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Because it failed to follow an agreement to seek mediation before commencing litigation, a Florida company lost its breach of contract claim – and a half-million dollars in earnest money – against a would-be buyer.
In USA Flea Market, LLC v. EVMC Real Estate Consultants, Inc., No. 8:06-cv-0431-T-24-TBM, 2007 WL 470501 (M.D. Fla. Feb. 13, 2007), Flea Market agreed to buy real estate from EVMC. The purchase agreement required EVMC to place $500,000 earnest money in escrow. According to Flea Market, EVMC did not place the earnest money in escrow but found a title company willing to certify that it had.
The purchase agreement contained a provision requiring the parties to submit all claims to mediation before commencing litigation. EVMC moved for summary judgment on the ground that Flea Market brought its breach of contract action without making any attempt to mediate. Flea Market did not dispute that it failed to mediate, so the Court granted summary judgment in favor of EVMC.
In so ruling, the Court rejected Flea Market's argument that the mediation agreement did not apply and that an obligation to participate in court-annexed mediation somehow fulfilled the mediation requirement.
As support for its ruling, the Court explained that when parties agree to submit disputes to pre-suit ADR, "it is simply against general contract principles to permit [one party] to avoid this aspect of their contractual bargain."
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