Thompson v. Miles ( 2014 )

United States Court of Appeals
For the First Circuit
Nos. 13-1120, 13-1121
MICHAEL THOMPSON,
Plaintiff, Appellant; Cross-Appellee,
v.
NANCY CLOUD; MICHAEL MILES,
Defendants, Appellees; Cross-Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Nancy Torresen, U.S. District Judge]
Before
Selya, Stahl and Lipez,
Circuit Judges.
Damon M. Seligson, with whom Dinicola, Seligson & Upton, LLP
was on brief, for appellant, cross-appellee.
Christopher R. Largay, with whom Largay Law Offices, P.A. was
on brief, for appellees, cross-appellants.
August 20, 2014
LIPEZ, Circuit Judge. After Michael Thompson purchased
a multimillion-dollar oceanfront property in Bar Harbor, Maine from
Nancy Cloud and Michael Miles, he discovered a number of problems
with the property that required significant expenditures to repair.
He brought this suit to recover damages for those repairs,
alleging, inter alia, breach of contract, fraud, and negligent
misrepresentation.1 The district court entered summary judgment
for the defendants, holding that Maine's implied warranty of
habitability did not apply under the circumstances of this case,
and that defendants had no duty of disclosure. The district court
also entered judgment on the record for the plaintiff on the
defendants' counterclaim for attorney's fees.
Plaintiff now appeals and defendants cross-appeal. We
affirm the district court's decisions on all counts, albeit
employing slightly different reasoning.
I.
In October 2008, appellant Thompson purchased a home in
Bar Harbor (called "Seascape") from appellees Miles and Cloud for
$2.9 million. Miles and Cloud originally purchased the land for
a home in 2000 and subsequently had Seascape constructed there.
The pair lived at Seascape during the summer seasons between 2002
and 2004, and then listed the property for sale. While the
1
Thompson's wife, Kathleen, originally joined in this action
but was subsequently dismissed because she was not a party to the
real estate transaction at issue.
-2-
property was listed, Miles and Cloud rented it out on a seasonal
basis, but otherwise (in their own words) "had very little to do
with Seascape."
Seascape was constructed from plans for an existing home
in South Carolina that had been prepared by Architect Stephen
Fuller. Having seen that Fuller-designed home, Miles purchased the
plans for use in the construction of Seascape. The plans did
require some modification. Although Miles listed himself on the
Seascape building permit application as "owner and general
contractor," his employee Michael Gallant, along with a number of
other subcontractors hired by Miles, actually constructed the home.
While Seascape was under construction, Miles and Cloud spent part
of the year in Florida and part at their other properties in Maine.
When in Maine, Miles would stop by to see the progress of
Seascape's construction.
After living in the house for the 2004 summer season,
Miles and Cloud listed Seascape for sale at $3.5 million. In
September 2007, Miles and Cloud signed a Seller's Property
Disclosure stating that there were no known "material defects."
Around that time, Thompson became interested in the property.
Through their respective real estate brokers, Thompson
and Miles exchanged a number of emails pertaining to potential
problems with the residence, including possible water damage. As
a result of those conversations, Miles and Cloud signed another
-3-
Seller's Property Disclosure, acknowledging that there had
previously been issues with leaking around the fireplace, the
copper canopy, and the stone work that (to their knowledge) had
been resolved. This second disclosure, like the first, stated that
it was not to be interpreted as a warranty on the property and
would not be incorporated as part of the contract between buyer and
seller.
Ultimately, in August 2008, Thompson entered into an
agreement with Miles and Cloud to purchase the property for the
reduced price of $3.1 million. Before the closing, however,
Thompson engaged Bill Barter to conduct an inspection of the home,
which identified more potential issues.2 Performing a standard
visual inspection only, Barter could not determine the full extent
of any potential damage. Thompson then had the home examined by a
contractor who recommended that all of the windows be replaced. As
a result of these inspections, Thompson sought a further reduction
in the purchase price. Miles and Cloud agreed to lower the price
in exchange for the incorporation of an "as-is" provision in the
Purchase and Sale Agreement. The Purchase and Sale Agreement was
thus modified to include an Investigation Contingency Amendment
2
Barter's report specifically mentioned leaking at the copper
entrance canopy and asphalt roof caused by ice dams; damage to the
downspouts for the gutter system; workmanship and materials in the
home's exterior construction of only modest quality; doors and
windows of only modest quality; windows that needed to be upgraded
to improve energy efficiency; and moisture penetration and damage
to fireplaces.
-4-
that reduced the sale price by $190,000 and specified that the
property was being sold "as is." The provision of the Purchase and
Sale Agreement stated, in pertinent part:
Buyer is encouraged to seek information from
professionals regarding any specific issue or
concern. Neither [s]eller nor Licensee makes
any warranties regarding the condition,
permitted use or value of Seller['s] real or
personal property. This Agreement is subject
to the following investigations, with results
being satisfactory to Buyer: [(a) General
Building, (b) Chimney, (d) Sewage Disposal,
(e) Water Quality, (f) Water Quantity, (g) Air
Quality), (i) Mold, (r) Insurance.3] All
investigations will be done by persons chosen
and paid for by Buyer in Buyer's sole
discretion. . . . In the absence of
investigation(s) mentioned above, Buyer is
relying completely upon Buyer's own opinion as
to the condition of the property.
On October 14, 2008, the parties closed on the property.
Since his purchase of Seascape, Thompson has spent in
excess of $1.5 million in repairs to the property, which included
repairing damage to the foundation and water damage in other areas
of the house. In January 2010, Thompson sent Miles and Cloud a
demand letter pursuant to Massachusetts General Laws chapter 93A4
3
The various areas to be inspected were chosen from a list
that was part of what was apparently a form purchase and sale
agreement. The types of inspections were listed from (a) to (s)
and marked with an "x" where appropriate.
4
Thompson ultimately brought his unfair trade practices claim
under Maine law. Me. Rev. Stat. tit. 5, § 205-A et seq. During
argument on Miles and Cloud's summary judgment motion, see infra,
Thompson conceded that this claim could not go forward because
Miles and Cloud were not engaged in trade or commerce.
Accordingly, we need not discuss it further on appeal.
-5-
seeking to recover the money he lost on repairs, which he claimed
resulted from the sellers' unfair and deceptive practices. After
the sellers refused to meet his demands, Thompson brought suit in
the United States District Court for the District of Massachusetts5
seeking money damages against Miles and Cloud on theories of breach
of the implied covenant of good faith and fair dealing, promissory
estoppel, unfair trade practices, breach of contract, fraud, and
negligent misrepresentation.
Miles and Cloud moved to dismiss the complaint. The
district court granted that motion with respect to the claims of
breach of the implied covenant of good faith and fair dealing and
promissory estoppel. Along with their subsequent answer to the
complaint, Miles and Cloud filed a counterclaim seeking legal fees
on the theory that Thompson violated a mediation provision
contained in the Purchase and Sale Agreement.6 Adopting the
5
Venue was eventually transferred to the United States
District Court for the District of Maine.
6
The purchase and sale agreement included a mediation
provision that stipulated as follows:
Earnest money disputes subject to the jurisdiction of
small claims court will be handled in that forum. For
all other disputes or claims arising out of or relating
to this Agreement or the property addressed in this
Agreement [sic] shall be submitted to mediation in
accordance with the Maine Residential Real Estate
Mediation Rules. Buyer and Seller are bound to mediate
in good faith and pay their respective mediation fees.
If a party does not agree first to go to mediation, then
that party will be liable for the other party's legal
fees in any subsequent litigation regarding that same
matter in which the party who refused to go to mediation
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recommendation of the magistrate judge, the district court granted
summary judgment for Miles and Cloud on all remaining claims of the
complaint in March 2012. Shortly thereafter, the parties filed a
joint motion for judgment on the stipulated record as to Miles and
Cloud's counterclaim. In January 2013, the district court entered
judgment in favor of Thompson on the counterclaim. Both parties
now appeal.
II.
A. Thompson's Claims
Thompson argues that the district court erred in granting
summary judgment because genuine issues of material fact remain
concerning his claims for breach of contract, fraud, and negligent
misrepresentation.
We review the district court's summary judgment decisions
de novo. Domínguez-Cruz v. Suttle Caribe, Inc., 202 F.3d 424, 428
(1st Cir. 2000). Summary judgment is properly granted when "the
movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(a). When considering the summary judgment
record, "[a]ll reasonable inferences are to be drawn in favor of
the party opposing summary judgment, in this case appellant
[Thompson], just as all disputed facts are viewed in the light most
favorable to him." O'Connor v. Steeves, 994 F.2d 905, 907 (1st
loses in that subsequent litigation.
-7-
Cir. 1993). In assessing Thompson's claim that genuine material
issues exist, we must decide whether "the evidence is such that a
reasonable jury could return a verdict for [Thompson]." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Federal jurisdiction in this case is based on diversity
of citizenship. See 28 U.S.C. § 1332. We apply the law of the
state of Maine to the contract and tort claims at issue because
Maine is the site of the real property at the heart of the dispute
and the transactions relating to it. The parties do not contend
otherwise.
1. Breach of Contract
Thompson's breach of contract claim is not based on an
explicit provision of the Purchase and Sale Agreement. Instead, he
relies on Maine's implied warranty of habitability.7 "In Maine the
law implies a warranty of habitability on the part of the
builder-vendor in the sale of a new home." Stevens v. Bouchard,
532 A.2d 1028, 1030 (Me. 1987).
On appeal, Thompson stresses that there exists a genuine
issue of fact as to whether Miles was the builder of Seascape.
7
This is an implied warranty that a home will be suitable for
human habitation. The Maine Supreme Judicial Court, sitting as the
Law Court (hereinafter, the "Law Court"), has further explained
that "[w]hether or not a particular defect renders the dwelling
'unsuitable' necessarily requires inquiry as to whether a
reasonable person faced with such a defect would be warranted in
concluding that a major impediment to habitation existed."
Banville v. Huckins, 407 A.2d 294, 297 (Me. 1979).
-8-
Miles and Cloud contend otherwise, pointing to evidence that their
employee, Gallant, actually handled all of the construction.
Regardless of who performed the manual labor, there is no dispute
that Miles listed himself as the "general contractor" on the
building permit for Seascape. Hence, there remains a genuine issue
of fact as to whether or not Miles was the builder. However, Maine
applies the implied the warranty of habitability against "builder-
vendors," not mere builders.
The Law Court has described a "builder-vendor" as "'the
contractor who builds on his own land for the purpose of sale.'"
Banville v. Huckins, 407 A.2d 294, 296 (Me. 1979)(emphasis
added)(quoting Wimmer v. Down E. Props., Inc., 406 A.2d 88, 92 (Me.
1979)); accord Park v. Sohn, 433 N.E.2d 651, 655 (Ill.
1982)(defining "the builder-vendor as one who is engaged in the
business of building, so that the sale is of a commercial nature,
rather than a casual or personal one"); Elderkin v. Gaster, 288
A.2d 771, 774 n.10 (Pa. 1972)(defining a "builder-vendor" as "one
who buys land and builds homes upon that land for purposes of sale
to the general public"); Mazurek v. Nielsen, 599 P.2d 269, 270-71
(Colo. App. 1979)(defining a builder-vendor as one whose "primary
reason for constructing the house is to resell it").8 Here, it is
8
See also Dillig v. Fisher, 688 P.2d 693, 695 (Ariz. Ct. App.
1984)("The courts considering this question in other jurisdictions
have consistently held that the seller's intent or purpose in
constructing and selling a house is the critical issue in
determining whether the sale is subject to the implied warranty of
-9-
undisputed that Miles and Cloud built Seascape not to sell it, but
to reside in it, which they subsequently did for a number of years.
As a federal court exercising diversity jurisdiction, we should not
expand Maine's definition of "builder-vendor" to a person so
situated for the purposes of implying a warranty of habitability
against him. Rared Manchester NH, LLC v. Rite Aid of N.H., Inc.,
693 F.3d 48, 54 (1st Cir. 2012) ("Concerns both of prudence and of
comity argue convincingly that a federal court sitting in diversity
must hesitate to chart a new and different course in state law.").
Moreover, even if Miles could be considered a "builder-
vendor" under Maine law, the warranty of habitability would not be
implied in the sale of property at issue because Seascape is
indisputably not a "new home." Maine has thus far implied the
warranty of habitability only in cases involving the sale of "new
homes." See Stevens, 532 A.2d at 1030 (refusing to expand the
implied warranty of habitability to the sale of an existing home
and explaining that past expansions of the warranty have all
involved "the sale of a new home"); see also Wimmer, 406 A.2d at 92(reiterating that "in the sale of a new house by a builder-vendor,
the law implies [a] warrant[y] that the house is suitable for
habitation" (emphasis added)). Here, it is undisputed that
Seascape was constructed some six years prior to Miles and Cloud
habitability."(collecting cases)).
-10-
selling it to Thompson. During those prior six years, Miles and
Cloud both lived in the property and rented it out on a seasonal
basis. No reasonable jury could conclude that it was a "new home."
Accordingly, the sale of Seascape was not accompanied by an implied
warranty of habitability, contrary to Thompson's breach of contract
claim. The district court properly granted summary judgment for
Miles and Cloud on that claim.
2. Fraud and Negligent Misrepresentation
Thompson's fraud and negligent misrepresentation claims
are based on allegations that Miles knew of the problems with
Seascape, yet failed to disclose them, either intentionally in
order to deceive Thompson or negligently. Under Maine law both
fraud9 and negligent misrepresentation10 require "justifiable
9
Under Maine law fraud has the following five elements:
(1) A party made a false representation, (2) The
representation was of a material fact, (3) The
representation was made with knowledge of its falsity or
in reckless disregard of whether it was true or false,
(4) The representation was made for the purpose of
inducing another party to act in reliance upon it, and
(5) The other party justifiably relied upon the
representation as true and acted upon it to the party's
damage.
Barr v. Dyke, 49 A.3d 1280, 1286-87 (Me. 2012) (emphasis omitted).
10
Maine courts, borrowing from the Restatement (Second) of
Torts, have defined negligent misrepresentation as follows:
One who, in the course of his business, profession or
employment, or in any other transaction in which he has
a pecuniary interest, supplies false information for the
guidance of others in their business transactions, is
subject to liability for pecuniary loss caused to them by
their justifiable reliance upon the information, if he
fails to exercise reasonable care or competence in
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reliance" on a misrepresentation. The parties dwell on the
question of whether Miles and Cloud had a duty to disclose all
known defects to Thompson.11 However, we need only look to this
common element of "justifiable reliance" to decide whether summary
judgment was appropriately granted to Miles and Cloud on the fraud
and negligent misrepresentation claims.
It is undisputed that an "as-is" provision was
incorporated into the Purchase and Sale Agreement in exchange for
the $190,000 final reduction in sale price. Specifically, the
Purchase and Sale Agreement included the following disclaimer of
reliance: "All investigations will be done by persons chosen and
paid for by Buyer in Buyer's sole discretion. . . . In the absence
of investigation(s) mentioned above, Buyer is relying completely
upon Buyer's own opinion as to the condition of the property."
The Law Court has articulated the following factors in
determining whether a "disclaimer-of-reliance clause" (i.e., an
"as-is" provision) can defeat a claim of fraud at summary judgment:
(1) Whether the complaining party was advised
by counsel;
obtaining or communicating the information.
Chapman v. Rideout, 568 A.2d 829, 830 (Me. 1990) (emphasis omitted)
(quoting and adopting Restatement (Second) of Torts § 552(1)
(1977)).
11
Indeed, the district court focused on this issue, finding
the lack of a duty of disclosure dispositive as to all of
Thompson's claims. We focus on a different issue.
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(2) Whether the terms of the agreement were
negotiated and not boilerplate;
(3) Whether the transaction was an
arm's-length transaction;
(4) Whether the parties were knowledgeable in
business matters;
(5) Whether the language of the clause was
clear; and
(6) Whether, if litigation was against a
fiduciary, the adversarial relationship of the
parties demonstrated an absence of trust
between the parties that negated any claim of
reasonable reliance.
Barr v. Dyke, 49 A.3d 1280, 1289 (Me. 2012) (footnotes omitted).
The Court explained that "no one factor will be dispositive," id.,and held that "[w]hen the language of a contract is unambiguous and
disclaims reliance regarding the subject of a later allegation of
fraud, the party seeking to survive a summary judgment motion and
avoid the contractual disclaimer of reliance bears the burden of
producing evidence that demonstrates a genuine issue of material
fact regarding these factors." Id. at 1290.12
Here, Thompson has failed to meet that burden.
Obviously, the defendants are not fiduciaries. It is undisputed
that both parties were represented by counsel in the real estate
transaction, and the final terms of the Purchase and Sale Agreement
12
Although the Law Court's legal proposition addresses the
relationship between a "disclaimer-of-reliance clause" and the
element of justifiable reliance in a fraud claim, its logic applies
as well to that relationship in a negligent misrepresentation
claim.
-13-
were a product of extended negotiations. Thompson produced no
evidence to suggest that he was unskilled in business matters, or
even simply overmatched by Miles's prowess. There is also nothing
in the record to suggest that the sale of Seascape was anything but
an ordinary, arms-length real estate transaction. Perhaps most
importantly, the language of the "as-is" provision is abundantly
clear -- Thompson was to rely only on those inspections that he
arranged for, and otherwise on his own opinion in determining the
condition of the property. Thompson also retained the right to
cancel the Purchase and Sale and Agreement if any of those
inspections were unsatisfactory, but he declined to exercise that
option. Thus, with all of the relevant factors working against
him, Thompson should be held to that disclaimer of reliance. The
district court properly granted summary judgment for Miles and
Cloud on the fraud and negligent misrepresentation claims.
B. Miles and Cloud's Counterclaim
In their cross-appeal Miles and Cloud assert that the
district court improperly entered judgment on the record against
them on their claim for attorney's fees, which was based on the
Purchase and Sale Agreement's mediation provision. That judgment
was entered pursuant to a joint motion requesting a decision on a
stipulated record. As we explained in Boston Five Cents Savings
Bank v. Department of Housing & Urban Development, when facing such
a motion the district court may "decide any significant issues of
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material fact that [it] discovers" in the stipulated record. 768
F.2d 5, 11-12 (1st Cir. 1985). We review such factual findings
under a clear error standard, García-Ayala v. Lederle Parenterals,
Inc., 212 F.3d 638, 643-44 (1st Cir. 2000), and we review the
district court's legal conclusions de novo. C.A. Acquisition
Newco, LLC v. DHL Express (USA), Inc., 696 F.3d 109, 112 (1st Cir.
2012) ("Contract interpretation, when based on contractual language
without resort to extrinsic evidence, is a 'question of law' that
is reviewed de novo." (quoting OfficeMax, Inc. v. Levesque, 658
F.3d 94, 97 (1st Cir. 2011) (internal quotation marks omitted))).
Thompson commenced this litigation after sending to Miles
and Cloud a demand letter, as required by Massachusetts's unfair
and deceptive trade practices law, and then receiving a response
from their attorney refusing to pay for the repairs noted therein.
It is undisputed that neither party invoked the mediation clause at
that point. Instead, Miles and Cloud answered the complaint and
filed a counterclaim. The venue of the dispute did change from
Massachusetts to Maine, but the forum (United States District
Court) did not.
The mediation provision of the Purchase and Sale
Agreement first stipulated that all major disputes concerning
Seascape or the sales transaction must be mediated:
Earnest money disputes subject to the
jurisdiction of small claims court will be
handled in that forum. For all other disputes
or claims arising out of or relating to this
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Agreement or the property addressed in this
Agreement [sic] shall be submitted to
mediation in accordance with the Maine
Residential Real Estate Mediation Rules.
Buyer and Seller are bound to mediate in good
faith and pay their respective mediation fees.
There is no dispute as to the validity of that mediation
requirement or whether Thompson's claims were subject to it.13
Miles and Cloud's counterclaim for attorney's fees concerns the
next clause of the mediation provision, which states that "[i]f a
party does not agree first to go to mediation, then that party will
be liable for the other party's legal fees in any subsequent
litigation regarding that same matter in which the party who
refused to go to mediation loses in that subsequent litigation."
(Emphases added). At issue here is whether this language requires
that a party explicitly refuse to mediate before the obligation to
pay the other party's legal fees arises, or whether, as Miles and
Cloud argue, the filing of a lawsuit alone could constitute the
required refusal to mediate.
Although the mediation provision could have been drafted
to equate the filing of a lawsuit with a refusal to mediate, that
provision takes a different approach by imposing the penalty of
paying attorney's fees only when a party "does not agree first to
go to mediation." This language conditions the contractual remedy
13
There is some dispute about whether Miles and Cloud waived
their right to invoke the provision when they actively engaged in
the litigation without mentioning it; however, we need not reach
that issue.
-16-
for the failure to mediate -- the payment of the attorney's fees of
the winning party in litigation -- on the effort of that party to
first secure a reaffirmation of the agreement to mediate from the
opposing party when a dispute covered by the mediation provision
arises. If that effort at reaffirmation leads to a refusal to
mediate, and the parties must resort to litigation to resolve the
dispute, the contractual remedy becomes available. By requiring
this additional interaction of the parties over the obligation to
mediate, the agreement requires, in effect, that the refusal to
mediate be clear before the heavy sanction of attorney's fees can
be imposed. It also ensures that any departure from the "'American
Rule' that each party pays its own fees," Doe v. Boston Public
Schools, 358 F.3d 20, 25 (1st Cir. 2004), is the result of a clear
contractual breach.
Although somewhat awkward, there is a point to such an
approach. A party in Thompson's position may file a lawsuit for a
reason that does not indicate a refusal to mediate (e.g.,
preservation of claims that could be time-barred), or may resort to
litigation first without an actual objection to mediation once
reminded of the contractual provision. It might be harsh to impose
the strong penalty of attorney's fees against a party so acting
without a clear indication of that party's intentions regarding
mediation.
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There is support for the requirement of a clear refusal
to mediate in a related area of the law -- arbitration.
Arbitration and mediation have long been cited together when
describing extra-judicial dispute resolution mechanisms. See,
e.g., Elgin, J. & E. Ry. Co. v. Burley, 325 U.S. 711, 752 (1945)
(Frankfurter, J., dissenting) (describing the "specialized
machinery of mediation and arbitration" as a method of escape from
"illadapted judicial interferences"). Indeed, mediation is often
explicitly required as a necessary precursor to arbitration in
contract provisions. See, e.g., Next Step Med. Co. v. Johnson &
Johnson Int'l, 619 F.3d 67, 69 (1st Cir. 2010) (analyzing a
provision that stated "[a]ny dispute that has not been resolved in
mediation, shall then be settled by arbitration"). Thus, we think
it appropriate to consult precedent interpreting arbitration
requirements to analyze the mediation provision at issue here.
In diversity cases calling for the interpretation of an
arbitration agreement, we generally apply the Federal Arbitration
Act. See, e.g., New Eng. Energy Inc. v. Keystone Shipping Co., 855
F.2d 1, 4 n.2 (1st Cir. 1988). Section 4 of the Act provides a
judicial remedy when one party refuses to honor an arbitration
agreement. That section gives federal courts the power to compel
arbitration when one party has been "aggrieved by the alleged
failure, neglect, or refusal of another to arbitrate under a
written agreement for arbitration." 9 U.S.C. § 4 (1988)(emphasis
-18-
added). District courts in our circuit interpreting this language
have looked for evidence in the record "demonstrat[ing] that the
plaintiff will refuse to arbitrate," even where the plaintiff,
already a party to a contract requiring arbitration, had initiated
federal litigation without first attempting to arbitrate. Vimar
Seguros Y Reaseguros, S.A. v. M/V Sky Reefer, No. CIV. A. 91-13345
WF, 1993 WL 137483, at *5 (D. Mass. Apr. 19, 1993); see also Unión
Independiente de Abogados de la Sociedad para Asistencia Legal v.
Sociedad para Asistencia Legal de P.R., Inc., 706 F. Supp. 3, 5
(D.P.R. 1989). The Third Circuit has stated the rule even more
precisely, holding that a party must "unequivocally refuse[] to
arbitrate, either by failing to comply with an arbitration demand
or by otherwise unambiguously manifesting an intention not to
arbitrate the subject matter of the dispute." PaineWebber Inc. v.
Faragalli, 61 F.3d 1063, 1066 (3d Cir. 1995). We think this
standard requiring a clear refusal to arbitrate further supports
the approach taken in the mediation provision at issue here.
There is no evidence in the record showing an unequivocal
refusal to mediate on Thompson's part. It is undisputed that Miles
and Cloud did not request mediation prior to the commencement of
litigation or after the complaint was filed. They also made no
motion to compel mediation in response to the complaint. Instead,
they actively litigated the dispute in federal court. The clear
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refusal required to trigger the attorney's fee obligation simply
did not exist here.
III.
For the foregoing reasons, we affirm the award of summary
judgment for the defendants on the plaintiff's breach of contract,
fraud, and negligent misrepresentation claims. We affirm the entry
of judgment for the plaintiff on the defendants' counterclaim. All
parties shall bear their own costs.
So ordered.
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