SCALA Newsletter-Spring & Summer 2018

Volume 2 Issue 2

Preparing to Mediate a Surety Claim


Len Levy | ADR Services Inc.

tions on each of the issues, which should be based on a determination of how the position advances each par- ty’s interests. Prioritize the issues. Which are the most important for you? The other parties? This will give you an opportunity to consider trading off (logrolling) agreement on an issue of lesser importance to you for the other side’s agreement on an issue of great- er importance to your client. Determine whether you have suffi- cient factual information from which to determine what the par- ties’ probable positions will be on the issues . If not, see if you can ob-

Those of us who have tried surety cases over the years understand many judges and attorneys do not understand the basic nature of suretyship, much less the more subtle nuances. Numerous examples exist in the appellate cases decided in California. In what should have been a rather simple case, in Schmitt v. Insurance Company of North America, a number of judges (and plain- tiff’s counsel) thought a motor vehicle bond was just another form of liability insurance. In complex construction pro- jects with issues of defective work, it is important for judges, arbitrators and mediators keep in mind the distinction


between liability insur- ance and surety bonds. This is addressed in an excellent publication of the Tort Trial & Insurance Practice Section of the American Bar Associa- tion’s CGL/Builder’s Risk Monograph (2004), which discusses, among other things, the relationship between insurance poli- cies and contract surety bonds. Surety claims on con- struction bonds are being resolved more and more

tain that information informally, or whether discovery in the context of a litigated matter is necessary – not for the purpose of trial, but for the pur- pose of negotiating a resolution. Determine all sides’ best and worst alternatives if resolution is not reached. Everything else being equal, the party with the better alter- natives will generally have more bar- gaining power.

through the mediation process. Below are a few ideas to keep in mind when preparing for a mediation involving sure- ty issues. Assuming you are convinced your mediator is sufficiently versed in the principles of suretyship, the following suggestions may be helpful to you in preparing for a mediation of surety cas- es. Ascertain the issues in conten- tion . Determine which of these is- sues do or do not require agreement in order to achieve a settlement. Determine each side’s probable posi- 1.


Continued on page 3

Inside this issue:

Preparing to Mediate a Surety Case

1, 3

SCALA Summer Social


Cybercrime: Protect Yourself


Photo Gallery

6 –7

Views from the Scaffolding | CA Small Claims Court and Bond Claims


Creative Corner


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