Legal Question in Real Estate Law in California

Hmm. What is the nature of the former client's beef with you? Does he understand that he is probably liable for two commissions? What defenses do you anticipate he'll raise? I inquire because your case looks pretty strong. I assume your earning a commission was not contrary to the lender's approval.

I have seen some case law saying that the only consequence of bringing suit when the contract calls for mediation first is forfeiture of your right to attorney fees. If you're OK with the Small Claims jurisdictional limit of (usually) $7,500, the loss of attorney fees would be meaningless. On the other hand, if the contract calls for arbitration, the client may raise the ante by demanding arbitration under Code of Civil Procedure section 1281.2.

Filing a SCC action is certainly a way to get the former client's attention and remind him that you are serious about collecting. I usually recommend obtaining and reading the Nolo Press book on California Small Claims, "Everybody's Guide to Small Claims Court in California."

Mediation and arbitration are two separate types of alternative dispute resolution. You an not use both at the same time. Arbitration is basically a mini-Court trial in which the arbitrator weighs the evidence presented and the arguments made and renders a decision as to who wins and how much if they are seeking damages. Mediators try to get the parties to reach a settlement, they render no decision, and if the parties do not reach a mutually agreeable settlement it is as if the mediation never occurred. If the other side refuses to co-operate, mediation is a complete waste of time; an arbitration award can be given if the other side refuses t appear and a willful refusal to appear when legally obligated to can result in a default judgment that is binding. There is no need to subpoena the other side to a hearing, you must merely give them notice of the hearing date and time, after giving them the opportunity to take part in the process.

Your contract may limit your legal remedy to mediation or arbitration and not allow you to go to Small Claims Court. You do seem to have an open and shut case; depending upon what their knowledge of the situation was and their actions, you probably want to bring in more defendants to be sure that you can actually collect any judgment. The seller probably does not have that much money as he went through the short sale procedure. You might be able to argue that the other broker(s) and buyer knew the seller was trying to evade paying you so they are liable for intentional interference with economic advantage. Your contract might also call for attorney fees; if it does, you are entitled to collect reasonable attorney fees, even if you find an attorney who charges you a lesser hourly fee [you get to keep the difference].

The big difference between mediation and arbitration is that arbitration is binding, while mediation is not. With arbitration, you could get an award, and then have the court confirm it as a judgment. If he is refusing to submit to arbitration, you may want to read your arbitration clause carefully, and initiate. If he fails to show up for the arbitration, you simply get an arbitration award and then file a petition with the court to confirm the award. That becomes a collectible judgment.

Arguably, if you file suit, you are waiving arbitration. The ball is then in his court, as pointed out by Mr. Whipple, for him to either file a motion to compel arbitration, or go forward with the lawsuit.

It's so funny how lawyers like to "hear" themselves talk, giving you lengthy treatises on mediation and arbitration and all that, instead of answering your question. If you used the standard CAR listing agreement, and if your commission is within the $7,500.00 limit of small claims court, the mediation and arbitration provisions of the listing agreement itself exempt your case from mediation and arbitration. You can proceed directly to small claims court. If your claim is more than $7,500.00, all you need is proof that you demanded they participate in mediation and they refused. You may then demand arbitration. If they refuse that, you have to file a proceeding in Superior Court under Code of Civil Procedure section 1281.2 to compel arbitration, and if you cannot agree on an arbitrator, for the court to appoint an arbitrator under section 1281.6. If you did not use the CAR form, I'd have to look at your listing agreement before I could tell you what your options are.