probably appeal the judgment but, since appellate courts have a tendency to affirm, rather, than reverse, trial court judgments, chances are that Steve will not fare any better on appeal.

The morale: it is always better to settle. At a certain point, mom was willing to accept less than the full sum sought in the complaint, but Steve refused. Now, he will have a judgment against him in that full amount, and will always be looking over his shoulder to see if his bank account is being levied upon or one of his other assets is being seized to satisfy the judgment. True to Murphy’s law, a seizure will occur when Steve can least afford it, or expect it; that is, at the worst possible time. At least with a settlement, one can control the outlay of the funds and protect the remaining assets. With a judgment, a defendant totally lacks control; surprise is the key element.

It is one thing to sit in a classroom and study mediation, and to conduct mock mediations… It is quite another to conduct a real one involving a case actually filed in court and see the outcome at trial when the parties do not reach their own resolution…. Very quickly, everyone learns… that actions do have consequences…

….. Just something to think about.

                       

Phyllis Pollack

Phyllis Pollack with PGP Mediation uses a facilitative, interest-based approach. Her preferred mediation style is facilitative in the belief that the best and most durable resolutions are those achieved by the parties themselves. The parties generally know the business issues and priorities, personalities and obstacles to a successful resolution as… MORE >