Texas Appeals Court Finds No ‘Meeting of the Minds’ in Dispute Over Mediation Cancellation Fee

[Ed. note: hat tip to our blog contributor Don Philbin.]

The Fourteenth Court of Appeals of Texas held that silence does not create a contract to pay a mediation cancellation fee.

In The Levin Group, PC v. Sigmon, no. 14-08-01165-CV (Tex.App.-Houston [14th Dist.] Jan. 21, 2010) the Levin Law Group, P.C. (LLG) sued Ernesto de Andre Sigmon for breach of an agreement to mediate the underlying civil lawsuit. Alan F. Levin, the principal at LLG, was hired as a mediator. Ernesto de Andre Sigmon, Allan G. Levine, and Don Fogel were the plaintiff’s attorneys.

On January 25, 2008, Allan G. Levine contacted LLG to obtain potential dates for a mediation. Then, Levine contacted the rest of the plaintiff’s attorneys and the defendant’s attorney. They “settled on February 8, 2008” to mediate the dispute. Levine confirmed the date with LLG’s office. On January 29, LLG faxed a letter containing the mediation information to all three attorneys. LLG also faxed an “Attorney Confidential Information Sheet and Request for Mediation” form (the “mediation request form”), and a “Rules for Mediation” form (the “mediation rules form”). The mediation rules form contained the following paragraph:

CANCELLATION/RESCHEDULING FEE AGREEMENT. ONCE A CASE HAS BEEN SET FOR MEDIATION, THE ATTORNEYS AND THE PARTIES RECOGNIZE THAT THE MEDIATOR’S CALENDAR HAS BEEN RESERVED, AND THEY MUST THEREFORE PROVIDE THE MEDIATOR AT LEAST TWO (2) WEEKS ADVANCE WRITTEN NOTICE OF CANCELLATION/RESCHEDULING. IN THE ABSENCE OF SUCH ADVANCE WRITTEN NOTICE, THE ATTORNEYS AND PARTIES AGREE TO AND SHALL PAY THE MEDIATOR FIFTY PERCENT (50%) OF THE TOTAL MEDIATION FEE FOR THE DAY(S) AS AN AGREED CANCELLATION/RESCHEDULING FEE. THIS RULE ALSO APPLIES TO MEDIATIONS SCHEDULED LESS THAN TWO (2) WEEKS IN ADVANCE OF THE MEDIATION DATE.

Sigmon neither completed nor signed the mediation request form. Sigmon’s client was unable to attend in person, but offered to be available by telephone. Fogel objected and the mediation was canceled. In April 2008, LLG sued Sigmon alleging breach of contract because Sigmon had refused to pay the mediation cancellation fee. The total fee for the mediation was $6,375; thus the cancellation/rescheduling fee would be $3,187.50. The trial court granted Sigmon’s summary judgment motion and LLG now appeals.

LLG claimed that a fact issue existed concerning whether Sigmon accepted the terms of the mediation by scheduling the date and failing to object to any of the terms contained in the mediation agreement. The court first outlined the legal standard for summary judgment. Then proceeded to discuss the enforceability of the contract. The court stated that a binding contract must have an offer and acceptance, and that acceptance must be in strict compliance with the terms of the offer.

The court noted that the mediation terms were communicated to Sigmon after the mediation was scheduled. Therefore, the court reasoned that Sigmon’s agreement to mediate the dispute does not support an inference that Sigmon agreed to the mediation rules or cancellation fees. And that not objecting to the terms of the mediation does not indicate acceptance of LLG’s mediation rules. In addition, the court reasoned that because LLG’s mediation rules required personal attendance, that was an offer. Sigmon rejected that offer by saying that his client would attend by telephone. The court said that Sigmon’s rejection could be deemed a counter-offer, which was rejected by Fogel.

The court stated that the “communications between the parties and the acts and circumstances surrounding those communications in this case indicate that there was no meeting of the minds, and thus no offer and acceptance, regarding the essential terms of the mediation.” Finally, the court said that “Sigmon conclusively established that he did not accept the terms of the mediation specified in the letters faxed by LLG, the mediation rules form, or the mediation agreement form – an essential element of LLG’s breach of contract claim.” Accordingly, the court affirmed the granting of summary judgment to Sigmon.

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