Weekly Law Resume - June 14, 2012: Real Estate Sales Contracts – Mediation Provision as a Bar To Recovery of Attorneys’ Fees

by Low, Ball & Lynch

Joe Cullen, et al. v. Paul Corwin, et al.
Court of Appeal, Third District (June 7, 2012)

More and more, real estate form purchase agreements have provisions which condition a prevailing party’s right to attorneys’ fees to a requirement that they mediate (or if they are the defendant, that they not refuse a mediation request). This case considered whether a defendant seller could recover attorneys’ fees after refusing a mediation request first made after the lawsuit was filed.

Plaintiffs Joe and Marieanne Cullen purchased a vacation home from defendants Paul and Geraldine Corwin in 2002. There were some cracks in the decking on the garage roof, and a home inspector noted unspecified water damage in the ceiling. The purchase agreement was a standard real estate form, which provided that the prevailing party in any dispute was entitled to recover legal fees. However, this right was subject to a condition precedent that read “If, for any dispute…to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after [the making of] a request…, then that party shall not be entitled” to recover attorney’s fees.

In March of 2005 the Cullens noted water pooling on the roof, which leaked “a lot.” They retained an attorney and later obtained an expert report regarding the cause of the roof leaks, and completed repairs in 2007. In September of 2009, they filed suit against the Corwins, alleging that they acted either negligently or fraudulently in failing to disclose the defective condition of the garage roof at the time of sale. Although neither side apparently discussed mediation prior to the filing of the suit by the Cullens, the Cullens’ attorney requested twice in 2010 that the Corwins participate in mediation, which the Corwins refused. Their attorney subsequently indicated that this was because they were seeking to conduct discovery to allow them to bring a summary judgment motion, and that it would be a “waste of time” to mediate before the motion, but that they planned to mediate if the motion was unsuccessful.

The Corwins moved for summary judgment based on the statute of limitations. That motion was granted, and judgment was entered in their favor. Subsequently, the Corwins’ motion for attorneys’ fees pursuant to the provision in the purchase agreement was granted, and they were awarded $16,500 in fees. The Cullens appealed the granting of attorneys’ fees based on the condition precedent that a party participate in or not refuse a request for mediation.

The Court of Appeal reversed, holding that the Corwins were not entitled to recover attorneys’ fees. The Court was not persuaded by the Corwins’ argument that because the Cullens filed suit before they demanded mediation, the Corwins did not have to agree to mediate when the request was made after suit was filed. The Court said the language in the provision was clear that fees could not be sought by (1) “one who commences an action without first attempting mediation or (2) one who refuses to mediate after [the making of] a request.” Nothing in the second portion of that requirement indicated that a mediation request could be refused on the basis that it was first made after the action commenced. Hence, by refusing to mediate when plaintiffs made their requests, the Corwins waived their right to recover attorneys’ fees if they prevailed.

The Corwins also argued that they were entitled to obtain their discovery responses and bring their motion for summary judgment prior to mediation, so that it would be a “meaningful” mediation if it took place once the parties knew where they stood in terms of the summary judgment. The Court noted that as a defensive strategy there was nothing wrong with the Corwins’ denial of a mediation request, but that this did not excuse the contractual language that they assent to mediation in order to be able to recover their attorneys’ fees. According to the Court, the language in the mediation provision “is designed to encourage mediation at the earliest possible time.” In addition, there is a strong public policy in promoting mediation “as a favorable alternative to judicial proceedings.”

In light of the language of the provision, as well as the Corwins’ lack of assent to the requests for mediation, the Court held that they were not entitled to seek attorneys’ fees despite being the prevailing party on the motion for summary judgment. As such, the Court reversed the order awarding fees to the Corwins.


In standard sales contracts where the prevailing party attorneys’ fees provision is tied to mediation, unless the party suing seeks mediation before suing, they will not be able to collect their attorneys’ fees if they win. Conversely, a defendant being sued under such a contract will not be able to collect fees if a request for mediation is made, either before or after litigation is filed, and refused by the defendant. It makes sense to agree to mediation if requested by the other side, at the very least to protect the right to attorneys’ fees.

For a copy of the complete decision see: http://www.courts.ca.gov/opinions/documents/C067861.PDF

Written by:

Low, Ball & Lynch

Low, Ball & Lynch on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.