Fee Provision Without Mediation Requirement In Later Jointly Drafted Cooperation Agreement Governed.
In Emery v. Marchick, Case No. B307999 (2d Dist., Div. 1 May 23, 2022) (unpublished), defendant used a California Association of Realtors’ Residential Purchase Agreement form in her offer to purchase a residential property from plaintiff. The form purchase agreement contained an attorney fee provision requiring that before filing a lawsuit, the parties attempt to resolve through mediation disputes arising out of the agreement or resulting transactions. Pursuant to an accepted requirement in plaintiff’s counter offer, the parties entered into a jointly drafted Cooperation Agreement regarding a lot line adjustment. The Cooperation Agreement also contained an attorney fee provision, but it did not require mediation of disputes. Well, a dispute arose and plaintiff filed a complaint claiming defendant breached the Cooperation Agreement – with judgment entered in plaintiff’s favor in the amount of $285,000 plus another $196,231.50, out of the $204,386.50 requested, in prevailing party attorney fees.
On appeal, defendant argued that plaintiff was not entitled to an award of attorney fees because she failed to attempt to mediate before filing her complaint. The 2/1 DCA disagreed with defendant’s contention and affirmed. For starters, the attorney fee provision in the Cooperation Agreement governed because the parties entered into it after the form purchase agreement and the fee provision the parties included in the Cooperation Agreement superseded. (Civ. Code, § 1585; Frangipani v. Boecker, 64 Cal.App.4th 860, 863 (1998).) Additionally, pursuant to Civ. Code, § 1651, where there is inconsistency in terms, those negotiated by the parties prevail over form terms which are not separately negotiated. Finally, pursuant to Civ. Code, § 1641, courts interpret contracts to give effect to every part and avoid interpretations that render part of a contract as surplusage. (Rice v. Downs, 248 Cal.App.4th 175, 186 (2016).) Interpreting that the form purchase agreement’s fee provision controlled would reduce the latter Cooperation Agreement’s fee provision to surplusage – something the appellate panel declined to do.
Comments