Cal. Ap. Bars Attorney fees To Prevailing Party Who Refuses To First Mediate
Edited by Judith Stalk
Frei v. Davey, Court of Appeal of Calif, Fourth App. Dist, Div Three; 124 Cal. App. 4th 1506; 22 Cal. Rptr. 3d 429.
The standard form residential purchase agreement used in California has a recently added clause providing that a prevailing party in litigation or arbitration who refused (emphasis by the court) a request to mediate made before the commencement of such proceedings is barred from recovering attorney fees. This is the first published case in which this provision has been applied. “The new provision barring recovery of attorney fees by a prevailing party who refuses a request for mediation means what it says and will be enforced.”
The court of appeals found that the Davies were the prevailing party on appeal, but that “Any award of attorney fees to the Davies was contingent on their compliance with the mediation provision found in paragraph 17A of the [standard form purchase and sale of residential real property] agreement… If the Davies refused the Freis’ request for mediation, the Davies may not recover their attorney fees, despite the fact they were the prevailing parties in the litigation.”
The Court lamented “It is also a graphic illustration of a case that should have been mediated at an early stage when the parties were only $18,540 plus expenses apart in their settlement positions. Hundreds of thousands of dollars in attorney fees have been spent and the parties have litigated through two trials and three appeals. The lesson? There is a good reason the mediation clause was in the Agreement and the legal consequences specified by the Agreement for refusing to mediate will be enforced.” No party recovered any damages, and the sale of the house was not compelled.