Where a contract has a mediation clause, and the Court dismisses for failure to participate in mediation, the statute of limitations is not tolled.

How does this apply in the real world? Imagine you have an agreement of sale to buy a home. Chances are the agreement will be the standard Pennsylvania Association of Realtors® form. It has a mediation clause which requires all parties to go through mediation BEFORE filing suit. Next imagine that after closing you discover the sellers failed to disclose mold hidden the walls which they covered up, a leaking roof with a temporary fix and 43 other things. Your statute of limitations for fraud is 2 years (there is a longer statute for other claims). One month before the statute runs you go to a lawyer and she or he files a complaint to stop the statute from running. The Defendant files papers claiming you should have gone to mediation first (you did not have time). The Court dismisses your case while you go to mediation. You are out of luck. Your case is gone.

In the recent decision of Morse v. Fisher Asset Mgmt, , the Pa Superior Court addressed the situation where a complaint was filed to protect the statute of limitations. The Defendant file Preliminary Objections seeking to enforce the ADR clause, which required mediation. The Preliminary Objections were sustained and the Complaint dismissed.. By the time mediation was over, the statute of limitations had run. Ooops, the Court held the statute of limitations was not tolled or stayed while the mediation was undertaken. Moral of the story: Give yourself time to complete mediation well before the statute of limitations bars your claim.

How do you avoid the catastrophe? You file the papers in Court and immediately file for mediation or whatever ADR (alternative dispute resolution) is mandated. When the Defendant seeks to dismiss your case, you ask the Court to not dismiss, but to stay the action, citing the case above.

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