Buyers' Failure to Respond to Sellers' Mediation Efforts Meant Mediation Clause Was Complied With.
We have surveyed many cases in the past that have strictly enforced CAR form mediation clauses, those provisions requiring that the parties attempt to engage in mediation before going to court in order to be qualified for an attorney's fees award as the prevailing side. You will find them under our website category "Mediation."
In Hovanesian v. Couveau, Case No. B209445 (2d Dist., Div. 7 Sept. 28, 2009) (unpublished), sellers prevailed over buyers (actually, assignees of earlier putative purchasers) in a real estate purchase dispute. There was a fees clause in the CAR form purchase agreement, but fees were conditioned on the parties mediating any disputes before proceeding to arbitration or court action. (CAR Form Agreement, paragraphs 17A and 22.) The lower court awarded sellers unspecified fees under these clauses.
Buyers appealed, arguing that sellers refused buyers' invitations to mediate.
Wrong, said the Court of Appeal. The actual facts showed quite the opposite to be true. On at least four occasions, sellers made suggestions of retired judge candidates for mediation in connection with a stand-alone mediation or in an arbitration coupled with a mediation before hand. The record showed no responses from buyers. Based on these exchanges (or lack thereof), the appellate panel concluded that sellers did not refuse to mediate, affirming the fee award in their favor.
BLOG UNDERVIEW—Contrast this case with Byoun v. Padilla, an unpublished decision examined in our July 16, 2009 post, where another panel of the Second District found that the defense did not refuse to cooperate in mediation efforts—with the result that fees were denied.
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