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Cunningham & Associates, Plc, et al v. Arag

January 31, 2012


The opinion of the court was delivered by: Judge Beryl A. Howell


Pending before the Court is defendants ARAG, LLC, ARAG Services, LLC, and ARAG Insurance Company's Motion to Compel Mediation or, in the Alternative, to Dismiss. ECF No. 3. The defendants contend, inter alia,that the contract underlying this dispute requires plaintiffs Cunningham & Associates, PLC and Joseph Cunningham to submit to mediation prior to proceeding with this case. For the reasons explained below, the Court agrees and the defendants' motion to compel mediation is granted.


Plaintiffs Cunningham & Associates, PLC and Joseph Cunningham are a law firm and an attorney, respectively. The plaintiffs' claims against the defendants, an insurance company and its affiliates, arise out of a contract entered between the parties in May 2007 under which the plaintiffs agreed to provide legal services to the defendants' insureds.*fn1 Compl. ¶¶ 10-12. The plaintiffs allege that the defendants abused their discretion under the contract to pay the plaintiffs reasonable fees for the representations of the defendants' policyholders. Id. ¶ 18. Specifically, the plaintiffs assert that legal representation associated with four of the defendants' insured demanded over 900 hours, for which the plaintiffs were collectively compensated approximately $2,300.00. Id. ¶¶ 23-48. The defendants then terminated their contract with the plaintiffs "without stating the basis for its termination but clearly resulting from its refusal to reimburse the plaintiffs for reasonable fees and expenses incurred." Id. ¶ 21.

On October 4, 2011, the plaintiffs initiated this lawsuit against the defendants in Superior Court of the District of Columbia, alleging fraud in the inducement (Count I), negligent misrepresentation (Count II), breach of the implied contractual duty of good faith and fair dealing (Count III), Quantum Meruit (Count IV), unjust enrichment (Count V), and violations of the District of Columbia Consumer Protection Act (Count VI). In compensation for their damages, the plaintiffs seek $1,062,860.00, plus interest, costs, and reasonable attorney's fees.

On November 7, 2011, the defendants removed the case to this Court pursuant to 28 U.S.C. § 1332(a) because the amount in controversy exceeds $75,000 and there is complete diversity between the parties.*fn2 ECF No. 1. Shortly thereafter, on November 14, 2011, the defendants' filed the instant motion seeking to compel the plaintiffs to mediate the dispute in Des Moines, Iowa prior to proceeding with this case or, in the alternative, to dismiss certain of the plaintiffs' claims.*fn3 This motion is currently pending before the Court. As explained below, the defendants' motion to compel mediation is granted and this case shall be stayed for a period of forty-five days pending completion of mediation as required by the contract between the parties.


The defendants argue that the contract underlying this lawsuit contains an "express provision" that the parties are to mediate any dispute arising under the agreement, and the plaintiffs must therefore submit to such mediation prior to instituting an action in this Court. Defs.' Mem. Supp. Mot. Compel Mediation, ECF No. 3, at 4. The Court agrees that the mediation provision in the contract clearly and unambiguously requires the parties to submit to a mediation session in Des Moines, Iowa.

"Under general contract law, the plain and unambiguous meaning of an instrument is controlling, and the Court determines the intention of the parties from the language used by the parties to express their agreement." A-J Marine, Inc. v. Corfu Contractors, Inc., No. 07-cv-1642, 2011 WL 4048793, at *13 (D.D.C. Sept. 13, 2011) (quoting Washington Metro. Area Transit Auth. v. Mergentime Corp., 626 F.2d 959, 961 (D.C. Cir. 1980)). "Interpretation of a contract, like statutory and treaty interpretation, must begin with the plain meaning of the language." AFGE, Local 2924 v. FLRA, 470 F.3d 375, 381 (D.C. Cir. 2006). "[W]here the language of the particular agreement or provision is clear and unambiguous, the Court must assume that the meaning ordinarily ascribed to the words used reflects the intentions of the parties." Pillsbury Winthrop Shaw Pittman, LLP v. Capitol Hill Grp., 447 B.R. 387, 394 (D.D.C.2011).

The contract between the parties provides in pertinent part under the section entitled "Mediation":

Parties agree that should a disagreement arise, they will use their best efforts to cooperate in finding an appropriate solution. In the event a solution cannot be found, the parties agree to participate in at least four hours of mediation in accordance with the Commercial Mediation Procedures of American Arbitration Association to be held in Des Moines, Iowa. The parties agree to share equally in the costs of mediation. The mediation shall be administered by a mutually agreed upon mediator.

Compl., Ex. 2, ARAG Attorney Agreement, at §5.C. The plaintiffs do not dispute that this provision is express and unequivocal. This contractual language, combined with consideration of the "long-standing and very strong public policy in this country favoring mediation and settlement," strongly compels the Court to enforce this provision in the parties' agreement. See Ohio Willow Wood Co. v. Thermo-Ply, Inc., 769 F. Supp. 2d 1065, 1068 (E.D. Tex. 2011).

Despite the clear terms of the contract, the plaintiffs contend that they should not be required to mediate this dispute in Iowa for four reasons. First, the plaintiffs contend that the defendants "waived any right to mediation under the parties' agreement" because they failed to respond in a timely manner during the parties initial negotiations regarding the location of a potential mediation session. Mem. Supp. Pls.' Opp'n Mot. Compel Mediation, ECF No. 9, at 11. The plaintiffs state that they requested the defendants to respond to their proposal "within ten (10) days," but "were compelled to file the instant action after receiving no further response from [the defendants] for almost a month and under the assumption that [the defendants] had forfeited any right to mediation." Id. The defendants, however, respond that the contract does not provide any procedure under which a party forfeits its right to mediation. Defs.' Reply, ECF No. 10, at

2. On this point, they are correct. While a waiver of contract terms may be implied from conduct, "the acts, conduct or circumstances relied upon to show waiver must make out a clear case." America v. Mills, 654 F. Supp. 2d 28, 33 (D.D.C 2009) (internal quotation and citation omitted). The defendants were not required by the relevant mediation provision, nor any other provisions in the agreement, to respond within ten days to the plaintiffs' proposals. See id. ("[I]mplied waiver may be inferred by conduct or actions that mislead the breaching party into reasonably believing that the rights to a claim arising from the breach was waived," quoting Long Island Sav. Bank, FSB v. United States, 503 F.3d 1234, 1252 (Fed. Cir. 2007) (emphasis in original)). This ...

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