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Court of Appeal:
Proviso Requiring Mediation Before Suing Didn’t Apply Where Cross-Complaint Was Mandatory
By a MetNews Staff Writer
The Court of Appeal for this district yesterday determined that where a contract provided for attorney fees to the prevailing party in any litigation based on an alleged breach of the agreement, but conditioning such an award on the winner having sought mediation before suing, the provision did not apply, under the circumstances, although a cross complaint was filed without first attempting to work out differences.
Presiding Justice Arthur Gilbert authored the unpublished opinion which finds inapplicable this clause in a contract:
“If, for any dispute or claim to which this paragraph applies, any Party (i) commences an action without first attempting to resolve the matter through mediation, or (ii) before commencement of an action, refuses to mediate after a request has been made, then that Party shall not be entitled to recover attorney fees, even if they would otherwise be available to that Party in any such action.”
Apartment Building Sale
Triad Properties is the appellant. Ventura Superior Court Judge Benjamin F. Coates denied it an award of attorney fees despite its success in pursuing a cross action against Dario Pini in connection with its sale to Triad of an apartment building in the City of Ventura.
Escrow closed in April 2019. While escrow was pending, several tenants sued Pini over the condition of the premises.
Pini cross complained against Triad for indemnity, contending it had “contractually agreed to cure the violations.” Triad then cross complained against Pini, alleging he did not disclose all material facts, including the lawsuit brought by the tenants while escrow was still open. In the end, Pini settled with the tenants and dropped his cross complaint against Triad, and paid Triad $200,000 to settle its cross complaint against him.
Gilbert’s Opinion
Gilbert said in his opinion reversing the order denying attorney fees to Triad that Triad had no duty to attempt to mediate its dispute with Pini because it was obliged to sue.
“Triad cross-complained alleging that Pini materially misrepresented the condition of the property. Both cross- complaints involve the same contract as it relates to the condition of the premises. The cross-complaints are intertwined. In fact, Triad’s cross-complaint was compulsory,” the presiding justice wrote.
He pointed to Code of Civil Procedure §426.30(a) which provides:
“Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.
Gilbert continued:
“Triad did not ask to join the tenants’ lawsuit against Pini. That action had nothing to do with the contract. The tenants just chose to file their action for damages while escrow was pending for the purchase agreement. Pini commenced his action and brought Triad in. Triad had no choice but to respond.”
The case is Triad Properties v. Pini, B333958.
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