Magistrate Judge Denies Motion for Contempt and Sanctions

In an unpublished decision last week, Magistrate Judge Michael Urbanski (W.D. Va.) denied the plaintiff’s motion to hold the defendant in contempt and for sanctions because of the defendants’ insurer’s failure to appear in person for mediation.

In Hinkle Oil & Gas, Inc. v. Bowles Rice McDavid Graff & Love, LLP, the underlying lawsuit revolved around an oil company’s claims that “it was prevented from acquiring several oil and gas wells in a bankruptcy proceeding because of certain actions taken by defendant law firm Bowles Rice, and certain of its individual partners, in conflict with the defendants’ obligation to zealously represent Hinkle Oil’s interests.” The plaintiffs claimed that it incurred significant expense by having counsel and its principals travel to Roanoke for the mediation, and that the defendants’ insurer violated a Settlement Conference Order by not having a representative physically present at the mediation with authority to settle.

Five days before the scheduled mediation, the district court (Judge Wilson), in a published opinion, granted summary judgment for the defendants because of the plaintiff’s inability to prove causation. Judge Urbanski, however, denied a request of the parties suggesting that the mediation be cancelled. According to the judge, “[t]he undersigned denied the request to cancel the mediation, believing that each side continued to have significant reasons to settle this case.”

The court briefly concluded that “[i]t is plain that ALPS, as insurer for Bowles Rice, did not meet its obligations under paragraphs 2, 3 and 4 of the Settlement Conference Order, as no ALPS representative with authority was present at the mediation.” Thus, the court analyzed what penalty was appropriate:

This is an unusual case in which summary judgment had been granted for
defendant immediately prior to the mediation. Despite this significant event in
the case, plaintiff's settlement position was such that no settlement was going
to be possible at mediation, regardless of whether the ALPS representative was
present or not. As such, because of the posture of the case and because the
parties remained light years apart in settlement, in the judgment of the
undersigned, it simply did not matter that the ALPS representative was not
physically present. There was, in short, no harm to Hinkle Oil by not having
the ALPS representative here in person. Under these most unusual circumstances,
no sanctions are warranted in this case.