Tag: unconscionable

Mediation Agreement Not Unconscionable

ABA American Bar Association, Section of Litigation, Alternative Dispute ResolutionThis article was also published by the American Bar Association’s Section of Litigation, Alternative Dispute Resolution Committee.

Mediation for home construction home builder suitIn The McCaffrey Group, Inc. v. Superior Court, 2014 WL 1153392 (5th Dist. Cal. 2014), the homeowners sought to sue a builder for alleged construction defects. The construction contract required a number of pre-litigation dispute resolution mechanisms, including mediation, and the parties had to split the costs of the mediation. The homeowners argued that this mediation requirement was unconscionable because the mediation costs could be quite high, and therefore act as a “tax” that had to be paid before they could have access to the courts. The homeowners noted, in this regard, that the mediator had the discretion to conduct the mediation as he or she saw fit, which could lead to a very lengthy, and therefore very expensive, process.

The court rejected the unconscionability argument, finding that it was reasonable to require the parties to split this expense. The court also noted that the homeowner had made no attempt to show that the mediation fees actually, rather than hypothetically, presented an unreasonable burden. The court, therefore, left the door open to a finding of unconscionability if, in a particular case, it could be shown that the mediation fees created an unreasonable financial burden.