The ABA published another interesting article discussing the dismissal of a third-party complaint because the parties failed to mediate as required by their contract. Entitled “Failure to Mediate Causes Dismisses of Case” by Michael Stefanilo, Jr, the article (dated March 23,2022) highlights Rivas v CBK Lodge General Partner, LLC, U.S. Dist. Ct. (M.D.Pa. 2022) 3:19-cv-01948 (July 27, 2021) in which plaintiff Jacqueline Rivas sued defendant CBK ad CBK Lodge General Partner, LLC (“Camelback”) which operated a water park for injuries she sustained when its water slide allegedly malfunctioned. Pursuant to a mandatory mediation program set up by the court, Rivas and Camelback attended mediation which was not successful. (Id. at 1.)
Camelback then sought and was granted leave to file a third-party complaint against the manufacturer of the water slide -Whitewater West Industries, Ltd. (Whitewater)- for indemnification and contribution claiming that as the manufacturer of the slide, Whitewater should bear the ultimate responsibility to Plaintiff for her injuries. Whitewater responded by filing a motion to dismiss claiming that the contract between it and Camelback contained a mandatory pre-litigation mediation clause. Since Camelback did not abide by this provision, the Third-Party Complaint should be dismissed. (Id. at 2.)
In its opposition to the motion, Camelback urged that the contract provision in question does not apply to “third party personal injury litigation” and so is of no moment. (Id.)
The provision in question provided:
In the event that any dispute arises between the parties to this Contract, the parties shall first endeavor to settle the dispute through direct discussions between their respective authorized representatives designated for such purpose. If the authorized representatives cannot resolve the dispute, the parties shall next endeavor to resolve the dispute through mediation. Mediation shall be conducted at [CBK’s] offices in Cohoes, New York under the Construction Industry Mediation Rules of the American Arbitration Association (“AAA”) by a mediator who is experienced and knowledgeable about the construction industry and construction contracts…. Unless otherwise agreed in writing, [Whitewater] shall continue with the Work and maintain the Project Schedule during any dispute resolution proceeding. (Id. at 4.)
The trial court determined that the language “any dispute between the parties” meant just that: ANY dispute! While the parties may have meant it to apply to construction disputes arising during the course of construction as indicated by the succeeding sentences in the quoted provision, that intention is belied by the use of “any dispute.” (Id. at 3-5.) There is no language in this clause expressing that limited intention of the parties.
Applying Pennsylvania law, the trial court found the clause to be clear and unambiguous. As Camelback did not seek mediation prior to filing its third-party complaint, that pleading must be dismissed. Consequently, the court granted Whitewater’s motion to dismiss this pleading against it. (Id.)
The obvious lesson is that one must be very careful in drafting dispute resolution clauses (or any contract clause for that matter.) Words matter and words have consequences. Had the parties been more specific by clearly stating their intent that mediation is required only for disputes arising between them involving or during the construction of the water slide/ water park, all of this could have been avoided. The third-party complaint would have withstood the motion to dismiss.
While requiring parties to mediate before litigating is always a good thing, make sure that this is truly what the parties intended… before the actual dispute arises.
…. Just something to think about.
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