The Bothersome Burden of Promises: Dismissals with Prejudice May Stem from Ignored Conditions Precedent
August 4, 2020
Primov v. Servco, Inc.
This case arose from an employment dispute involving a U.S. military contractor (“Serco”) and one of its employees (“Primov”). Primov claimed that Serco had not compensated Primov in accordance with the controlling employment contract. Due to Primov’s belief that he was not receiving proper compensation, he filed a lawsuit against Serco in circuit court for the difference between what he had earned and what he thought he should have earned. This claim was fully litigated, motions were filed, and depositions were taken. At the trial date for his initial claim, Primov nonsuited his action. Months later, he then brought the claim a second time.
At the heart of this controversy was the employment contract itself, which contained a mediation provision which stated:
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 in the state or federal courts located in Fairfax County, Virginia.
While Primov claimed he had made a proper request for mediation, the circuit court did not agree with his position. The record demonstrated that after Primov had brought suit, he wrote a letter to Serco that merely stated “he would not be opposed to pursuing mediation concurrently with the court proceedings.” Not only was this letter sent after litigation had commenced, it also did not specifically request mediation, but only demonstrated a willingness to participate in future mediation.
Primov’s case before the circuit court was dismissed with prejudice due to Primov’s failure to satisfy the contractually imposed condition precedent to suit. Primov appealed the decision to the Supreme Court of Virginia.
The Supreme Court of Virginia began its analysis by restating the fundamental rule that a “contract’s condition precedent to initiating legal action is enforceable in Virginia.” Id. at *6-7 (citing TC MidAtlantic Dev., Inc. v. Commonwealth, 280 Va. 204, 210 (2010)). The Court explained that a plaintiff’s failure to comply with mandatory pre-litigation dispute resolution provisions denies the defendant the benefit of the contracted-for bargain. Id. at *8-9, 11. Importantly, the Court emphasized that courts cannot “simply ignore the intent of the parties” by allowing a lawsuit to proceed when a condition precedent to suit does not occur. Id. at *8-9.
Agreeing that dismal was proper, the court next grappled with whether the circuit court abused its discretion when it entered a dismissal with prejudice. Referencing In re Commonwealth’s Attorney for Roanoke, the court noted that “[a] judgment is the court’s determination of the rights of the parties upon matters submitted to it in a proceeding,” and “[t]he rendition of a judgment,” such as a dismissal of an action, is a judicial act and an “exercise of judicial discretion.” Id. at *8 (quoting 265 Va. 313, 319 (2003)).
The court reasoned:
Primov had the opportunity to fully litigate his claim in the Initial Action, a similar action, that he nonsuited at the trial date, and Primov filed the Initial Action without requesting mediation as required by the Employment Agreement. After being made aware of the Mediation Provision four months into the Initial Action, Primov did not request mediation, but continued litigating the Initial Action [*16] for another five months before nonsuiting on the trial date. Even after nonsuiting the Initial Action, Primov still failed to request mediation before filing the Current Action, thus depriving Serco of the benefit of its contracted bargain.
Having considered the actions taken by both parties in the initial action and Primov’s repeated failures to comply with the mediation provision, the court concluded that the circuit court had not abused its discretion in entering the dismissal with prejudice.
The takeaway from this case is straight forward–parties to a contractual agreement are bound by the conditions precedent to suit in that agreement. When a plaintiff fails to comply with a condition precedent, that is grounds for dismissal, and when the plaintiff unabashedly disregards contractual language denying the defendant the benefit of the bargain, there may be grounds for dismissal with prejudice.