It Does Not Apply to Someone Simply Defending An Action.
In our category "Mediation," we have explored many decisions entertaining the issue of when attorney's fees are properly awarded under California real estate purchase agreements with attorney's fees clauses mandating mediation as a condition precedent to fee recovery. Here is another decision on the topic, with the "bottom line" message being that you need to pay attention to the wording of the clause (contractual interpretation 101) and then see what version of the CAR contract that is at issue for purposes of resolving a dispute (contractual interpretation advanced class—given that the CAR contract forms have changed over the years).
Yelinek v. Lane, Case No. C061919 (3d Dist. Oct. 5, 2010) (unpublished) involved a defense verdict in favor of a residential house seller in a fraud/negligent misrepresentation action involving a CAR real estate agreement with a fees clause subject to a mediation condition precedent. The trial judge ultimately awarded defendant seller $49,575 in attorney's fees and $3,808.20 in costs after seller refused to mediate with buyers.
Buyer's appeal, arguing that seller's failure to mediate prevented an award of attorney's fees, was unsuccessful.
The mediation condition precedent clause prevented a fee award with respect "to any party commenc[ing] an action based on a dispute or claim to which this paragraph applies …."
The Court of Appeal determined the fee award was proper, because defendant seller never commenced any action such that he did not have to agree to mediation before being entitled to fee recovery. (Accord, Johnson v. Siegel, 84 Cal.App.4th 1087, 1101 (2000).) The Third District distinguished the leading case of Frei v. Davey, 124 Cal.App.4th 1506 (2004) on the ground that the defendants barred from fee recovery there were also cross-complainants such that they needed to satisfy the mediation requirement. In contrast, the defendant in Yelinek was only defending so that he did not need to agree to mediation for fee recovery qualification purposes.
BLOG OBSERVATION—In this area, litigants also need to be attuned to the fact that the mediation condition precedent in the CAR contract has evolved over the years. We believe that it also now applies to a defendant who refuses to accede to mediation after a plaintiff offers to do so before commencing an action. So, keep focused on the wording of the fee clause and its qualifications in order to determine if fee recovery is in "the ballpark" (aptly stated given that we are now in the midst of the Major League playoffs).
Below: Babe Ruth.
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