Requirement to Mediate, Found in One Document, Applies to Integrated Transaction With Several Documents
The teaching of Darton v. Park Vasona Gas, Inc., Case No. H037499 (6th Dist. Feb. 14, 2013) (Premo, Acting. P.J., author 3:0) (unpublished) is straightforward: if mediating is a pre-condition to collect attorney fees, one should seek to mediate before filing suit; however, if mediation is not a pre-condition, then the prevailing party can collect fees, and that includes a party who successfully defends.
Plaintiff sold a gas station, sued defendants alleging non-payment, and prevailed. A defendant cross-complained against plaintiff, and lost. The integrated purchase agreement, which included a note, guaranty, covenant not to compete, and lease, also included an attorney’s fees provision.
Plaintiff received an award of $128K from the trial court, because plaintiff prevailed. Defendant appealed. “In plain language, on its face,” explained the Court of Appeal, “the purchase agreement authorizes an award of attorney fees to the prevailing party in a dispute between the buyer and seller, but bars an award to a party who commences an action without first attempting to resolve the dispute through mediation.” Defendant argued because the mediation requirement was part of an integrated agreement, plaintiff was required to seek mediation, regardless of which specific document contained the mediation provision. The Court of Appeal agreed with defendant, and reversed the fees award arising from plaintiff’s victory on its complaint.
However, plaintiff also prevailed on the cross-complaint – and plaintiff did not have to initiate mediation to defend itself. Johnson v. Siegel, 84 Cal.App.4th 1087, 1101 (2000) (affirming fee award to defendant under mediation clause where plaintiff filed complaint without first seeking to mediate). That victory did entitle plaintiff (in its capacity as a cross-defendant) to receive attorney’s fees.