Why I Like Mediation for Encroachment Claims under Title Insurance Policies
Especially for Thorny Rose Bush Claims
Imagine an encroachment claim made to a title company. The subject of the claim is a rose bush sitting at or over or near, depending on who you asked, the lot line between adjoining backyards. The two backyards abut onto each other with no alley in between. The two surveys produced for the owners’ original purchases presume two opposite conclusions. If you look at the land itself, there is no telling in whose yard the rose bush grows. Who planted and took care of the bush over the years is a thorny matter of contention. Neither neighbor wants to concede any ground, pedal, stem or thorn. The neighbors choose to engage in litigation with each other and their title insurers. They’re insured by the same company and the title company, as they are required to do under the policy, defends both, choosing a separate outside counsel to represent each party. There’s an outcome, eventually, but neither party is happy. Even for the winner, the blush is off the rose.
Litigation cost isn’t a factor for the parties in the above example because the title company foots the bill as required by the policy. However, the parties go through a lengthy, labor intensive and grueling process to get to the outcome in litigation. There are many steps to litigation with long waits in between, pleadings, motions, pleading amendments, discovery, maybe more motions, pre-trial motions, pre-trial conference, jury selection, trial, post-trial motions, appeal. It can take years to end the dispute. When you’re talking about a dispute between neighbors, that’s years of bad will with the family next door.
Contrast that with what really brings people to the end of an encroachment claim, the facts. What do the surveyors say? Did metes and bounds not tie to reliable monuments? Was there a mistake in a subdivision? Was there too little land in the first place or were lots mistakenly moved one way or the other during staking? Are the parties mistaken in their interpretation of subdivisions or surveys? Has there been an adverse taking over 20 or more years? These questions are arguably timelier and more decisively answered by everyone meeting with parties in one super-mediation session than in drawn out proceedings where questioning and cross-exam are the only means of communication. When I administered claims, I always wondered if the judge understood surveying and title insurance.
Of course, lack of subpoena power can make it harder to get the experts involved, particularly parties who could be at fault and required to compensate the parties. However, fact witnesses such as the survey involved in the original deal could be persuaded knowing that they can be subpoenaed it court if they don’t attend the mediation. Non-involved experts are paid for giving their opinions in litigation all the time and could be paid to attend a mediation that might even be more convenient for them in timing and location.
More and more, title companies are throwing claims into arbitration under provisions of the policy. While arbitration can reduce the time and expense of claims administration, for each type of claim, you need an arbitrator who understands the title and survey issues which leaves a very narrow field of arbitrators available. Also, in arbitration, the parties don’t feel like their voice has been heard any more then in court, and often less. For that reason, arbitration is getting a bad name among consumers. This is causing more attorneys to demand an endorsement deleting the mandatory arbitration clause from the policy.
In my title company claims experience, we often settled encroachment claims by conducting a meeting among the parties and experts. Sometimes, however, the case would not settle because the parties were still emotionally miles apart and didn’t trust anyone in the case not on their side. If a trained peacemaker mediator had attended these meetings, I believe many more could have settled out of court and at far less expense for the title company and with less grief for the parties. Since the role of the mediator is to facilitate discussion and settlement and not to decide the outcome of the case like an arbitrator, a mediator with somewhat less experience could run the mediation. (Although I’d argue they should have some experience with survey and title insurance.) From the title company point of view, this is good customer service because they can settle the claim timely, help the parties understand the issues and feel better about the outcome, and the parties may have a chance of successfully living as neighbors in the future. Mediation can help the title company come out of a claim smelling like a rose.