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Mediation was condition precedent for contract suit.

Byline: Virginia Lawyers Weekly

Where the parties' real estate purchase agreement provided that disputes must first be mediated, and that traditional litigation could commence if mediation was unsuccessful, plaintiffs' suit on the contract must be dismissed because mediation never took place.

This is so even though defendants failed to respond to plaintiffs' two requests for mediation. Defendants' request for sanctions, however, will be denied.

Overview

Under the parties' contract, plaintiffs, James and Robin Bates, were to sell their home to defendants, Jennifer and Jacob Purdon. "The Purdons allegedly breached the Agreement by failing to complete the purchase."

The contract contained a mediation clause, which provided that before any suit, the parties would submit any suit or claim to mediation. A related document provided that if the parties could not reach an agreement through mediation, "traditional litigation may be pursued after the mediation process has been exhausted."

Counsel for the Bateses sent letters requesting mediation to the Purdon's then-counsel and the Purdon's agents on Dec. 6, 2017, and Feb. 23, 2018, but no one responded to either request. The Bateses filed their complaint on June 6, 2018. The Purdons alleged as an affirmative defense that mediation was a condition precedent to filing a suit, and that the condition had not been fulfilled.

Parties'positions

The Purdons have filed a plea in bar seeking dismissal on failure of the condition precedent. They also assert that "they did not waive their right to mediation because they did not intentionally relinquish that right, asserting that "'ever since their first appearance in this litigation, [they] have consistently requested both benefit and the burden of their bargain and have sought to have this matter mediated.' They contend that, in response, the Bateses 'ignored the mediation provision and continued litigating the action for months.'"

The Bateses agree that mediation is a condition precedent but assert that the Purdons, by not responding to two requests, waived mediation, which allowed the Bateses to file suit.

Issueandresolution

"The issue before the Court is whether the Purdons actually waived their contractual right to mediate and, if not, what remedy is appropriate."

The Bateses' requests for mediation complied with the agreement's terms. The Purdons say they were never told of the requests "but that is a matter between the Purdons and their counsel and no fault of the Bateses." But it is "undisputed" that the parties never mediated their dispute.

The court disagrees with the Bateses that by not responding to mediation requests, the Purdons waived their right to mediation. To find that a waiver occurred, there must be "an intentional relinquishment of a known right," which includes both "knowledge of the facts basic to the exercise of the right" and "the intent to relinquish that right." These elements must be proved by "clear, precise and unequivocal evidence."

The Bateses have presented no evidence of the Purdon's express or intentional waiver of the contractual right to mediate. Instead, the Bateses argued that waiver can be implied by the Purdons' failure to respond to mediation requests. In the analogous case of Tatoo Art, Inc. v. TAT Int'l, LLC, 711 F. Supp. 2d 645 (E.D. Va. 2010), the court, interpreting Virginia law, rejected a similar argument.

The Purdons seek dismissal with prejudice but the court finds that the Purdons will not be unfairly prejudiced by a dismissal without prejudice. The Bateses complied with the mediation provision by requesting it before commencing litigation. "The Purdons are the ones who failed to respond to the Bateses' pre-litigation mediation requests. The Court therefore finds it appropriate to allow the Bateses to bring this matter back to the Court once the condition precedent is satisfied, if necessary."

The Purdon's request for $3,000 in sanctions is denied. The Bateses' complaint and reliance on an implied waiver argument "were sufficiently 'well grounded in fact and warranted by existing law' and 'not interposed for any improper purpose,' as required by section 8.01-271.1."

The plea in bar is sustained and the complaint is dismissed without prejudice. The request for sanctions is denied.

Bates, et al. v. Purdon, et al. Case No. CL18-4589, Jan. 25, 2019; Norfolk Cir. Ct. (Lannetti). Jonathan M. Young, Jeff S. Howell, James M. Pickrell for the parties. VLW 019-8-009, 10 pp.

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Title Annotation:real estate purchase agreement, Bates v. Purdon, Norfolk Circuit Court, Virginia
Publication:Virginia Lawyers Weekly
Date:Feb 10, 2019
Words:714
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