Carlsbad Hotel Associates, L.L.C. v. Patterson-UTI Drilling Co.

2009 NMCA 005, 199 P.3d 288, 145 N.M. 385
CourtNew Mexico Court of Appeals
DecidedOctober 30, 2008
Docket27,922
StatusPublished
Cited by7 cases

This text of 2009 NMCA 005 (Carlsbad Hotel Associates, L.L.C. v. Patterson-UTI Drilling Co.) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carlsbad Hotel Associates, L.L.C. v. Patterson-UTI Drilling Co., 2009 NMCA 005, 199 P.3d 288, 145 N.M. 385 (N.M. Ct. App. 2008).

Opinions

OPINION

SUTIN, Chief Judge.

{1} The Fifth Judicial District Court provided an opportunity to the parties to engage in a court-sponsored settlement conference pursuant to a local settlement conference rule. Once the parties agreed to participate, they became subject to both the local rule and to a court order, which both required good faith participation. Defendant Patterson-UTI Drilling Company, L.P., L.L.L.P. (Patterson) determined in advance of the settlement conference that it had no liability and entered the settlement conference with no intention of settling. At the conference, Patterson offered an amount only under the threat of sanction. The district court judge presiding in the case, referred to hereafter as “the district court,” sanctioned Patterson for bad faith participation, based on (1) Patterson’s failure in advance of the settlement conference to notify Plaintiff Carlsbad Hotel Associates, L.L.C. (the Hotel) and a co-Defendant, Chi Operating, Inc. (Chi), that it had determined that it had no liability and did not intend to make any offer to settle; (2) Patterson’s failure to make an offer except upon threat of court sanction by the facilitator; and (3) Patterson’s failure to further compromise from the offer it made under threat of sanction. This case requires us to consider the propriety of the sanction imposed against Patterson for violation of the local rule and the court order. Although we express some concerns about the requirement of good faith in general in the mediation context and its meaning in particular in the same context, we affirm the sanction because the order to which Patterson agreed defined good faith in a manner pursuant to which the district court could have properly found that Patterson was in violation.

INTRODUCTION

{2} Several insightful articles in the last several years have addressed the propriety of court rules requiring good faith participation in court-affiliated mediations and settlement conferences and the propriety of allowing courts to sanction participants for the failure to negotiate in good faith. In the eyes of several practitioners and academics, the application of a good faith requirement and the imposition of sanctions can be overly problematic. See James J. Alfini et al., Mediation Theory and Practice 287-314 (Matthew Bender & Co., Inc. ed., 2d ed. 2006); Carrie Menkel-Meadow et al., Mediation: Practice, Policy, and Ethics 301-11 (2006); Stephen J. Ware, Principles of Alternative Dispute Resolution § 4.30, at 335-37 (2d ed. 2001); Roger L. Carter, Oh, Ye of Little (Good) Faith: Questions, Concerns and Commentary on Efforts to Regulate Participant Conduct in Mediations, 2002 J. Disp. Resol. 367; Carol L. Izumi & Homer C. La Rue, Prohibiting “Good Faith” Reports Under the Uniform Mediation Act: Keeping the Adjudication Camel Out of the Mediation Tent, 2003 J. Disp. Resol. 67; John Lande, Using Dispute System Design Methods to Promote Goodr-Faith Participation in Court-Connected Mediation Programs, 50 UCLA L.Rev. 69 (2002); ABA Sec. of Disp. Resol., Resolution on Good Faith Requirements for Mediators and Mediation Advocates in Court-Mandated Mediation Programs (Aug. 7, 2004), http://wum.abanet.org/ dispute/draftres2.doc (listing articles on the subject).

{3} As indicated by one effective writer on the subject, “[rjules ... that permit courts to sanction a wide range of subjective behavior create a grave risk of undermining core values of mediation and creating unintended problems.” John Lande, Why a Good-Faith Requirement Is a Bad Idea for Mediation, 23 Alternatives to High Cost Litig. 1, 9 (2005). A resolution of the American Bar Association Section of Dispute Resolution advocates examination and revision of rules authorizing sanctions for bad faith conduct in court-mandated mediation programs in order “to preserve the core values of the mediation process, namely, party self-determination, mediator impartiality, and mediation confidentiality.” ABA, supra.

{4} Competing views exist as to the benefit or detriment of a good faith participation requirement in court-affiliated mediations and settlement conferences, even in those with which the parties have voluntarily agreed. There are several policies favoring a good faith participation requirement. “The call for good-faith in mediation is premised on the need to ensure that the court-ordered process is not a waste of time, that it is at least possible to achieve a collaborative resolution, and that mediation is not misused. Furthermore, some suggest that to the extent that courts order participation and parties devote resources to it, society should protect the integrity of the process.” Menkel-Meadow, supra, at 301; see also Lande, supra, 50 UCLA L.Rev. at 74 (pointing out the views that courts want to ensure that the time and money spent for mediation are well spent and that stakeholders also want to ensure maintenance of the integrity of the court-affiliated mediation programs).

{5} However, there exist a number of concerns about and policies disfavoring a good faith participation requirement. These are addressed in the articles listed earlier in this opinion. There are problems defining “good faith” and wrestling with subjectivity, and with commensurate concerns about adequate notice to the parties for what they can be sanctioned. In addition, requiring facilitators to report bad faith can compromise their facilitative and neutral roles and can produce unwanted incursion into confidentiality. Also, the sanction possibility gives one party a weapon against the other, thus encouraging, if not increasing adversarial behavior. Furthermore, the enforcement of sanctions creates satellite litigation resulting in more time and costs, something that mediation is meant to reduce. Also prominent is an overriding notion of a party’s right to access to the court to have a claim resolved by a jury, together with the party’s right to control how the case is presented, with no limitations by coercion or threat of sanction. Finally, because mediations are not on the record, a party and the facilitator may disagree on what occurred. A hearing to take evidence on what occurred not only invades confidentiality, it is likely to produce conflicting views of what occurred in the mediation. This conflict would raise fact and credibility issues which, in turn, would raise questions whether the facilitator, whose view of what occurred in mediation would be in play, can in fairness sit in judgment.

{6} In the present case, neither the local rule nor the order discusses whether the settlement conference was to be conducted in a manner consistent with norms and the principles of mediation, which require neutrality and impartiality of mediators, strict confidentiality, voluntary settlements, and self-determination (that is, the right of the parties to control whether an offer is made and the amount of any offer). See Izumi, supra, at 80-87; Alfini, supra, at 298-99, 312 (questioning, in the author’s review of Pitman v. Brinker Int’l, 216 F.R.D. 481 (D.Ariz. 2003), whether different standards should apply to a judicial settlement conference conducted by a federal magistrate, on the one hand, and a mediation, on the other).

{7} Our analysis and determination in this case is driven, however, by the particular scheme into which the parties chose to enter. In this ease, all parties agreed voluntarily to a settlement conference; consequently the district court issued an order providing for such a conference, thus bringing the proceeding within the sphere of the court’s local rule on good faith negotiations.

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Carlsbad Hotel Associates, L.L.C. v. Patterson-UTI Drilling Co.
2009 NMCA 005 (New Mexico Court of Appeals, 2008)

Cite This Page — Counsel Stack

Bluebook (online)
2009 NMCA 005, 199 P.3d 288, 145 N.M. 385, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carlsbad-hotel-associates-llc-v-patterson-uti-drilling-co-nmctapp-2008.