384 F. Supp. 3d 191
D.D.C.2019Background
- Plaintiffs and Tough Mudder entered a settlement agreement resolving certain claims in mediation; plaintiffs later sued after Tough Mudder failed to timely pay the settlement amount.
- Tough Mudder had previously defended the arbitration agreement; courts had upheld its enforceability.
- Plaintiffs sought to relitigate the mediated claims in court and sought rescission, declaratory relief on class arbitration, and a Chapter 93A claim.
- Tough Mudder eventually offered to pay the agreed settlement amount plus statutory interest and mediation costs after the missed deadline.
- Plaintiffs moved for summary judgment seeking rescission for material breach; Tough Mudder moved to enforce the settlement and dismiss various counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs may relitigate mediated claims in court | Plaintiffs sought to proceed on Counts I–IV in court despite mediation resolution | Settlement and mediation resolved those claims; remedy is enforcement of the settlement | Dismissed Counts I–IV; plaintiffs must enforce the Settlement Agreement |
| Whether plaintiffs can obtain declaratory judgment to litigate arbitration issues as a class | Plaintiffs sought declaration that Counts I–IV proceed in court as a class | Arbitration agreement already upheld by prior decisions; no bad-faith mediation conduct shown | Denied; arbitration agreement remains enforceable |
| Whether Tough Mudder violated Mass. Gen. Laws ch. 93A by mediation conduct and failing to pay | Plaintiffs argued post-mediation conduct and nonpayment were unfair/deceptive under 93A | Tough Mudder argued breach without extortionate/coercive conduct; offered full payment plus interest | Count VII dismissed: no facts showing extortionate/coercive conduct; also failed 30-day pre-suit notice requirement |
| Whether plaintiffs are entitled to rescission for material breach of the settlement agreement | Plaintiffs contended the late payment was a material breach justifying rescission | Tough Mudder argued delay was not material; time was not of the essence and it offered full payment with interest | Denied rescission; court found breach immaterial and awarded agreed $225,000 plus interest |
Key Cases Cited
- Woods v. Wells Fargo Bank, N.A., 733 F.3d 349 (1st Cir. 2013) (individualized inquiry for unfair or deceptive practices under 93A)
- Anthony's Pier Four, Inc. v. HBC Assocs., 583 N.E.2d 806 (Mass. 1991) (using breach as leverage can constitute unfair act under 93A)
- Zabin v. Picciotto, 896 N.E.2d 937 (Mass. App. Ct. 2008) (failure to pay rises to 93A only when used to gain advantage)
- Lease-It, Inc. v. Mass. Port Auth., 600 N.E.2d 599 (Mass. App. Ct. 1992) (rescission requires a material breach)
- Porter v. Harrington, 159 N.E. 530 (Mass. 1928) (parties may make time of performance of the essence)