Unique Procedural Posture Of The Case Drove The End Result.
Under our heading “Mediation,” we have posted on numerous cases which hold that parties must strictly comply with a mediation condition precedent under a real estate purchase agreement in order to be qualified for an attorney’s fees award in subsequent litigation/arbitration proceedings. (See, e.g., Frei v. Davey, 124 Cal.App.4th 1506, 1516 (2004).) However, based on a unique procedural posture of the entire litigation, a cross-complainant still gained fees even though not complying with a mediation condition precedent in Lamar Central Outdoor, LLC v. Hwang, Case No. B266070 (2d Dist., Div. 5 Sept. 9, 2016) (unpublished).
In this one, a billboard company sued two defendants, landowners where the billboard was located (first defendant being original landowner and second defendant being second landowner by a sale from first defendant), after two billboards were demolished by the second landowner. Second landowner then cross-complained against first landowner defendant based on breach of contract, unjust enrichment, conversion, and implied equitable indemnity. Billboard company eventually won, but second landowner won against first landowner/defendant/cross-defendant on the cross-complaint, garnering an attorney’s fees award of $65,535 based on the real estate purchase agreement.
On appeal, losing first landowner challenged the fee award to second landowner primarily on the basis that first landowner did not satisfy the mediation condition precedent under the real estate purchase agreement before filing the cross-complaint so that no fees were deserving.
The 2/5 DCA disagreed, but based on the unique procedural posture of the matter. Although acknowledging that courts have strictly construed the mediation condition precedent in numerous cases, it found that this case presented different concerns. Here, the two landowner defendants did not have a straight dispute between each other, but were dragged into a dispute by “stranger” billboard company. Because the law actually mandates that a defendant file a compulsory or permissive cross-complaint for judicial efficiency purposes, the purposes of the mediation condition precedent—to have ADR completed between the primary dispute combatants before a commencement of suit/arbitration—was not served. After all, even if the landowners had participated in mediation on the cross-complaint, one could hardly say that the global dispute with billboard company would have been resolved. The peculiar circumstances of this case certainly drove the result to affirm the fee award despite noncompliance with the mediation condition precedent.