California vs. Florida: Real Estate Contracts

In response to the California Third District Court of Appeals decision for a unique attorney fee case under a standard form real estate purchase contract:

Adversaries should mediate at the first opportunity to get the full advantage of the law under California Residential Real Estate Contracts.

The recent case of Cullen v. Corwin, 2012 DJDAR 7533 (2012), the California Third District Court of Appeal, Calaveras, Case No. CO67861 held that the prevailing party was not entitled to attorney's fees because the prevailing party refused requests to mediate.  The obligation to mediate was a condition precedent to recovering fees in litigation, pursuant to the Contract for sale of Real Property.

The actual Contract language stated, "If, for any dispute...to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after [the making of] a request..., then that party shall not be entitled to recover attorney fees..." (Lange v. Schilling (2008)163 Cal. App.4th 1412, 1416-1417, as cited in Cullen v. Corwin.

The Cullen court noted that as a matter of strategy, a party may decline mediation to pursue discovery, as happened in this case.  However, that strategy will block the recovery of attorney fees for the declining party.

Once again, the courts, in California as in Florida, are recognizing the value of the use and especially the early use, of mediation pursuant to contractual language.  The defendant in Cullen sought to be "excused" from the mediation condition as they needed discovery to make the mediation "meaningful."  The court pointed out that, “the costly and time-consuming procedures connected with discovery are thus not a necessary adjunct to mediation proceedings that a party can demand before participating."  Cullen, supra.

Florida's "Residential Contract for Sale and Purchase" which has been approved by the Florida Realtors and the Florida Bar, contains a provision different from the California contract.  The Florida Contract provides in paragraph 16 (b) that the "Buyer and Seller shall attempt to settle Disputes in an amicable manner through mediation pursuant to Florida Rules for Certified and Court-Appointed Mediators and Chapter 44, F.S., as amended (the 'Mediation Rules')."  Thus, Florida requires mediation before litigation can be filed.  Whereas in California, the contract at issue allowed the parties to go to litigation without mediation, but at the cost of losing the right to recover attorney fees.

As compared to the California contract in this case, Florida is the stronger promoter of early mediation.  The citizens of Florida will benefit from Florida's emphasis on early mediation.

http://www.jdsupra.com/post/documentViewer.aspx?fid=4958015c-73ba-437c-9205-1b4531661403




Beth Mills is a mediator at the firm of Upchurch, Watson, White and Max. For more information visit Beth Mills's biography. 



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