Gibson Case Advantages To Mediate
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:
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. Residential Purchase Agreement.
The sellers made a counter offer requiring the buyer, upon acceptance, to provide written confirmation from his lender that it would lend on the property, which was a large acreage with a modular home.
The buyer accepted the counter offer, but never provided the confirmation letter and his deposit check had insufficient funds. The transaction never closed.W hen the sellers then accepted another buyer's offer, the first buyer sued for breach of contract and specific performance.
The sellers filed a cross-complaint for wrongful interference with an economic relationship, but later dismissed their cross-complaint. Before filing the cross-complaint, the sellers' attorney allegedly telephoned to request mediation, but the buyer denied this happened.
The parties went to trial on the buyer's specific performance claim and the sellers won. As the prevailing party, the sellers were awarded $94,974 in attorney fees and costs for defending the specific performance 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 the buyer'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 fees by the party who commences the action, not the party defending against the action.
Finally, the court awarded the sellers their attorney fees incurred for the appeal.
Jim W Hildreth- Real Estate Mediator