NATARE CORPORATION v. WRIGHTFIELD LIMITED

Filing 41

ORDER GRANTING DEFENDANT'S MOTION TO STAY IN FAVOR OF MEDIATION AND, IF NECESSARY, ARBITRATION - Defendant's Motion to Stay in Favor of Mediation and, if necessary, Arbitration is GRANTED. Dkt. 14 . The parties are hereby ORDERED to cond uct mediation and, if needed, arbitration, as provided by the terms of their contracts. This matter is hereby STAYED pending resolution of mediation and/or arbitration. The Clerk is DIRECTED to procedurally close this case on the Court's docket until such time as the Parties may notify the Court when the case can be finally dismissed or reopened. SEE ORDER. Signed by Judge Sarah Evans Barker on 3/12/2025.(AAS)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
NATARE CORPORATION,

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Plaintiff,
v.
WRIGHTFIELD LIMITED,
Defendant.

No. 1:24-cv-00286-SEB-MG

ORDER GRANTING DEFENDANT'S MOTION TO STAY IN FAVOR OF
MEDIATION AND, IF NECESSARY, ARBITRATION
This matter comes before the Court on Defendant Wrightfield Limited's
("Wrightfield") Motion to Stay in Favor of Mediation, and, if necessary, Arbitration. Dkt.
14. For the reasons stated herein, Wrightfield's motion is GRANTED.
FACTUAL BACKGROUND
On December 12, 2016, Plaintiff Natare Corporation ("Natare") and Wrightfield
entered into two written contracts, entitled "License and Royalty Agreement" and
"Distributor Agreement" (hereinafter, the "contracts"), both of which permitted
Wrightfield to use Natare's name in the sale and distribution of certain aquatic products.
Dkt. 12-2 at 6–47. Both contracts contained the following identical Alternative Dispute
Resolution ("ADR") provisions:
Disputes. Any dispute arising out of or relating to this Agreement, including
the alleged breach, termination, validity, interpretation and performance
thereof ("Dispute") shall be resolved with the following procedures:
(a) Negotiation. Upon written notice of any Dispute, the parties
shall attempt to resolve it promptly by negotiation between
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executives who have authority to settle the Dispute, and this
process should be completed within (30) days (the
"Negotiation").
(b) Mediation. If the dispute has not been resolved in negotiation
in accordance with paragraph (a), then the parties shall proceed
to mediation unless the parties at the time of the dispute agree
to a different time frame. Either party may elect to serve a
"Notice of Mediation," signifying that the Negotiation was not
successful and to commence the mediation process . . . During
the course of the mediation, no party can assert the failure to
fully comply with paragraph (a) as a reason not to proceed or
to delay the mediation . . . .
(c) Arbitration. Any Dispute not resolved through negotiation or
mediation in accordance with paragraphs (a) and (b) shall be
resolved by final and binding arbitration in accordance with the
rules of the International Court of Arbitration before a neutral,
three (3) member tribunal.
Id. at 22–23, 44–45. In other words, the parties agreed to undertake the sequential steps
of negotiation, mediation, and arbitration in an effort to resolve their disputes before
proceeding to court. Id.
On February 28, 2023, Natare sent Wrightfield a demand letter alleging several
breaches of contract and demanding a payment of $1,995,692.00 (plus interest) in full
satisfaction thereof. Dkt. 12-2 at 48–55. Shortly thereafter, Natare attempted to instigate
negotiations, in accordance with the first of the three agreed upon ADR steps. Id.
However, despite Natare's best efforts, the ensuing months yielded little progress towards
a final resolution, principally (according to Natare) due to Wrightfield's foot-dragging and
overall inattentiveness to the dispute resolution process. Dkt. 20-1 at 1–10. Though the
parties' attempts at negotiations were (decidedly) unsuccessful, no further efforts were
made to engage in either mediation or arbitration.
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Apparently on the grounds that it couldn't negotiate with itself, on November 27,
2023, Natare filed suit against Wrightfield in Marion Superior Court, alleging breach of
contract, account stated, and—as an alternative to the breach of contract claim—unjust
enrichment. Dkt. 12-2 at 4. On February 13, 2024, Wrightfield timely removed this
litigation to our Court on the basis of diversity jurisdiction, pursuant to 28 U.S.C. §§
1332, 1441. 1 Natare's having succeeded in getting its attention, Wrightfield moved on
March 12, 2024, to stay proceedings and compel mediation, and if necessary, arbitration,
pursuant to the Federal Arbitration Act (the "FAA"), 9 U.S.C. § 1 et. seq. However,
Natare now opposes the pending motion, arguing that Wrightfield's dilatoriness
constituted a repudiation of their agreements and that litigation to secure a remedy on the
contract claims is required. Wrightfield's motion is fully briefed and ripe for ruling.
LEGAL STANDARD
"[A]greements to engage in alternative dispute resolution must be enforced, if they
are valid as a matter of state contract law, whether or not they are aptly labeled
'arbitration.' " Riviera Distributors, Inc. v. Jones, 517 F.3d 926, 929 (7th Cir. 2008) (citing
Omni Tech Corp. v. MPC Sols. Sales, LLC, 432 F.3d 797, 800 (7th Cir. 2005)); see also
Khanna v. Banks, No. 1:21-cv-05752, 2022 WL 1028712, at *3 (N.D. Ill. Apr. 4, 2022)
(directing parties to submit to "binding confidential mediation," pursuant to their private
contract). The FAA likewise embodies "both a liberal federal policy favoring arbitration .

1

Natare is an Indiana corporation with its principal place of business being Indiana; Wrightfield
is an English private limited company. Dkt. 12 at ¶¶ 8–11. In addition, the amount in controversy
exceeds $75,000.00, exclusive of interest and costs, as § 1332(a) requires.
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. . and the fundamental principle that arbitration is a matter of contract." Gupta v. Morgan
Stanley Smith Barney, LLC, 934 F.3d 705, 710 (7th Cir. 2019) (quoting AT&T Mobility
LLC v. Concepcion, 563 U.S. 333, 339 (2011)). Indeed, the FAA regards written
arbitration agreements as "valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract . . . ." 9 U.S.C. § 2.
Accordingly, by statute, when presented with a valid arbitration agreement, "the court
shall make an order directing the parties to proceed to arbitration in accordance with the
terms of the agreement." Id. § 4.
Courts are required to grant a motion to compel arbitration where there is (1) a
written agreement to arbitrate, (2) a dispute within the scope of the agreement to arbitrate,
and (3) a refusal to arbitrate. Zurich Am. Ins. Co. v. Watts Industries, Inc., 417 F.3d 682,
687 (7th Cir. 2005) (citing 9 U.S.C. § 4). The party seeking to compel arbitration bears
the burden of demonstrating a valid entitlement to arbitrate. See A.D. v. Credit One Bank,
N.A., 885 F.3d 1054, 1063 (7th Cir. 2018).
DISCUSSION
Natare and Wrightfield do not dispute that the conflict between them falls within
the scope of the ADR provisions, nor do they disagree that, by filing suit, Natare's actions
demonstrate a refusal to arbitrate. Dkt. 12-2 at 3. Natare contends, however, that, though
it initially had sought to pursue to ADR steps laid out in the contracts, Wrightfield's
noncooperation with those informal negotiations has operated as a repudiation of their
underlying agreement to mediate and arbitrate. Id. at 3–4. Therefore, Natare argues, the
ADR provisions have no legal force, and the parties need not engage in further ADR
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efforts prior to proceeding in a judicial forum. Id.; Dkt. 20 at 1–2. Natare maintains that
good faith, informal negotiations were a condition precedent 2 to mandatory mediation
and/or arbitration, and Wrightfield's (alleged) repudiation of that condition precedent
operates as a waiver of any right Wrightfield might have had to compel arbitration. Dkt.
20 at 1, 6–8.
Under Indiana law, which we apply for purposes of interpreting the underlying
agreement to arbitrate, Riviera Distributors, 517 F.3d at 929, "parties to an arbitration
agreement may make the right to seek arbitration subject to a condition precedent" that
"must be met before a court may compel arbitration." Welborn Clinic v. MedQuist, Inc.,
301 F.3d 634, 638 (7th Cir. 2002). That said, "a party cannot avoid arbitration because of
the other party's failure to comply with the negotiation steps of a grievance procedure as
long as that other party acted in good faith to preserve its right to arbitration." Id. (citing
St. John Sanitary Dist. v. Town of Schereville, 621 N.E.2d 1160, 1163 (Ind. Ct. App.
1993)).
The Seventh Circuit's 2002 decision in Welborn addresses these principles. There,
the parties had entered into an agreement requiring them to resolve potential disputes
through good faith negotiations and, if necessary, arbitration. Id. at 636. When a
disagreement arose between the parties, the defendant refused to participate in the
agreed-upon dispute resolution procedure, prompting the plaintiff to file suit. Thereafter,

2

A condition precedent is defined as "[a]n act or event, other than a lapse of time, that must exist
or occur before a duty to perform something promised arises." Condition, Black's Law Dictionary
(12th ed. 2024).
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the defendant moved to compel arbitration, which the plaintiff resisted on the grounds
that the defendant had "waived its right to arbitration through its pre-litigation conduct,"
namely its "delay tactics and its refusal to participate in informal dispute resolution." Id.
at 637. Relying on Indiana law as well as "the general presumption in favor of
arbitration," the court held that informal negotiation was "not [a] condition[ ] precedent to
[the defendant's] contractual right to compel arbitration . . . ." Id. at 638. The court also
noted that "the purpose" of including an ADR provision in a private agreement "is
undoubtedly to encourage successful negotiations so that neither litigation nor arbitration
will be necessary, not to prefer the courts to an arbitrator if informal discussions break
down." Id. at 638–39.
As relates to the case at bar, the dispositive question is whether, under the terms of
the parties' contracts, informal negotiations were a prerequisite to mediation and/or
arbitration. Applying the principles outlined above, we have little difficulty concluding
that the plain language of the ADR provisions omits any condition precedent on the
parties' obligation to mediate and/or arbitrate. Natare and Wrightfield negotiated an
extensive, comprehensive ADR scheme designed to resolve disputes "arising out of or
relating to" their contracts. Dkt. 12-2 at 22–23, 44–45. As in Welborn, the ADR
provisions here specifically anticipate the possibility of failed negotiations, stating that
"[i]f the dispute has not been resolved in negotiation . . . , then the parties shall proceed to
mediation," and, if necessary, to "final and binding arbitration." Id. (emphasis added).
The parties further stipulated that "no party can assert the failure to fully comply with"
the negotiation provision "as a reason not to proceed or to delay the mediation." Id.
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In light of these unambiguous terms of the ADR provisions, while sympathizing
with Natare's justifiable sense of frustration over Wrightfield's dilatoriness and
unresponsiveness, we cannot agree with Natare that Wrightfield's failure to cooperate in
earlier negotiation efforts—irrespective of whether its failure was undertaken
deliberately, incidentally, or otherwise—permits Natare to bypass the mediation and
arbitration stages outlined in the ADR provisions of its contracts with Wrightfield. The
informal negotiations were demonstrably not a condition precedent to mediation and/or
arbitration. The parties' agreement to mediate and/or arbitrate, as set forth in the ADR
provisions, must and therefore shall be enforced accordingly. 9 U.S.C. § 4.
CONCLUSION
For these reasons, Defendant's Motion to Stay in Favor of Mediation and, if
necessary, Arbitration is GRANTED. Dkt. 14. The parties are hereby ORDERED to
conduct mediation and, if needed, arbitration, as provided by the terms of their contracts.
This matter is hereby STAYED pending resolution of mediation and/or arbitration.
9 U.S.C. § 3; Smith v. Spizzirri, 601 U.S. 472, 478 (2024). The Clerk is DIRECTED to
procedurally close this case on the Court's docket until such time as the Parties may
notify the Court when the case can be finally dismissed or reopened.
IT IS SO ORDERED.
Date:

3/12/2025

_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana

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Distribution:
Abigail A. Clapp
GREENBERG TRAURIG LLP
[e-mail]
Andrew M. McNeil
BOSE MCKINNEY & EVANS, LLP (Indianapolis)
[e-mail]
Troy Michael Miller
BOSE MCKINNEY & EVANS, LLP (Indianapolis)
[e-mail]
Tyler Lynn Salway
Greenberg Traurig, P.A
[e-mail]
Aaron Van Nostrand
Greenberg Traurig, P.A
[e-mail]

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