The following California case shows another advantage to Real Estate Mediation to the collection of attorney fee's to the prevailing party. The case clearly shows that to collect the prevailing parties attorney fees, mediation must occur first . Enclosed is the case.
Van Slyke v. Gibson: Under C.A.R.'s mediation and attorney fees clauses, the prevailing party in any action is entitled to reasonable attorney fees and costs, except when that party fails to attempt mediation or refuses to mediate before commencing an action. In this case, a potential buyer wrote an offer using the C.A.R. ResidentialPurchase Agreement. The sellers made a counter offer requiring thebuyer, upon acceptance, to provide written confirmation from hislender that it would lend on the property, which was a large acreagewith a modular home. The buyer accepted the counter offer, but neverprovided the confirmation letter and his deposit check hadinsufficient funds. The transaction never closed.When the sellers then accepted another buyer's offer, the first buyersued for breach of contract and specific performance. The sellersfiled a cross-complaint for wrongful interference with an economicrelationship, but later dismissed their cross-complaint. Beforefiling the cross-complaint, the sellers' attorney allegedlytelephoned to request mediation, but the buyer denied this happened.The parties went to trial on the buyer's specific performance claimand the sellers won. As the prevailing party, the sellers wereawarded $94,974 in attorney fees and costs for defending the specificperformance claim. The buyer appealed the $94,974 award, arguing that the sellers failed to propose mediation before filing their cross-complaint. The buyer lost on appeal.The appellate court in Van Slyke pointed out that the $94,974 attorney fees and costs were incurred for defending against thebuyer's claim, not for pursuing the sellers' cross-complaint.Moreover, the court held that, as stated in the C.A.R. agreement,seeking mediation is a prerequisite for the recovery of attorney feesby the party who commences the action, not the party defendingagainst the action. Finally, the court awarded the sellers their attorney fees incurred for the appeal.
Other California cases penalties for refusal to mediate.
Frei v Davey (2004) 124 C.A. 4th 1506
Lange v. Schilling (2008)
Cullen v. Corwin (2012)