The Court Distinguishes Mandatory Mediation Language Of Frei v. Davey.
We sometimes supplement our diet of published cases with unpublished cases -- especially for mediation decisions, which are few in supply compared to arbitration decisions. Ocean Tomo, LLC v. PatentRatings, LLC v. Patent Ratings, LLC, G055429 (consol. with G056063, G056829) (4/3 6/13/19) (Fybel, Aronson, Thompson) (unpublished) addresses a discrete mediation issue involving attorney's fees. Hence, we post about it.
Ocean Tomo was a member and 25% owner of PatentRatings, LLC, and Jonathan Barney was the manager and 63.83 % owner of PatentRatings. A business dispute erupted when Ocean Tomo failed to meet a capital call and Barney deposited money in PatentRatings' bank account as a loan to cover Ocean Tomo's portion of the capital call. Ocean Tomo sued Barney and PatentRatings after the parties could not resolve their disputes through mediation, and Barney cross-complained against Ocean Tomo. Following a bench trial, the court found in favor of Barney and PatentRatings and against Ocean Tomo on all claims and cross-claims. The trial court also granted motions for contractual attorneys fees in favor of Barney and Ocean Tomo.
Ocean Tomo argued Barney was not entitled to attorney's fees because he did not mediate before he filed his cross-claims. However, Justice Fybel distinguished the Operating Agreement language in the case from the mandatory mediation language of Frei v. Davey, 124 Cal.App.4th 1506 (2004). In Ocean Tomo, the parties "pledge[d] to attempt to resolve any dispute amicably without the necessity of litigation." In Frei v. Davey, if a party commenced an action without first attempting to mediate, or after refusing to mediate, "then that party shall not be entitled to recover attorney's fees, even if they would otherwise be available to that party in any such action." That's not the same as in Frei v. Davey, and Justice Fybel, who penned that opinion, as well as Ocean Tomo, is the authority on the subject.
Furthermore, Barney did participate in mediation before Ocean Tomo filed its lawsuit, and the Court of Appeal held "[t]he trial court did not err in finding that Barney was not required to attempt additional alternative dispute resolution before filing his cross-claims."
BONUS: Wikipedia describes Ocean Tomo as, "an intellectual property merchant bank that provides financial products and services, including expert testimony, valuation, research, ratings, investments, risk management, and transactions." Ocean Tomo invested in PatentRatings, a company created to commercialize a product created by Barney: "Barney created a software product to statistically analyze, rate, and value patents. . . " Jonathan Barney's spouse, Colleen Barney, worked as an attorney with me at a previous law firm. Congratulations, Jonathan.
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