XL Design Professional Claims File: Fear of Mediation Unfounded

Mediation and other forms of alternative dispute resolution (ADR) are still disfavored by some design professionals. Skeptics feel ADR often results in innocent parties having to pay a portion of the damages even though they "did nothing wrong." Such fears of mediation are usually unfounded, as the following XL Design Professional claims case shows.

The facts: Our insured, a mechanical engineer, was hired by an architect to help design a car dealership. A lawsuit was filed by the owner against the architect due to problems with a floor drainage system in the area where the dealership changed motor oil and washed cars. At issue was the fact that the drainage system did not meet government standards regarding the potential drainage of motor oil into a sanitary or storm system.

It was clear early on that the civil engineer on the project failed to get the needed approvals and permits for the drainage system. And, because the architect hired the civil, he shared the liability. Yet the civil and the architect both blamed the mechanical engineer for the problem since he designed the drainage system.

The mechanical engineer first refused to participate in any mediation regarding the matter since he was convinced that 1) he was completely innocent and 2) mediation would force him to pay part of the claim. Eventually, following a little education on the mediation process, the three design firms agreed on a plan of action: the architect would first settle the claim with the owner and then the three design firms would attend a mediation hearing to determine who was responsible for what portion of the loss.

The results: Based on the mechanical's convincing presentation, during the mediation proceeding, both the architect and civil agreed that our insured had no fault and that they would settle the loss between themselves. Our insured paid no damages and received a credit through XL Design Professional Mediation Works! program that covered 50% of his minor legal expenses.

Mediation turned out to be the best possible payoff for our insured even though he thought it would result in an innocent party "getting dinged."