Failure to Engage in Mandatory Contractual Mediation Bars Fee Claim

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In Cullen v. Corwin, 2012 DJDAR 7533 (2012), the Third District Court of Appeal decided a unique attorney fee case arising under a standard form real estate purchase contract. The court concluded that there was a procedural bar to the prevailing party’s fee claim and rejected the claim for attorney fees. The party refused to engage in the required mediation prior to litigating the case. The court of appeal concluded that the failure to comply with the mandatory condition barred the recovery of fees.

The plaintiffs purchased a vacation home from the defendants. The plaintiffs alleged that the defendants failed to disclose structural defects in the home. The language of the standard form purchase agreement stated that a party who “commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after the making of a request shall not be entitled to recover attorney fees.”

The plaintiffs made two requests for mediation after they filed their lawsuit. Despite the overtures, the defendants refused to mediate the dispute. The defendants then moved for summary judgment. The court granted the summary judgment motion and awarded the defendants $16,500 in fees. The plaintiffs appealed, contending that the defendants’ refusal to participate in the required mediation constituted a procedural bar to any fee recovery.

The court of appeal reversed the fee award. The court noted that the contractual requirement for post‑lawsuit mediation was a bar to the fee claim. The court referenced the strong public policy toward mediation and that the clause in the standard form agreement was placed into the standard form contract to minimize the number of disputes requiring institution of formal litigation.

The court concluded that the defendants were not entitled to attorney fees because they refused to participate in alternative dispute resolution.

 

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, Civil Remedies Updates, General Business Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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