Mediation – A condition precedent to Litigation

On February 4, 2016 the Nevada Supreme Court ruled that mandatory mediation provisions found in contracts act as a condition precedent to the initiation of litigation.  In the case of MB America v. Alaska Pacific Leasing Co., 132 Nev. Adv. Op. 8 (Feb. 4 2016) the Supreme Court of Nevada upheld a district court’s granting of summary judgment when Plaintiff MB initiated litigation without having first fulfilled its duty to submit the dispute to mandatory mediation.   Likewise, the Supreme Court upheld an award of attorneys’ fees to Defendant Alaska Pacific.

Plaintiff MB argued that it had discussed mediation informally with Alaska Pacific, however, the Supreme Court found that this did not meet the requirements of the contract and because Alaska Pacific had not expressly rejected mediation, Plaintiff MB was under an obligation to fulfill the mediation requirement.  The Court likewise rejected the argument that the district court matter should be stayed pending compliance with the mediation requirement, which would be typical when dealing with arbitration provisions.

Parties and their attorneys would do well in future proceedings to strictly comply with any mediation provisions contained in their agreement and memorialize such compliance in the event that it becomes necessary to establish that all “conditions precedent” to litigation have been fulfilled.