MANDATORY MEDIATION CLAUSE UPHELD IN REAL ESTATE AGREMENT
The court sustained defendants’ preliminary objection and ordered the parties to participate in mandatory mediation, as required by a real estate agreement.
Plaintiffs commenced this action in October 2019 with respect to a real estate transaction. Defendants filed preliminary objection and plaintiffs responded by filing an amended complaint. Defendants proceeded to raise preliminary objections to the amended complaint. Before the hearing on that matter took place, plaintiffs filed a second amended complaint which included claims for breach of contract, unfair trade practices, violations of consumer protection law, unjust enrichment, fraudulent inducement and negligent misrepresentation.
In their preliminary objections, defendants argued that plaintiffs failed to attach the signed sale agreement to their pleading. That document contained a mediation provision, and defendants argued that the matter had to be referred to mediation. Defendants also raise other preliminary objections regarding the request for attorney fees and the degree of specificity contained in plaintiffs’ claims for relief.
Plaintiffs responded that defendants waived the right to enforce the mediation provision, because they failed to raise the objection to the initial complaint and the first amended complaint. Also, plaintiffs noted that defendants had already engaged in the discovery process by sending a notice of deposition for one individual, which amounted to a waiver of the right to proceed. According to plaintiffs, defendants had accepted the judicial process rather than enforcing the mediation clause.
The court rejected plaintiffs’ rationale for avoiding the mandatory meditation provision. Plaintiff did not attach the sale agreement until they filed their second amended complaint. One of the defendants was the executor of an estate, and the court noted that this person might not have been aware of the mediation provision. The other defendants were the brothers of one of the parties to the sale agreement, so they would likely not have been aware of the existence of a clause requiring mediation. Once plaintiffs filed their amended pleading with the sale agreement attached, defendants raised the objection at their first opportunity to do so and used the proper procedure by filing a preliminary objection.
The fact that defendants began the discovery process by sending a notice of deposition did not rise to the level of engagement that constituted acceptance of the judicial process. The court assumed that defendants gave the notice in the event that they were unsuccessful in their preliminary objections.
Plaintiffs’ assertion that defendants waived their right to enforce the meditation provision was without merit. The court sustained the preliminary objection and ordered the parties to submit their claims to mediation, and it dismissed the remainder of the complaint in its entirely without prejudice.
RE: Digest of Recent Opinions, Pennsylvania Law Weekly, 43 PLW 979, Tuesday, October 27 2020, Fenstamaker v. Clark, PICS Case No. 20-1085 (C.P. Lycoming, September 22, 2020)
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