PHYSICIAN AND TACTICAL HEALTHCARE SERVICES, LLC v. INOVA HEALTH CARE SERVICES

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

PHYSICIAN AND TACTICAL

HEALTHCARE SERVICES, LLC, 1:20-cv-10808-NLH-KMW

Plaintiff,

v. OPINION

INOVA HEALTH CARE SERVICES,

Defendant.

APPEARANCES:

JONATHAN P. RARDIN

ARCHER & GREINER PC

ONE LIBERTY PLACE, 32ND FLOOR

1650 MARKET STREET

PHILADELPHIA, PA 19103

On behalf of Plaintiff

SUSAN KARLOVICH

WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP

200 CAMPUS DRIVE

FLORHAM PARK, NJ 07932

On behalf of Defendant

HILLMAN, District Judge

This matter concerns claims by Plaintiff Physician and

Tactical Healthcare Services, LLC (“PATHS”) that Defendant Inova

Health Care Services breached a contract the two entered for

Plaintiff to provide certain medical billing services for

Defendant. Presently before the Court is Defendant’s motion to

dismiss Plaintiff’s claims, or in the alternative to transfer

the action to the District Court for the Eastern District of

Virginia. For the reasons expressed below, Defendant’s motion

will be granted, and Plaintiff’s claims will be dismissed

without prejudice.

BACKGROUND

Plaintiff is a business which provides account receivable

management services, qualifying eligible patients for Medicaid

coverage and providing related consulting services to healthcare

providers. Defendant is a healthcare organization operating

hospital facilities in Virginia. On August 23, 2018, the two

parties entered into a Services Agreement, pursuant to which

PATHS agreed to assist Inova in qualifying its patients for

Medicaid coverage for services provided to eligible patients at

five medical facilities operated by Inova for an anticipated

period of two years. That same day, the parties also signed a

document entitled “Appendix 2 – Inova IT Terms and Conditions.”

Over the following months, the parties began to perform on

the contract, with multiple issues arising that are relevant to

their underlying dispute but not relevant to the Court’s

analysis in this Opinion. Then, on June 14, 2019, an official

from Inova emailed PATHS, purporting to terminate their contract

pursuant to “section 3.a of that agreement, which allows either

party to terminate the agreement without cause after the initial

12 months, upon ninety days’ prior written notice.” (ECF No. 5

at ¶ 44). Plaintiff responded by rejecting the idea that

Defendant had properly terminated the agreement, and requesting

that Defendant inform it when Inova officials would be available

to meet to discuss the issue.

Defendant followed by sending a second notice of

termination, this time asserting that it was doing so for cause

under the Services Agreement, which permits either party to

unilaterally terminate the agreement for cause so long as they

provide 30 days notice. Plaintiff again responded by declaring

that Defendant’s termination was baseless, and further asserted

that “[u]nless Inova withdraws the improper 30-day notice of

termination, PATHS does not intend to meet to attempt to consult

and negotiate to reach a solution pursuant to Paragraph 16 of

the Service Agreement as Inova has made its intentions to evade

its obligations under the service Agreement clear.” (ECF No.

11-11, Ex. I).

Finally, Plaintiff filed its initial complaint in this

action on August 19, 2020. (ECF No. 1). After this Court

issued an Order to Show Cause regarding this Court’s subject

matter jurisdiction over the action, Plaintiff filed the

operative Amended Complaint on August 28, 2020. (ECF No. 5).

Plaintiff’s complaint asserts five causes of action: three

counts of breach of contract for improper termination, refusal

to permit access to certain locations, and refusal to refer

patients timely, as well as counts for breach of the implied

covenant of good faith and fair dealing and for fraud in the

inducement. Defendant responded to the complaint by filing the

presently pending motion to dismiss on October 1, 2020. (ECF

No. 9). Plaintiff filed a brief in opposition to the motion on

November 2, 2020, (ECF No. 11), and Defendant filed a brief in

further support of its motion on November 16, 2020. (ECF No.

14). The motion to dismiss is therefore fully briefed and ripe

for adjudication.

DISCUSSION

I. Subject Matter Jurisdiction

This Court has jurisdiction over Plaintiff’s claims under

28 U.S.C. § 1332, as there is complete diversity of the parties

and the amount in controversy exceeds $75,000.

II. Legal Standard for Motion to Dismiss under Rule 12(b)(3)

and 12(b)(6)

When considering a motion to dismiss a complaint for

failure to state a claim upon which relief can be granted

pursuant to Federal Rule of Civil Procedure 12(b)(6), a court

must accept all well-pleaded allegations in the complaint as

true and view them in the light most favorable to the plaintiff.

Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well

settled that a pleading is sufficient if it contains “a short

and plain statement of the claim showing that the pleader is

entitled to relief.” Fed. R. Civ. P. 8(a)(2).

“While a complaint attacked by a Rule 12(b)(6) motion to

dismiss does not need detailed factual allegations, a

plaintiff’s obligation to provide the ‘grounds’ of his

‘entitle[ment] to relief’ requires more than labels and

conclusions, and a formulaic recitation of the elements of a

cause of action will not do . . . .” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (alteration in original)

(citations omitted) (first citing Conley v. Gibson, 355 U.S. 41,

47 (1957); Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc.,

40 F.3d 247, 251 (7th Cir. 1994); and then citing Papasan v.

Allain, 478 U.S. 265, 286 (1986)).

To determine the sufficiency of a complaint, a court must

take three steps: (1) the court must take note of the elements a

plaintiff must plead to state a claim; (2) the court should

identify allegations that, because they are no more than

conclusions, are not entitled to the assumption of truth; and

(3) when there are well-pleaded factual allegations, a court

should assume their veracity and then determine whether they

plausibly give rise to an entitlement for relief. Malleus v.

George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 664, 675, 679 (2009) (alterations,

quotations, and other citations omitted).

A district court, in weighing a motion to dismiss, asks

“not whether a plaintiff will ultimately prevail but whether the

claimant is entitled to offer evidence to support the claim.”

Twombly, 550 U.S. at 563 n.8 (quoting Scheuer v. Rhoades, 416

U.S. 232, 236 (1974)); see also Iqbal, 556 U.S. at 684 (“Our

decision in Twombly expounded the pleading standard for ‘all

civil actions’ . . . .”); Fowler v. UPMC Shadyside, 578 F.3d

203, 210 (3d Cir. 2009) (“Iqbal . . . provides the final nail in

the coffin for the ‘no set of facts’ standard that applied to

federal complaints before Twombly.”). “A motion to dismiss

should be granted if the plaintiff is unable to plead ‘enough

facts to state a claim to relief that is plausible on its

face.’” Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at

570).

Similarly, in evaluating a motion to dismiss pursuant to

Rule 12(b)(3), the Court accepts the allegations in the

complaint as true, unless they are contradicted by defendants’

sworn statements. Bookman v. First Am. Mktg. Corp., 459 F.

App’x 157, 158 n.1 (3d Cir. 2012). Defendants bear the burden

of showing that venue is improper. Id. at 160.

III. Analysis

While Defendant at times cites to both New Jersey and

Virginia case law, both the Services Agreement and Addendum 2

clearly provide that Virginia law governs the construction and

enforcement of the agreements. (ECF No. 5-1, Ex. A at 10, ¶ 12

and 4, ¶ 22). As a federal court sitting in diversity, the

Court applies New Jersey law regarding choice of law provisions.

Klaxon Co. v. Stentor Elec. Mfg. Co. Inc., 313 U.S. 487, 496, 61

S.Ct. 1020, 85 L.Ed. 1477 (1941). In New Jersey, “effect [is

given] to contracting parties’ private choice of law clauses

unless they conflict with New Jersey public policy.” General

Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 331 n.21

(3d Cir. 2001) (citing Instructional Sys., Inc. v. Computer

Curriculum Corp., 130 N.J. 324, 614 A.2d 124, 133 (N.J. 1992)).

As the interpretation and enforceability of the Dispute

Escalation provision clearly falls within the ambit of the

choice of law provision, and the Court sees no reason why

enforcement of the provision would conflict with New Jersey

public policy, the Court will therefore apply Virginia law in

its analysis of the pending motion.

The Defendant here has raised multiple separate arguments

for why the complaint must either be dismissed or transferred:

it argues that (1) the Dispute Escalation clause required the

parties to mediate their claims before initiating litigation,

(2) the forum selection clause required this complaint to be

filed in Virginia, (3) this Court lacks personal jurisdiction

over Defendant, (4) the complaint should be dismissed or

transferred due to improper venue, and (5) the complaint must be

dismissed for insufficient service of process. The Court will

turn first to Defendant’s argument focused on the Dispute

Escalation provision’s mediation requirement.

The Dispute Escalation provision, Section 16 of the

Services Agreement, provides a process by which the parties must

first attempt to resolve any disputes that arise between them

before resorting to litigation. Specifically, it states:

16. DISPUTE ESCALATION. In the event of any dispute,

claim, question, or disagreement arising from or

relating to this Agreement or the breach thereof, the

parties hereto shall use their best efforts to settle

the dispute, claim, question, or disagreement. To

this affect they shall consult and negotiate with

each other in good faith and, recognizing their

mutual interests, attempt to reach a just and

equitable solution satisfactory to both parties. If

they do not reach such solution within a period of

60 days, then, upon notice by either party to the

other, all disputes, claims, questions, or

disagreements shall be subject to mediation conducted

in accordance with the Local Rule of Procedure

adopted by the U.S. District Court of Virginia for

the Early Neutral Evaluation Mediation Program. If

the dispute, claim, question, or disagreement is not

resolved pursuant to such mediation procedures, each

party will be entitled to seek whatever legal or

equitable remedies that may be available to such

party under this Agreement.

(ECF No. 5-1, Ex. A at 3, § 16).

Defendant argues that this action must be “dismissed so

that PATHS can pursue its claims in mediation conducted in

accordance with the Local Rule of Procedure adopted by the U.S.

District Court of Virginia for the Early Neutral Evaluation

Mediation Program.” (ECF No. 9-2 at 15). Plaintiff, for its

part, simply argues that Defendant is responsible for this

failure to mediate, because it “improperly terminated the

Service Agreement on multiple occasions without regard to its

obligations under this Paragraph or any attempt to resolve any

dispute and, finally, before the mediation could occur,

effectively waiving its right to termination.” (ECF No. 11 at

20 n.5).

The Court first notes that Defendant’s brief, despite have

raised the existence of this provision as its first and central

argument for why this action should be dismissed, does not

specify the rule under which it moves for that dismissal and

refers to it in its moving brief as a forum selection clause.

While Defendant’s arguments are interwoven with their points

regarding a separate provision also disputed by the parties,

which is more accurately described as a forum selection clause,

Defendant repeatedly states its belief that the mediation

requirement found in Section 16 mandates dismissal of this

action. See, e.g., (ECF No. 9-2 at 14) (“By signing the

Services Agreement, PATHS contractually agreed to mediate in

Virginia before seeking other legal remedies . . .”) and (Id. at

15) (“The parties manifested clear intent by agreeing to mediate

in Virginia prior to filing suit . . .”).

The parties have not briefed which rule this argument is

most properly assessed under; other federal courts, faced with

similar provisions governed by Virginia law, have addressed such

questions as arguments that the Court lacked subject matter

jurisdiction under Rule 12(b)(1) or that the plaintiff had

failed to state a claim under Rule 12(b)(6). See Tattoo Art,

Inc. v. Tat Intern., LLC, 711 F. Supp. 2d 645 (E.D. Va. 2010)

(granting motion to dismiss for lack of subject matter

jurisdiction due to plaintiff’s failure to engage in mediation

prior to commencing litigation); American Technology Services,

Inc. v. Universal Travel Plan, Inc., No. Civ.A.1:05CV802(JCC),

2005 WL 2218437 (E.D. Va. Aug. 8, 2005) (granting motion to

dismiss under Rule 12(b)(6) for failure to state a claim due to

plaintiff’s failure to engage in mediation prior to commencing

litigation). Here, the Court will defer to Defendant’s framing

that this basis for dismissal is directly related to its

argument that the complaint must be dismissed due to the

existence of a forum-selection cause, which other courts in this

district have recently addressed under Rule 12(b)(6). See,

e.g., Zydus Worldwide DMCC v. Teva API Inc., 461 F. Supp. 3d 119

(D.N.J. 2020). However, the Court notes that the specific

mechanism under which this argument is analyzed has no

substantive impact on the motion at hand, for the simple reason

that the facts and evidence that both parties rely upon in

arguing whether this provision applies or impacts the present

case are all directly referenced in and attached to the Amended

Complaint. Accordingly, the Court will proceed to assess the

parties’ full arguments regarding the import and application of

the Dispute Escalation provision.

The initial question before the Court then is whether the

Dispute Escalation provision required the parties to attempt

mediation of Plaintiff’s claims before the filing of this

lawsuit, and whether, if the provision did, Plaintiff’s claims

must therefore be dismissed. “A contract's condition precedent

to initiating legal action is enforceable in Virginia.” Primov

v. Serco, Inc., 296 Va. 59, 66, 817 S.E.2d 811, 814 (2018)

(citing TC MidAtlantic Dev., Inc. v. Commonwealth, 280 Va. 204,

210, 695 S.E.2d 543, 547 (2010)). And Virginia law specifically

enforces conditions precedent like the one here, which require

parties to engage in some form of mediation prior to initiating

legal action.

In Primov v. Serco, for example, the Virginia Supreme Court

upheld a lower court’s decision to dismiss a complaint with

prejudice due to the plaintiff’s failure to abide by the

contract’s mediation requirement. There, the parties’ contract

provided that “The parties shall attempt in good faith to

resolve any dispute arising out of or relating to this Agreement

promptly by confidential mediation. If the dispute has not been

resolved by mediation within 60 days of a written request to

mediate made by one of the parties, then either party may bring

suit . . .” Id. at 64. The lower court found that “[t]he plain

language of the mandatory mediation provision in the Assignment

Letter clearly states the parties must attempt mediation outside

of court at the written request of the aggrieved party at least

60 days prior to initiating litigation,” and accordingly held

that “[t]he appropriate remedy when a party fails to satisfy a

condition precedent triggering the right to litigation is

dismissal.” Primov v. Serco, No. CL-2016-17124, 2017 WL

9887365, at *6-7 (Va. Cir. Ct. July 19, 2017).

In a similarly straightforward case, Pruett v. U.S. Bank

Nat. Ass'n, No. 1:12CV00006, 2012 WL 5465554 (W.D. Va. May 4,

2012), the court was faced with a contract providing that “[i]n

an effort to avoid the expense and delay of litigation, the

parties agree to submit any disputes or claims arising out of

this Contract, including those involving the Listing Company or

the Selling Company, to mediation prior to instituting

litigation.” Id. at *1. That court easily found that the

failure to mediate warranted dismissal: “The language in the

Agreement requiring nonbinding mediation prior to instituting

litigation is clear and there is no doubt that by the terms of

the Agreement, [Plaintiff] was required to submit his claims to

mediation before filing an action in court. Because the

Complaint contains no allegation of performance of this

requirement, its dismissal is appropriate.” Id.

And these are far from the only cases applying Virginia law

to reach this conclusion. In fact, Virginia’s state and federal

courts have been consistent in enforcing contractual provisions

requiring that parties mediate their claims before filing

lawsuits. See, e.g., Galloway v. Priority Imports Richmond,

LLC, No. 3:19-cv-209, 2019 WL 4307874, at *1, 3 (E.D. Va. Sept.

11, 2019) (enforcing provision requiring that “the Parties will

first attempt to resolve the Dispute through nonbinding

mediation conducted by a neutral third party prior to

instituting any other legal action”); Bates v. Purdon, No.:

CL18-4589, 2019 WL 5965230, at *7 (Va. Cir. Ct. Jan. 25, 2019)

(“The Mediation Provision requires that the parties mediate

disputes before instituting litigation. Because the parties have

not yet participated in mediation and the [Defendants] have not

waived their right to mediate, the Court . . . dismisses the

Complaint without prejudice.”); Dominion Transmission, Inc. v.

Precision Pipeline, Inc., No. 3:13-cv-442–JAG, 2013 WL 5962939,

at *1 (E.D. Va. Nov. 6, 2013) (“[T]he Court finds that the

plaintiff did not abide by its contractual obligation to submit

the dispute to formal mediation, and that accordingly, this

matter should not yet be before this Court. The Court therefore

GRANTS the defendant's Motion to Dismiss, and DISMISSES the

plaintiff's complaint WITHOUT PREJUDICE.”); Tattoo Art, Inc.,

711 F. Supp. 2d at 649-50, 652 (holding that “Plaintiff failed

to satisfy the condition precedent necessary to trigger the

right to initiate litigation” because the parties did not

attempt mediation despite contractual providing stating that

“[i]n the event of any dispute arising from this Agreement, the

parties agree to submit the dispute to mediation in Virginia

Beach, Virginia, prior to filing any action to enforce this

Agreement.”).

It therefore appears clear that the Dispute Escalation

clause’s unequivocal statement that “all disputes, claims,

questions, or disagreements shall be subject to mediation

conducted in accordance with the Local Rule of Procedure adopted

by the U.S. District Court of Virginia for the Early Neutral

Evaluation Mediation Program,” and that the parties may only

resort to other legal remedies if their claim “is not resolved

pursuant to such mediation procedures,” is enforceable under

Virginia law. Accordingly, Plaintiff was not permitted to file

this lawsuit until the parties had attempted to mediate their

claims. Plaintiff does not dispute that no such mediation

occurred here.

Instead, Plaintiff appears to put forward only one argument

as to why the mediation requirement is not enforceable in this

action: “Mediation in this matter did not occur because Inova

improperly terminated the Service Agreement on multiple

occasions without regard to its obligations . . . or any attempt

to resolve any dispute and, finally, before the mediation could

occur, effectively waiving its right to termination.” (ECF No.

11 at 20 n.5). Plaintiff cites no case law to support this

argument, and this contention appears nowhere else in the

argument section of its brief besides the footnote quoted above.

However, waiver of a condition precedent like the Dispute

Escalation provision’s mediation requirement is a valid

argument, and the Court will address whether it excuses the

failure to mediate here. “Waiver is an intentional

relinquishment of a known right” that consists of two elements:

(1) “knowledge of the facts basic to the exercise of the right”

and (2) “the intent to relinquish that right.” Va. Polytechnic

Inst. & State Univ. v. Interactive Return Serv., 267 Va. 642,

652, 595 S.E.2d 1, 6 (2004). “The party relying on a waiver has

the burden to prove the essentials of such waiver ... by clear,

precise and unequivocal evidence.” Id.

Plaintiff’s waiver argument is focused on the chain of

communications surrounding Defendant’s attempt to terminate the

agreement. As described above, Defendant initially informed

Plaintiff of its intent to terminate the agreement in June 2019.

After Plaintiff responded by referencing the Dispute Escalation

provision and requesting Defendant inform it when Inova

personnel would be available to meet with PATHS personnel to

attempt to resolve the issue, Defendant then sent a second

letter, purporting to terminate the agreement for cause; this

termination is the basis for Count I of Plaintiff’s complaint

for breach of contract via improper termination. In response,

Plaintiff sent its own second letter, declaring that “[u]nless

Inova withdraws the improper 30-day notice of termination, PATHS

does not intend to meet to attempt to consult and negotiate to

reach a solution pursuant to Paragraph 16 of the Service

Agreement as Inova has made its intentions to evade its

obligations under the service Agreement clear.” (ECF No. 5-1,

Ex. 8).

At its core, Plaintiff’s argument is that the Dispute

Escalation clause required the parties to first meet and

discuss, and then mediate, "any dispute, claim, question, or

disagreement,” and that since Defendant did not do so prior to

declaring that it was terminating the agreement for cause,

Defendant waived its right to later demand mediation prior to

Plaintiff filing this lawsuit.

However, Plaintiff’s argument runs into an issue that its

briefing entirely ignores: this reading of the provision’s

requirement runs into conflict with the exact Termination clause

underlying Count I of their complaint. The Termination clause

of the Services Agreement, found in § 3, is clear: “This

Agreement may be terminated by either party with cause, upon

thirty (30) days prior written notice and without cause after

the initial 12 months, upon ninety (90) days prior written

notice.” (ECF No. 5-1, Ex. A at 3, ¶ 3). The Services

Agreement therefore affords both parties the right to

unilaterally terminate the contract, pursuant to certain notice

requirements and the requirement that they wait until 12 months

have passed if terminating without cause. Plaintiff here, and

in their second responsive letter sent to Defendant, essentially

asserts that Defendant’s declaration that they were exercising

this unilateral right to terminate for cause itself constituted

waiver of the mediation requirement.

But such a reading would swallow the language of the

Termination provision and, at least to some extent, negate the

parties’ right to terminate for cause upon only 30 days notice;

the parties here agreed upon this specific termination

provision, presumably believing that there was some benefit

gained from being able to exit their contractual agreement in

that time frame if they had cause to do so. Under Virginia law,

“[w]hen two provisions of a contract seemingly conflict, if,

without discarding either, they can be harmonized so as to

effectuate the intention of the parties as expressed in the

contract considered as a whole, this should be done.” Plunkett

v. Plunkett, 271 Va. 162, 168, 624 S.E.2d 39, 42 (2006) (quoting

Ames v. American Nat'l Bank of Portsmouth, 163 Va. 1, 39, 176

S.E. 204, 217 (1934)). Here, such harmonization is simple: the

Court finds that the Dispute Escalation clause did not require

mediation prior to Defendant’s decision to exercise its

unilateral termination right.

Defendant’s counterargument regarding waiver intersects

with this idea. Defendant frames the chain of events here

slightly differently: it contends that “[i]t was Inova’s notice

of termination, and Plaintiff’s objection to such notice, that

created the dispute requiring mediation.” (ECF No. 14 at 9).

The Court agrees. The dispute in question here is whether

Defendant properly terminated the agreement; Defendant purported

to assert its right to terminate the contract, first without

cause and then for cause, and Plaintiff objected and argued that

its termination was improper. At that stage, the Dispute

Escalation provision’s mediation requirement became relevant,

and required mediation before Plaintiff could sue for breach of

contract based on that improper termination. Rather than doing

so, Plaintiff straightforwardly and unequivocally declared it

would not comply with the Dispute Escalation provision’s

requirements unless Defendant revoke its purported termination:

“Unless Inova withdraws the improper 30-day notice of

termination, PATHS does not intend to meet to attempt to consult

and negotiate to reach a solution pursuant to Paragraph 16 of

the Service Agreement . . .” (ECF No. 5-1, Ex. 8). These

facts, conceded by Plaintiff, not only demonstrate that

Defendant did not waive the mediation requirement, but in fact

make clear that fault for the failure to mediate the dispute

before resorting to legal action lays at Plaintiff's own feet.

This finding is consistent with the results of similar

cases under Virginia law. In Tattoo Art, for example, the

relevant contract similarly required that the parties submit any

contractual disputes to mediation before instituting litigation.

711 F. Supp. 2d at 649-50. The plaintiff there sent a letter

terminating the contract based on the defendant’s failure to

report sales and pay royalties, and its unauthorized alteration

of the plaintiff’s copyrighted work. Id. at 652. After

defendant did not cease its activity, plaintiff suggested

mediation; the mediation suggestion was rebuffed, and plaintiff

ultimately filed suit. Id. The Court there, faced even with a

previous suggestion from the plaintiff that the parties should

mediate, found that waiver had not occurred because the

plaintiff had not met the high bar of demonstrating the

defendant “knowingly and intentionally relinquish[ed] their

express right[]” to mediation. Id. at 652-53. Similarly, in

Bates, the plaintiff had actively demanded the parties mediate a

dispute that arose after the defendant allegedly breached their

contract. 2019 WL 5965230 at 5. The defendant there completely

ignored the mediation request letters, and the plaintiff decided

to file suit. Id. at 6. But even in that case, the Virginia

court held that it had “been presented nothing evidencing that

the [Defendants] knowingly and intentionally relinquished their

right to mediate under the Agreement,” and dismissed the

complaint without prejudice. Id. at 7.

Plaintiff here has not put forth “clear, precise and

unequivocal evidence” that Defendant knowingly and intentionally

waived its right to mediate this dispute under the Dispute

Escalation provision, and therefore has failed to meet the “high

standard required for establishing waiver”. Dominion

Transmission, 2013 WL 5962939 at *6. To the contrary,

Plaintiff’s own factual allegations and evidence demonstrate

that it was Plaintiff itself that almost immediately declared

that it had no intention of abiding by the mediation

requirement, and it was obviously Plaintiff who then proceeded

to initiate this action. Accordingly, the Court finds that

Defendant has not waived the mediation requirement, and that

Plaintiff violated the Dispute Escalation provision of the

Services Agreement when it filed this lawsuit without the

parties having yet attempted to mediate their dispute regarding

Defendant’s termination of the Services Agreement.

The Court will therefore grant Defendant’s motion to

dismiss the complaint without prejudice, so that the parties may

mediate their dispute. As this decision is dispositive, the

Court makes no findings regarding the proper forum for any

potential future litigation, and further does not reach

Defendant’s arguments regarding personal jurisdiction or

insufficient service of process. However, the Court recognizes

that the parties further dispute whether their contractual

agreement would require that mediation take place in Virginia.

As the Court is dismissing this action to allow for mediation,

it will further address this related, narrow question.

Defendant’s main argument in favor of a requirement that

mediation take place in Virginia is based on the Dispute

Escalation provision’s requirement that mediation shall be

“conducted in accordance with the Local Rule of Procedure

adopted by the U.S. District Court of Virginia for the Early

Neutral Evaluation Mediation Program.” Defendant points the

Court to the Eastern District of Virginia’s Local Rule 83.6,

which governs such mediations in that district, and notes that

it advises that mediation by a district judge or magistrate

judge is available to litigants in all civil cases. The rule

does have such a provision. (ECF No. 14-3, Ex. 12 at Rule

83.6(C)) (“All district judges, magistrate judges, and

bankruptcy judges are authorized to act as mediators or

neutrals.”). According to Defendant, the rule “contemplates

that the mediator would be a United States district judge or

magistrate judge who are all trained and authorized to act as

mediators or ‘neutrals.’ It follows then that the mediation

would therefore be conducted in the forum agreed to by the

parties, the United States District Court, Eastern District of

Virginia where the judge or magistrate sits.” (ECF No. 14 at

9).

Contrary to Defendant’s implication, however, the rule

explicitly and unequivocally does not require mediation to be

conducted by a district or magistrate judge. The subsection of

the rule immediately prior to the subsection cited by Defendant

states that “The parties by consent may select and compensate

any mutually acceptable non-judicial mediator or neutral.” (ECF

No. 14-3, Ex. 12 at Rule 83.6(B)). Accordingly, by Rule 83.6’s

own terms, it does not require that a mediation be conducted in

any specific forum, or by any specific mediator. Nor does the

simple fact that the Dispute Escalation clause mandates that

mediation shall be “conducted in accordance with the Local Rule

of Procedure adopted by the U.S. District Court of Virginia for

the Early Neutral Evaluation Mediation Program” mean that

mediation must take place in Virginia or in that District. As

Plaintiff correctly explains, the Dispute Escalation clause

“merely dictates the procedural rules applicable to a

mediation,” rather than dictating exactly where it must occur.

And while the Court makes no finding regarding whether the

forum selection clause found in Appendix 2 applies to the claims

brought here, it does find that, even were it to apply, it would

not require a specific forum for the parties’ mediation. The

clause in Appendix 2 provides that “any action to enforce or to

construe any provision of the Agreement may be brought only in

the Commonwealth of Virginia, notwithstanding the

appropriateness of the jurisdiction [of] the courts of any other

state.” (ECF No. 5-1, Ex. A at 10, § 12). The term “action,”

when used in the legal context and in both Virginia’s code for

civil procedure and its version of the Uniform Commercial Code,

generally refers to judicial proceedings in court. See, e.g.,

Black’s Law Dictionary (11th Ed. 2019) (Defining “action” as “a

civil or criminal judicial proceeding”); VA Code Ann. § 8.01-

2(1) (Virginia’s Civil Remedies and Procedure Code stating that

“‘Action’ and ‘suit’ may be used interchangeably and shall

include all civil proceedings whether upon claims at law, in

equity, or statutory in nature and whether in circuit courts or

district courts.”); VA ST § 8.1A-201 (Virginia’s version of the

Uniform Commercial Code defining “Action” by describing it as

“in the sense of a judicial proceeding”); “Action.” Merriam-

Webster.com Dictionary, Merriam-Webster, https://www.merriam-

webster.com/dictionary/action (accessed May 16, 2021) (defining

“action” as “the initiating of a proceeding in a court of

justice by which one demands or enforces one's right . . . [or]

the proceeding itself”).

Alternatively, Title 8.01 of the Virginia Annotated Code,

which covers Civil Remedies and Procedures, includes a Chapter

21.2 governing “Mediation.” That chapter defines mediation as

“a process in which a mediator facilitates communication between

the parties and, without deciding the issues or imposing a

solution on the parties, enables them to understand and to reach

a mutually agreeable resolution to their dispute” — a definition

which in no way overlaps with the same Title’s definition of

“action.” VA Code Ann. § 8.01-581.21. Accordingly, both

general definitions and Virginia statutory law appear to

distinguish between actions, which are “civil” or “judicial”

proceedings in court, and mediations such as that required by

the Dispute Escalation provision.

This reading of the term as used in the contract here is

only further strengthened by the Dispute Escalation provision’s

explanation that Virginia is required as the forum for actions

to construe or enforce the Services Agreement “notwithstanding

the appropriateness of the jurisdiction [of] the courts of any

other state,” which again implies that the provision itself

applies to actions brought in court, not a mediation attempting

to resolve the dispute before instituting a civil lawsuit. The

Court finds that this provision, by its clear language, governs

the proper forum for actions brought in court; it does not sweep

so broadly as to require a specific forum for pre-litigation

mediation between the parties. Accordingly, while the parties

must mediate their claims before resorting to civil litigation,

and that mediation must be conducted in accordance with the

Local Rule of Procedure adopted by the U.S. District Court of

Virginia for the Early Neutral Evaluation Mediation Program, no

specific forum or neutral mediator is required.

CONCLUSION

For the reasons expressed above, Defendant’s motion to

dismiss (ECF No. 9) will be granted, and Plaintiff’s claims will

be dismissed without prejudice so as to allow the parties to

engage in mediation of their dispute.

An appropriate Order will be entered.

Date: May 19, 2021 /s Noel L. Hillman

At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.