Last week, I mediated a very contentious dispute that was fueled by a misassumption. Only late in the mediation did the parties realize the existence of the misassumption. In the words of our President, it became a “teachable moment.” The teaching: never assume.
The dispute was simple. A homeowner suffered a fire loss and so made a claim to her insurance company. Eventually, the claim was settled and the insurer issued two checks, payable jointly to the homeowner and her lender or mortgage company. The homeowner allegedly forged the endorsement of the mortgage company and attempted to negotiate both checks. She was able to negotiate one of them but the bank became suspicious and was able to have its depositor, the insurer, request a stop payment on the other. The homeowner then vanished. The mortgage company then requested the insurer to re-issue the second check and send it directly to the mortgage company. The insurer refused, contending it owed a duty to the insured to pay her and was concerned that the insured might reappear and request the payment. Thus, the dispute arose.

For more than a year, the parties corresponded: the mortgage company insisting that it was entitled to the re-issued check, while the insurer, citing various reasons, claimed it should hold the funds to be given to the insured, if and when she reappeared. Themes of bad faith and entitlement to punitive damages were flying between the parties.

In preparation for the mediation, the insurer’s counsel sent a very thorough, detailed brief containing many exhibits. It was signed by the attorney (I will call her “Esquire, Senior”) who had been handling the matter from the beginning. Counsel for the mortgage company submitted her brief and again it was signed by the attorney (I will call her “Mortgage Attorney”) who had been handling the matter throughout.

The parties then appeared for the mediation session. The Mortgage Attorney and a senior representative of the mortgage company arrived at the mediation. But, on behalf of the insurer, a junior attorney (“Esquire, Junior”) appeared without her client who was appearing by telephone. Immediately, the Mortgage Attorney and her representative became upset: they felt disrespected. They believed that – deep down – the insurer knew it had no valid reason to not re-issue the checks for the past year or more and so sent Esquire, Junior to “take the heat” for its “bad faith” tactics and otherwise unprofessional behavior. They believed that Esquire, Senior was “playing dirty” by not showing up but, instead, took the “cowardly” road of sending a junior associate to handle what would be a very contentious and unpleasant mediation.

So, if the mortgage company and its counsel were not livid about this case before, they certainly became so. They, immediately opined: “Esquire, Senior does not even have the “guts” to show up herself.” However, being polite, they did not raise this directly with Esquire, Junior. Instead, they seethed, silently, and/or vented to the mediator during the separate sessions.

Only, many hours later, as the matter was settling, did Esquire, Junior mention that solely because of a family emergency arising late the prior afternoon, Esquire, Senior could not be there: otherwise, she would have been present to “take the heat” herself. She further mentioned that it was and is not Esquire Senior’s “style” to send an associate to do her “dirty work”.

Upon being told this, a palpable shift in attitude appeared on the faces of the Mortgage Attorney and her representative. They had ascribed evil motives where there were none which had fueled their anger and infected their negotiations. They had assumed, and had done so, erroneously. Had they not done so, perhaps, the mediation would not have been as contentious or taken as long to resolve.

I have always said that litigation occurs mainly due to a lack of communication or a miscommunication. People assume the wrong things or take a communication the wrong way and sue over it, only to find out years later the error of their thinking. Here, the mediation got off to a bad beginning and lasted longer than it should have because of a misstep and misassumption.

The lesson: never assume, just ask instead.

. . .Just something to think about.


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