Insurer’s Due Process Rights Trumps California’s Mediation Confidentiality Statute
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A federal trial court concluded that California’s strict mediation confidentiality provisions were not applicable in a bad faith claim by homeowners against their insurer, as the insurer needed to be able to show that its failure to settle the case was the result of the homeowners’ excessive demands in mediation. The court relied on the seminal California Supreme Court case, Cassel v. Superior Court, in which due process is recognized as a limit on the mediation confidentiality statute, even though the Supreme Court was not concerned about shielding legal malpractice when only civil damages were at issue. Here, however, the federal court concluded that the insurer’s due process right to defend itself outweighed confidentiality, where the homeowners initially demanded $7 million in mediation for a house the court found to be worth about $1 million. While the parties also had signed a confidentiality agreement covering the mediation, it was never presented to the court and thus could not exclude testimony about the mediation. The decision is being appealed to the Ninth Circuit.
Read original articleTags: California Supreme Court, mediation confidentiality, Supreme Court
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