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A California appellate court reversed an award of attorney fees after finding that the prevailing party failed to attempt to mediate the dispute prior to bringing an action in court. The parties' agreement precluded an award of attorney fees unless mediation was attempted.
In Cole v. R & T Properties, Inc., No. B192815, 2007 WL 806519 (Cal. Ct. App. Mar. 19, 2007), Cole purchased a home from Tieger. However, it turned out that a third party, McGhee, had title to the home as a result of a specific performance judgment against Tieger. Cole brought breach of contract and fraud actions against Tieger after McGhee evicted him from the home.
A trial court found for Cole, holding that Tieger did not have clear title to the home and awarding Cole $37,000 in attorney fees. Tieger challenged the attorney fees award, arguing that it was prohibited by the parties' agreement.
In the agreement, one provision stated that the parties agreed to mediate any dispute before proceeding to court and that failure to attempt to mediate would result in forfeiture of any future attorney fees award.
The Court reversed the award of attorney fees in Cole's favor, noting that Cole made no attempt to mediate. Although Cole argued that a letter sent from his attorney to Tieger's attorney constituted an attempt to mediate, the Court held that the letter was simply a demand for partial performance.
Additionally, the Court noted that the language of the mediation provision required mediation before a neutral third party. Therefore, exchanges between the parties' attorneys could not qualify as an attempt to mediate.
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