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Harmonizing conflicts: Using mediation to resolve residential solar disputes

Making customers happy is one of the many joys of the solar and storage business. But consumer, business or other conflicts do occasionally arise, and then the goal is to quickly reach a solution that is fair to both sides, keeping time, hassle and legal costs to a minimum.

This is one of many reasons that mediation, a form of alternative dispute resolution (ADR), is now widely used to avoid costly and protracted arbitration or court proceedings. It can be agreed to by contract to cover any future dispute with a customer or other party. Or it can be employed to resolve a particular conflict. Even if one party goes directly to court, mediation will often be mandated by a judge prior to trial. In short, as the solar industry continues to expand, there will be more circumstances where mediation comes into play. Fortunately, it is an excellent option to resolve many issues that installers, homeowners, neighborhood associations, builders and governmental officials typically face with residential solar.

How does mediation work?

Typically, the parties in dispute mutually select a seasoned mediator (preferably knowledgeable in their business) charged with helping them reach a binding settlement. The mediator is provided a quick statement of the basic case, key facts and each parties’ position, with supporting documentation, and the parties meet in person or remotely (mostly in separate rooms with the mediator) to negotiate a solution. The mediator, armed with perspective from both sides, works to find common ground wherever possible to forge a solution everyone can accept.

Any settlement is reflected in a binding written agreement reached that same day or shortly thereafter. Various organizations (such as AB Conflict Resolution Services) serve as ADR centers providing the tools and mediation choices necessary for the parties to quickly select, schedule and conduct the mediation.

Most solar contractors have likely tried to reach a direct agreement with the customer or other third party before delving into ADR. But things can escalate, and communication can become difficult — or the parties’ expectations are just too different. A seasoned mediator, especially one who knows both the law and the solar business, can serve as a sounding board, a voice of neutrality and reason, and an authority on the governing law that would drive the outcome of any contested case. A mediator is also trained to craft creative solutions that both sides view as fair. While mediation is informal in nature — and no mediator can force a settlement — a vast majority of disputed cases settle eventually. Mediation provides a focused, direct forum for parties to air their grievances, get a reality check on claims, and put behind them what is typically an unwelcome, stressful and lingering dispute.

When should solar companies use mediation?

There are numerous examples of where mediation can come into play to resolve residential solar disputes. Issues may arise regarding the timing of the installation, especially in these days of slow permitting, uncertain delivery routes and choked supply chains. Or a customer may ultimately have expectations of electrical output over time that don’t match reality or regret that they didn’t install a larger system to power that new electric vehicle or electrification upgrade. In these and many other circumstances, customers can turn their frustrations on the installer, often without accounting for the terms of the sales contracts that govern these matters. Such false expectations can be fed in part by overzealous sales promises or just miscommunication on both parties’ part.

Whatever the cause of the dispute, we have all been there. Inevitably, tensions flare, emotions overtake reason, and the company (among others) is threatened with a court case, online or other consumer complaint, or other escalated proceeding. If the sales contract or lease with the customer provides for mediation as a precursor to any initiating contested proceeding (or triggering the involvement of other outside parties), a ready vehicle is available to diffuse what may have otherwise been a costly and damaging case and/or reputational hit for the company.

For solar installers and developers, committing to mediation within sales agreements or long-term leases can not only head off future disputes but can also demonstrate a long-term willingness to be there for the customer and solve issues amicably. This is particularly important for community solar projects, where satisfying a broad, diverse customer base is crucial.

Mediation clauses can be easily written into contracts, with simple language such as, “All disputes arising under or in connection with this Agreement, if not informally resolved promptly between the parties, shall be addressed through mediation, conducted by a mutually agreed upon mediator, before involving any outside third party or resorting to arbitration or litigation.” Installers can leave open the issue of who pays for the mediation, so that a customer isn’t necessarily bound to split the costs.

Mediation for general contractor issues

In another example, ADR is often a standard requirement for general construction projects, and mediation serves a vital role in situations where the solar provider is tied to a general residential home development schedule. Often the contract is with the general contractor, not the site owner, and the pressure is on the contractor to deliver on a tight timeline that is largely dependent on the work of many other unrelated trades. When a timing or cost dispute arises, the contract terms typically favor the contractor and give it broad leverage to withhold payment if it believes timing or quality standards are not met. If the parties have a quick mediation outlet to address these matters (often backed by binding arbitration), the solar company has a vehicle to get the matter resolved, continue work on the project, and smooth out relations for future projects.

Mediation for homeowner disputes and dealing with HOAs

Another area of solar where mediation can be vital is when neighbors or homeowner associations (HOAs) become tied up in solar battles. Because there is rarely an agreed route among the parties involved to pursue ADR, these matters most often end up in court, costing everyone significant time and money.

A Boulder, Colorado, neighborhood. (Photo by Dennis Schroeder / NREL)

As noted, parties can voluntarily agree to mediation, and proposing the same to address heated solar residential disputes with neighbors or HOAs can be a great contribution by the installer to try to diffuse the immediate issue and pave the way for installing solar on many more homes in that neighborhood. A recent example in suburban Denver could have benefitted from mediation. In this case, the homeowners (who I represented, and thus was not a mediator) were seeking to obtain HOA approval to put solar on their roof and to modify the existing HOA covenants to create a better review process more aligned with Colorado “right to solar” laws. Unfortunately, the homeowners were unable to find a resolution with the HOA board and the board never agreed to mediation. In these scenarios, it’s easy for potential customers to get frustrated and give up on solar altogether.

Can mediation really make a difference in these tense situations? My experience is that they can. Setting a forum where participants are forced to crystallize their position into written form, then come to the table with at least some professionalism and respect and willingness to listen, often provides the framework necessary to cut through the emotion, personal agendas and egos, and work through solutions. But this isn’t the only reason that mediation works. The mediator can often force lawyers who are unable to communicate about the realities of the governing law and prevailing facts to hear each other’s perspectives, then get the mediator’s input on these matters. This serves as a reality check on expectations that lawyers may have falsely planted in the parties’ heads about the strength of their respective positions. Moreover, the mediator will doubtlessly have a stark perspective on the costs and hassle that both sides face if the matter devolves into litigation.

A mediator can often not only clarify the law on such common issues as the HOA’s authority over the aesthetics of solar but help all parties craft rules governing the configuration, location and size of solar that are within the authority of the HOA. The mediator can also help parties look beyond their own personal agendas and political views and see the bigger picture as to the long-term trends of the neighborhood and overall national trend towards acceptance of solar in residential settings.

The solar industry is often on the outside of these important discussions while neighbors or associations bicker about all the nuances of solar design and installation. Ironically, mediation may be the best and only way for the only true expert in the room — industry representatives who do this every day — to be heard.

Final thoughts

All told, the solar industry is playing a pivotal role in our transition to renewable energy, yet it is not immune to basic consumer or business disputes. Opting for mediation for residential projects aligns with the urgent need to integrate more solar by providing a swift, efficient means to resolve conflicts. This approach not only supports the national renewable energy agenda but also underscores the industry’s commitment to sustainability and cooperation. For solar installation companies, it reinforces a proactive stance on customer service and dispute resolution, conveying a positive, forward-looking attitude to all stakeholders.

Drawing from over 40 years of experience, Roger Freeman is a nationally recognized expert in environmental, energy, and natural resources law and policy, in all its diverse forms. His breadth of experience and ability to work through complex environmental matters has led to his longstanding recognition as one of the Best Lawyers in America. Mr. Freeman also has vast expertise in resolving contractual and insurance disputes, both in the environmental field and beyond. He is adept at finding creative solutions to settling environmental and related litigation, ranging from government enforcement actions and penalty proceedings to private toxic tort actions.

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