Stone & Webster, Inc. v. Georgia Power Company , 968 F. Supp. 2d 1 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STONE & WEBSTER, INC. et al.,
Plaintiffs,
v. Civil Action No. 12-1226 (CKK)
GEORGIA POWER COMPANY et al.,
Defendants.
MEMORANDUM OPINION
(September 30, 2013)
This contract action involves an agreement concerning the design and construction of
nuclear electrical generating units in Waynesboro, Georgia. On July 25, 2012, Plaintiffs Stone &
Webster, Inc. and Westinghouse Electric Company LLC (together “Plaintiffs”) filed the instant
[1] Complaint against Defendants Georgia Power Company, Oglethorpe Power Corporation,
Municipal Electric Authority of Georgia, and the City of Dalton, Georgia (collectively
“Defendants”), asserting claims for breach of contract and violation of the Georgia Prompt
Payment Act, Ga. Code. Ann. §§ 13-11-1 et. seq. Presently before the Court is Defendants’ [20]
Motion to Dismiss the Complaint and Supporting Statement of Points and Authorities. Upon
consideration of the parties’ submissions, 1 the applicable authorities, and the entire record, the
1
While the Court renders its decision on the record as a whole, its consideration has focused on
the following documents: Pls.’ Compl. (“Compl.”), ECF No. [1]; Defs.’ Mot. to Dismiss the
Compl. and Supp. Stmt. of P. & A. (“Defs.’ MTD”), ECF No. [20]; Pls.’ Mem. of P. & A. in
Opp’n to Defs.’ Mot. to Dismiss (“Pls.’ Opp’n”), ECF No. [22]; Defs.’ Reply Mem. of P. & A.
in Supp. of Their Mot. to Dismiss the Compl. (“Defs.’ Reply”), ECF No. [31]. In an exercise of
its discretion, the Court finds that holding oral argument on the instant motions would not be of
assistance in rendering a decision. See LCvR 7(f).
1
Court shall GRANT Defendants’ motion to dismiss. Accordingly, this action is hereby
dismissed, without prejudice, in its entirety.
I. BACKGROUND
The dispute between the parties arises out of the design and construction of two nuclear
electrical generating units at an electric generating plant in Waynesboro, Georgia (the “Project”).
Compl. ¶ 9. Defendants, who are the owners of the Project, and Plaintiffs, who collectively are
the contractor on the Project, entered into an Engineering, Procurement and Construction
Agreement (“EPC Agreement”), pursuant to which Plaintiffs allegedly agreed to design,
engineer, procure, construct, and test the nuclear electrical generating units and related facilities
and structures at the plant. Compl. ¶ 10.
The instant Complaint asserts claims for breach of contract and violation of the Georgia
Prompt Payment Act, Ga. Code. Ann. §§ 13-11-1 et. seq, relating to Plaintiffs’ efforts to
excavate and backfill soil at the site of the two future nuclear generating units. 2 Compl. ¶¶ 50-
68. During the course of its work, Plaintiffs allege that they encountered soil conditions
materially different than the conditions represented by Defendants, which served as the basis for
the EPC Agreement on the contract price. Pls.’ Opp’n at 4. Due to these conditions, Plaintiffs
allege, they were required to perform significant additional work. Id. While Defendants
compensated Plaintiffs for a portion of these costs, Defendants refused to pay Plaintiffs
approximately $58 million that allegedly was due for this work. Id.
Article 27 of the EPC Agreement sets forth mandatory “Dispute Resolution” steps that
the parties to the agreement must take to resolve any claims arising out of or relating to the EPC
2
This Court dismissed a separate and distinct claim between these parties under the EPC
Agreement in Stone & Webster, Inc. v. Georgia Power Co., No. 12-cv-1783, 2013 WL 4616430(D.D.C. Aug. 30, 2013), on the grounds that the action was more properly adjudicated in a
mirror-image proceeding pending in the Southern District of Georgia.
2
Agreement. Compl. ¶ 47; Pls.’ Opp’n, Exhibit A (EPC Agreement), Article 27. Sections 27.3
and 27.4 set forth the procedures by which the parties resolve such claims. Section 27.3 requires
a party making a claim to notify the other party in writing. Pls.’ Opp’n, Exhibit A, Article 27.3.
If the claim remains unresolved thirty days after this written notice, then Section 27.3 requires
that the parties undertake mediation pursuant to Section 27.4 prior to initiating further
proceedings.
27.3 Resolution by Negotiation
(a) As an express condition precedent to commencement of any further
proceedings with respect to a Claim (except as may be provided under any
applicable lien statute), the Party making such Claim shall notify the Contractor’s
Consortium Project Director or the Owners’ Authorized Representative, as the
case may be, in writing of such Claim. The Contractor’s Consortium Project
Director and the Owners’ Authorized Representative shall meet within thirty (30)
Days of receipt of the written notice of such Claim for the purpose of attempting
to resolve the Claim.
(b) If the Claim remains unresolved after the thirty (30) Day period
described in Section 27.3(a) then the Parties shall undertake mediation pursuant to
Section 27.4.
Id. Section 27.4, which governs any resulting mediation, provides for mediation pursuant to the
Construction Industry Mediation Procedures of the American Arbitration Association (“AAA”),
but allows the parties to mutually agree to other procedures. Id. at Section 27.4. In addition,
Section 27.4 includes a “backstop” provision that allows a party to proceed to arbitration or
litigation (depending upon the claim amount) 3 if the mediation has not concluded “within sixty
(60) days after its commencement . . . .” Id.
27.4. Mediation.
3
The EPC Agreement defines “Claim Threshold Amount” as $25 million. The Plaintiffs’
demand in this matter is $58 million, which as both parties agree, exceeds the threshold amount
and proceeds via litigation rather than arbitration. See Defs.’ MTD at 3 n. 3.
3
(a) Any Claim not resolved pursuant to Section 27.3 shall be referred to
mediation, which, unless the Parties mutually agree otherwise, shall be in
accordance with the Construction Industry Mediation Procedures of the AAA in
effect at the time of the mediation. If the mediation has not concluded within
sixty (60) Days after its commencement, then, as applicable:
(i) with respect to a Claim that exceeds the Claim Threshold
Amount, either Party shall have the right to proceed to litigation of such Claim in
a court of competent jurisdiction, in accordance with Section 34.3; and
(ii) with respect to a Claim that falls below the Claim
Threshold Amount, such Claim shall be resolved pursuant to Section 27.5.
(b) An executive vice president (or equivalent) of (i) in the case of
Contractor, each Consortium Member (unless otherwise agreed to by the
Consortium Members) and (ii) in the case of Owners, each Owner (or GPC acting
as agent for such Owner) shall be in attendance at and participate in the
mediation.
(c) The Parties shall share equally the mediator’s fee and any AAA
filing fees equally. The mediation shall be held in Atlanta, Georgia, unless
another location is mutually agreed upon. Agreements reached in mediation shall
be enforceable as settlement agreements pursuant to Section 27.6.
Id..
The EPC Agreement also sets out requirements regarding the venue for any litigation that
results under the Agreement. Section 34.3 sets this Court as the non-exclusive jurisdiction for
disputes. Id. at Section 34.3. Pursuant to this provision, the parties waive their rights to dismiss
the action on the basis of forum non-conveniens or improper venue. However, the contract
expressly reserves the right to raise first-to-file challenges with respect to venue.
34.3 Venue: The Parties agree to the non-exclusive jurisdiction of the United
States District Court for the District of Columbia for any legal proceedings that
may be brought by a Party arising out of or in connection with this Agreement or
for recognition or enforcement of any judgment. . . . Each party hereby waives
any right to stay or dismiss any action or proceeding under or in connection with
this Agreement brought before the foregoing court on the basis of forum non-
conveniens or improper venue. For the avoidance of doubt, the Parties do not, by
this Section 34.3, waive any first-to-file challenges to venue.
Id.
4
After unfruitful discussions and communications between the parties regarding Plaintiffs’
claim, on April 27, 2012, Plaintiffs submitted to Defendants a Change Dispute Notice, which
commenced the dispute resolution process under Article 27 of the EPC Agreement. Pls.’ Opp’n
at 4. The parties were unable to resolve the dispute during the subsequent month and agreed that
they should proceed with mediation pursuant to Section 27.4 of the EPC Agreement. Id.
On May 25, 2012, Plaintiffs filed a Request for Mediation with the AAA. Id. at 7,
Exhibit B (E-mail requesting mediation with AAA). However, subsequently on June 13, 2012,
before an AAA mediator had been selected by the parties, the parties mutually agreed to modify
the procedures for the pending mediation, concluding that the mediation would no longer be
conducted in accordance with the Construction Mediation Procedures of the AAA, as provided in
the original EPC. Id. at 8-9; Defs.’ MTD, Exhibit 3 (E-mail exchange between Plaintiffs’
counsel and AAA representative) (noting that AAA “mediator selections . . . are due . . . June 15,
2012). Rather, the parties agreed to proceed with a non-AAA mediator, and abide by a different
set of procedures “as agreed by the parties and Mr. Green.” Pls.’ Opp’n, Exhibit F (Letter from
Stephen Stallings to Andrew Ness). To wit, in a letter to Defendants “confirm[ing] the Parties’
agreement to modify the procedures for the pending mediation,” Plaintiffs wrote:
1. Rather than selecting a mediator from the American Arbitration Association’s
(the “AAA”) roster of mediators, the mediator will be Eric D. Green, Esq.;
2. The mediation will be held on July 30 and 31, 2012 in Atlanta or such other
location as agreed by the parties and Mr. Green;
3. Rather than conducting the mediation in accordance with the Construction
Industry Mediation Procedures of the AAA, as provided in §27.4(a) of the
EPC Agreement, the mediation will instead proceed in accordance with the
procedures as agreed by the Parties and Mr. Green;
4. Except as specifically agreed to herein, all other provisions of Article 27 of
the EPC Agreement remain in full force and effect.
Id.
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On July 25, 2012, Plaintiffs filed suit in this Court. Pls.’ Opp’n at 9. Three business days
later, on July 30, 2012, the parties participated in mediation before Eric Green in Atlanta,
Georgia, which concluded unsuccessfully on the same day. Id. On August 23, 2012, Defendants
filed a Complaint regarding the same contractual disputes at issue here in the United States
District Court for the Southern District of Georgia, the jurisdiction where the nuclear generating
units are being constructed and where most of the events at issue in this dispute took place. See
Georgia Power Company, et al. v. Westinghouse Electric Company, et al., No. 12-cv-123 (S.D.
Ga.) (JRH-WLB). Defs.’ MTD at 4-5. Four days later, in this Court, Defendants filed the
present [20] Motion to Dismiss the Complaint and Supporting Statement of Points and
Authorities. Defendants now argue that Plaintiffs failed to satisfy the contractual condition
precedent of mediation prior to bringing suit in this Court. Defs.’ MTD at 1.
II. LEGAL STANDARD
Defendants move to dismiss the Plaintiffs’ Complaint under Fed. R. Civ. P. 12(b)(1) for
lack of subject matter jurisdiction and Fed. R. Civ. P. 12(b)(6) for failure to state a claim. Defs.’
MTD at 1.
As an initial matter, the Court is skeptical of Defendants’ invocation of Fed. R. Civ. P.
12(b)(1) in this context. Other courts have questioned whether a party’s alleged failure to satisfy
a condition precedent in a private contract deprives a court of subject matter jurisdiction. See,
e.g., N-Tron Corp. v. Rockwell Automation, Inc., No. 09-cv-0733, 2010 WL 653760, at *5 (S.D.
Ala. Feb. 18, 2010) (“[I]t is abundantly clear that N-Tron’s admitted non-compliance with the
mandatory dispute resolution procedures embodied in the MoM does not implicate jurisdictional
concerns.”). As the court noted in N-Tron, Defendants’ argument “conflates non-performance of
a contractual condition precedent with deprivation of subject matter jurisdiction.” Id. at *4. As
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support for their position that the 12(b)(1) analysis applies here, Defendants cite to Mortimer v.
First Mount Vernon Indus. Loan Ass’n, No. 03-cv-1051, 2003 WL 23305155 (D. Md. May 19,
2003), in which the United States District Court for the District of Maryland granted a motion to
dismiss under Rules 12(b)(1) and 12(b)(6) based on the plaintiff’s failure to honor a contractual
mediation clause. The court in Mortimer provides no explanation for the apparent lack of subject
matter jurisdiction, and indeed, the opinion is unclear on whether the dismissal is even actually
for lack of subject matter jurisdiction. See id. at *1 (“For the reasons stated herein, I shall
dismiss Mortimer’s complaint without prejudice for failure to mediate.”). See also Ziarno v.
Gardner Carton & Douglas, No. 03-cv-3880, 2004 WL 838131, at *3 (E.D. Pa. Apr. 8, 2004)
(providing a similarly unelaborated conclusion that failure to abide by a contractual condition
precedent requiring mediation prior to suit deprives a court of subject matter jurisdiction). Given
that other courts in this district have implicitly concluded that failure to abide by a mediation
clause that functions as a condition precedent does not deprive a court of subject matter
jurisdiction, see Cunningham & Assocs., PLC v. ARAG, LLC, 842 F.Supp.2d 25, 30 (D.D.C.
2012) (employing the remedy of a stay, rather than dismissal, for failure to fulfill a contractual
condition precedent), this Court is reluctant to interpret this privately agreed-upon condition as a
jurisdictional bar. Accordingly, the Court does not consider Defendants’ motion properly
brought under Rule 12(b)(1).
Nevertheless, the Court does consider Defendants’ motion to dismiss properly brought
under Rule 12(b)(6). Fed. R. Civ. P. 12(b)(6) requires that a complaint contain “ ‘a short and
plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957));
7
accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). Although “detailed factual
allegations” are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the
“grounds” of “entitle[ment] to relief,” a plaintiff must furnish “more than labels and conclusions”
or “a formulaic recitation of the elements of a cause of action.” Id. at 1964–65; see also Papasan
v. Allain, 478 U.S. 265, 286 (1986). Instead, a complaint must contain sufficient factual matter,
accepted as true, to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at
570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (citing Twombly, 550 U.S. at 556).
In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court must
construe the complaint in a light most favorable to the plaintiff and must accept as true all
reasonable factual inferences drawn from well-pleaded factual allegations. In re United Mine
Workers of Am. Employee Benefit Plans Litig., 854 F.Supp. 914, 915 (D.D.C.1994). Further, the
Court is limited to considering the facts alleged in the complaint, any documents attached to or
incorporated in the complaint, matters of which the court may take judicial notice, and matters of
public record. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624
(D.C.Cir.1997). “This includes documents . . . that are referred to in the complaint and [] central
to the plaintiff’s claim.” Long v. Safeway, Inc., 842 F.Supp.2d 141, 144 (D.D.C. 2012) (internal
punctuation and citation omitted)
III. DISCUSSION
Section 27.4 of the EPC Agreement provides that a party may file suit on a claim under
the agreement only either (a) after the mediation has concluded or (b) “[i]f the mediation has not
concluded within sixty (60) Days after its commencement . . . .” Pls.’ Opp’n, Exhibit A, Section
8
27.4. Here, the parties disagree about whether Plaintiffs’ suit, brought on July 25, 2012, meets
the latter criteria. Defendants argue that the mediation commenced only when the parties sat
down before mediator Eric Green in Atlanta, Georgia. Since the in-person mediation occurred
on July 30, 2012, they argue Plaintiffs’ suit is plainly premature. Plaintiffs, by contrast, argue
that they “commenced” the mediation pursuant to the applicable AAA rules on May 25, 2012
when they submitted their request for mediation. Accordingly, Plaintiffs contend that their suit,
filed more than sixty days after May 25, 2012 is timely under Section 27.4 of the EPC
Agreement. The parties agree, and the EPC Agreement mandates, that the construction of the
contract must be resolved pursuant to Georgia law. See Pls.’ Opp’n, Exhibit A, Section 34.1
(“The validity, construction, and performance of this Agreement shall be governed by and
interpreted in accordance with the laws of the State of Georgia . . . .”).
The Court concludes that Plaintiffs’ suit is untimely under either definition of
“commence” because in their June 13, 2012 letter, the parties substantially changed the terms of
the EPC Agreement with respect to mediation. In this letter – sent by Plaintiffs to Defendants –
the parties confirm their agreement that mediation would no longer occur with an AAA
mediator, but would rather take place before Eric Green, a mediator unaffiliated with the AAA.
See Pls.’ Opp’n, Exhibit F. More importantly, the parties agreed that “[r]ather than conducting
the mediation in accordance with the Construction Industry Mediation Procedures of the AAA,
as provided in §27.4(a) of the EPC Agreement, the mediation will instead proceed in accordance
with the procedures as agreed by the Parties and Mr. Green.” Id. This change is plainly
permissible under the EPC Agreement, which provides that mediation “shall be in accordance
with the Construction Industry Mediation Procedures of the AAA” “unless the Parties mutually
agree otherwise.” Pls.’ Opp’n, Exhibit A, Section 27.4(a). Pursuant to this provision, the parties
9
mutually agreed to a new procedure for mediation that would no longer be governed by the AAA
rules originally specified. Indeed, at the time of this letter, the parties had not even selected an
AAA mediator. See Defs.’ MTD, Exhibit 3 (June 14, 2012 e-mail from AAA requesting that
parties make their AAA mediator selection by June 15, 2012). At the same time, despite this
move away from AAA mediators and rules, the parties clearly specified in this letter that all
other provisions of Section 27 – including the sixty-day backstop provision – would “remain in
full force and effect.” Pls.’ Opp’n, Exhibit F.
Having agreed that the AAA rules no longer governed the mediation in their June 13,
2012 letter and agreeing to proceed with a non-AAA mediator, Plaintiffs can hardly rely on these
rules to support the argument that the sixty day clock began running on May 25, 2012.
Plaintiffs’ argument that a request for mediation constitutes “commencement” of the mediation
hinges on the AAA Rules referenced in the EPC Agreement. Although the Construction
Industry Mediation Procedures of the AAA do not define “commence”, they do describe a
request for mediation as the “initiation” of a mediation. See Pls.’ Opp’n, Exhibit B (AAA
Construction Industry Mediation Procedures). The use of the word “initiate” in the AAA rules
represents the crux of Plaintiffs’ argument that their suit is timely. Yet in their June 13, 2012
letter, Plaintiffs agreed that these rules would no longer govern the mediation. Nowhere does
this letter specify that the AAA rules would remain in effect for the limited purpose of
determining the date of the mediation’s commencement. Rather, as they were permitted to do
under the EPC Agreement, the parties mutually agreed to proceed outside the AAA rules.
Moreover, even if Plaintiffs definition of “commence” is correct outside of the context of
the AAA rules, they cannot rely on their May 25, 2012 request as the start of the sixty day clock.
This request to the AAA was subsequently withdrawn when the contract was significantly
10
modified in the June 13, 2012 letter, as the parties decided to proceed before an entirely different
mediator with an entirely different set of procedures. Defs.’ MTD, Exhibit 3 (E-mail to AAA
representative in which Plaintiffs’ counsel states that “[t]he parties have agreed to proceed with
their mediation outside of the AAA/ICDR.”). Accordingly, even if a request for mediation
constitutes commencement of the mediation, the earliest date of commencement that Plaintiffs
can point to is June 13, 2012, when they requested mediation before Eric Green. Plaintiffs
cannot point to their defunct request for mediation with the AAA, as this would plainly never
lead to the mediation with Defendants. And even viewing June 13, 2012 as the date of
commencement, Plaintiffs’ suit remains untimely, as the sixty day clock would not have expired
until August 13, 2012.
Plaintiffs argue that the Court should still look to the May 25, 2012 date as the start of the
sixty-day period because in a June 5, 2012 e-mail Plaintiffs informed Defendants that “the 60
day period for the mediation under the contract expires on July 24th . . . .” Pls.’ Opp’n at 19
(citing Pls.’ Opp’n, Exhibit E (E-mail from Stephen Stallings to Andrew Ness)). Pursuant to this
e-mail, Plaintiffs argue, Defendants were on notice of, and because they did not object, conceded
to, Plaintiffs’ understanding of the date of the mediation’s commencement. In support of this
argument, Plaintiffs point to a Georgia statute stating that “the meaning placed on the contract by
one party and known to be thus understood by the other party at the time shall be held as the true
meaning.” Ga. Code. Ann. § 13-2-4. Yet, as Defendants point out, Ga. Code. Ann. § 13-2-4
“can have no application unless the contract is ambiguous.” Loveable Co. v. Honeywell, Inc.,
431 F.2d 668, 675 (5th Cir. 1970) (discussing an identical, prior version of this provision)
(internal citation omitted). Here, the contract, as modified by the June 13, 2012 letter,
unambiguously states that the contract is proceeding outside of the AAA rules without any
11
caveats. Plaintiffs cannot introduce external evidence to show that this clear term actually meant
proceeding outside all AAA rules except for the time of a mediation’s commencement. “Where
parties have reduced to writing what appears to be a complete and certain agreement, it will, in
the absence of fraud, accident or mistake, be conclusively presumed that the writing contains the
entire contract . . . .” Andrews v. Skinner, 158 Ga. App. 229, 230, 279 S.E.2d 523, 526 (Ga. Ct.
App. 1981). See also Archer v. Carson, 213 Ga. App. 161, 163, 444 S.E.2d 82, 85 (Ga. Ct. App.
1994) (“language which is unambiguous will not be construed as ambiguous based on extrinsic
circumstances.”). Furthermore, the parties’ June 13, 2012 letter leaves in place and implicitly
incorporates the merger clause in the EPC Agreement, which states that, “[t]his Agreement
contains the entire agreement and understanding between the Parties as to the subject matter
hereof, and merges and supersedes all prior agreements, commitments, representations, writing
and discussions between them with respect to the subject matter thereof . . . .” Pls.’ Reply,
Exhibit 2 (EPC Agreement excerpts). The June 5, 2012 e-mail from Plaintiffs – coming before
the June 13, 2012 letter in which the parties mutually revised specific terms of the agreement but
left all other provisions in place – represents the sort of prior writing excluded by this merger
clause. Accordingly, Plaintiffs cannot point to it as conclusive support for their interpretation.
See Tampa Bay Fin., Inc. v. Nordeen, 272 Ga. App. 529, 535, 612 S.E.2d 856, 861 (Ga. Ct. App.
2005) (“Whether the promises were made, however, is simply not significant because, even if
made, the promises themselves were contradicted by the merger clause and could not be
reasonably relied upon.”). Moreover, it bears noting that the June 5, 2012 e-mail is merely a
statement of interpretation of the AAA Rules in effect under the original EPC Agreement. Yet,
as noted, the parties subsequently explicitly discarded these rules by mutual consent in their June
12
13, 2012 letter modifying the EPC Agreement. Accordingly, the June 5, 2012 e-mail represents
merely a unilateral interpretation of a prior agreement.
Having concluded that Plaintiffs’ suit is untimely, the Court must determine the
appropriate remedy. Defendants request that the Complaint be dismissed without prejudice.
Defs.’ MTD at 10-12; Defs.’ Reply at 16-19. Plaintiffs, on the other hand, argue that dismissal is
inappropriate. Pls.’ Opp’n. at 20-22. Plaintiffs note that in other cases where parties have failed
to mediate as a condition precedent to filing suit, courts have stayed the proceedings to allow the
mediation to occur. Id . “When confronted with objections that Plaintiffs have initiated litigation
without satisfying arbitration or mediation requirements, courts routinely stay rather than dismiss
the proceedings to allow for the implementation of the agreed-upon dispute mechanism.” N-
Tron Corp., 2010 WL 653760, at *7. See also Advanced Body Care Solutions, LLC v. Thione
Int’l, Inc., 524 F.3d 1235, 1241 (11th Cir. 2008) (“district courts have inherent, discretionary
authority to issue stays in many circumstances, and granting a stay to permit mediation (or to
require it) will often be appropriate.”). Yet, as Plaintiffs admit, a stay would plainly be pointless
here, where the mediation concluded a mere five days after Plaintiffs filed suit. Pls.’ Opp’n at
22. Indeed, although almost all of the cases Plaintiffs cite focus on the appropriateness of a stay,
Plaintiffs are really arguing that the Court should simply ignore Plaintiffs’ failure to comply with
the condition precedent and deem the motion to dismiss moot.
Defendants by contrast, argue that dismissal without prejudice is the appropriate remedy.
They contend that those courts granting stays to allow mediation represent a minority view.
Defs.’ Reply at 16. Yet the cases cited by Defendants are similarly unhelpful, as they involve
courts dismissing suits without prejudice to allow mediation to occur. See, e.g., Loancraft v.
First Choice Loan Svcs., Inc., No. 12-cv-10138, 2012 WL 628617, at *3 (E.D. Mich., Feb. 27,
13
2012) (dismissing without prejudice to allow mediation to occur); Brosnan v. Dry Cleaning
Station, Inc., No. 08-cv-2028. 2008 WL 2388392, at *2 (N.D. Cal. June 6, 2008) (same); Ziarno,
2004 WL 838131, at *3 (same). Here, as noted, the Court cannot dismiss without prejudice to
allow mediation to occur because the mediation has already happened. Neither party cites – and
the Court is unable to locate through its own research – any case law addressing the appropriate
remedy in this factual scenario, where a contractual condition precedent to filing suit is satisfied
after the Plaintiffs file suit. 4
Nevertheless, even applying equitable considerations of the sort used in determining
whether to stay or dismiss an action – the mode of analysis proposed by Plaintiffs – the Court
concludes that dismissal of this action without prejudice is appropriate here. See Feld
Entertainment, Inc. v. ASPCA, 523 F.Supp.2d 1, 3 (D.D.C. 2007) (“In determining whether to
grant a stay, ‘the court, in its sound discretion, must assess and balance the nature and
substantiality of the injustices claimed on either side.”) (quoting Gordon v. Fed. Deposit Ins.
Corp., 427 F.2d 578, 580 (D.C. Cir. 1970)). In the cases cited by Plaintiffs, courts have focused
on three primary factors in determining the appropriate remedy: the harm of dismissal to the
Plaintiff, the harm of not dismissing to the Defendant, and the interests in judicial efficiency.
See N-Tron, 2010 WL 653760, at *8 (considering harm to plaintiff of dismissing case, harm to
defendant of not dismissing case, and questions of judicial economy); Loancraft, 2012 WL
4Plaintiffs do cite Perry v. Beggs, 581 F.Supp. 815, 816-17 (D.D.C. 1983), where the court
permitted a premature Title VII suit to proceed when plaintiff satisfied a condition precedent
after filing suit. There, the plaintiff received a right-to-sue notice from the EEOC only after
filing her Title VII suit. The court concluded that her subsequent receipt of the letter cured any
defect caused by filing suit prior to receiving the letter. Perry is inapposite here. In Perry, there
was no discussion of prejudice to the opposing party from permitting the premature suit to go
forward. Here, as discussed infra, allowing Plaintiff’s premature suit to ripen would reward the
Plaintiffs at the expense of the Defendants, who are deprived the opportunity to file suit first in
the forum of their choice.
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628617, at *3 (considering harm to Plaintiff in determining whether to stay or dismiss case).
Analyzing Plaintiffs’ claim under these three factors, dismissal without prejudice is plainly the
proper remedy.
Here, the harm to Plaintiffs of dismissing without prejudice is minimal. In N-Tron, the
court concluded that the harm of dismissing the case without prejudice “would be considerable,
inasmuch as a dismissal without prejudice would be tantamount to a dismissal with prejudice,
effectively barring it from ever litigating its fraud and deceit claims against [defendant] because
of the now-expired limitations period.” 2010 WL 653760, at *8. Here, there is no allegation that
Plaintiffs will be barred from ever litigating these claims. This dismissal is without prejudice,
and statutes of limitations do not appear to bar a renewed suit on these claims. See Ga. Code.
Ann. §§ 9-3-24, -25, -26. Moreover, even if Plaintiffs choose not to file suit in this Court, they
still have an opportunity to litigate these claims in the mirror-image proceeding currently
pending before the Southern District of Georgia. Accordingly, dismissing Plaintiffs’ suit without
prejudice will not significantly impair their interests.
By contrast, the harm to Defendants of allowing this case to proceed is significant. As
Defendants point out, the timing provisions in the contract – allowing suit either upon the
conclusion of mediation or sixty days after its commencement – set up an honest race to the
courthouse between the parties. Pls.’ Opp’n, Exhibit A, Section 34.3. Indeed, the EPC
Agreement explicitly preserves each party’s right to raise a first-to-file challenge to venue. Id.
Although this Court was one potential venue for suit, the contract makes clear that it was not the
exclusive venue. Id. By filing suit prematurely, Plaintiffs deprived Defendants of their right to
file suit first in the venue of their choosing. If this Court were to decide for Plaintiffs, and allow
this suit to proceed in spite of their failure to abide by the condition requiring mediation, it would
15
be setting a precedent that parties may disregard such conditions and pay no consequences so
long as they subsequently engage in fruitless mediation. Such a position would plainly render
the mediation requirement a nullity. Furthermore, it would reward parties who file suit
prematurely by eliminating the race to the courthouse contemplated in the contract, potentially
depriving a party of the first-to-file challenge that the contract expressly reserves. Plainly,
allowing this suit to proceed would not “place [Defendant] in precisely the same bargained-for
position it would have occupied had [Plaintiff] complied with the [mediation] clause before
filing suit in the first place.” N-Tron, 2010 WL 653760, at *8.
Finally, the interests of judicial efficiency do not outweigh these considerations. “The
Court has inherent power to control the disposition of the causes on its docket with economy of
time and effort for itself, for counsel, and for litigants.” Feld Entertainment, 523 F.Supp.2d at 5.
Although there is admittedly a loss in time and effort in dismissing this case without prejudice
rather than allowing it to proceed, the lack of harm to Plaintiffs from dismissal and the prejudice
to Defendants from a lack of dismissal plainly dwarf any marginal savings of time and effort.
Weighing these considerations, the Court concludes that dismissal without prejudice is the
appropriate remedy to protect the parties’ interests.
Accordingly, finding Plaintiffs’ arguments to the contrary unavailing, this Court
concludes that Plaintiffs’ suit was not timely brought under the EPC Agreement, as modified by
the June 13, 2012 letter between the parties. Because of the substantial prejudice to Defendants
that would result from excusing this error by Plaintiffs, the Court finds that dismissal without
prejudice is the appropriate remedy.
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IV. CONCLUSION
For all of the reasons stated herein, the Court finds that Plaintiffs’ suit is not timely under
the terms of the EPC Agreement governing this dispute. Accordingly, Defendants’ [20] Motion
to Dismiss the Complaint and Supporting Statement of Points and Authorities is GRANTED.
This action is hereby dismissed without prejudice. An appropriate Order accompanies this
Memorandum Opinion.
Dated: September 30, 2013
_________/s/______________
COLLEEN KOLLAR-KOTELLY
United States District Judge
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