Justia Arbitration & Mediation Opinion SummariesArticles Posted in Construction Law
Wayne Farms LLC v. Primus Builders, Inc.
Wayne Farms LLC appealed a circuit court order compelling it to arbitrate its claims asserted against Primus Builders, Inc., and staying the action. Wayne Farms was a poultry producer located in Dothan, Alabama. Wayne Farms sought to expand its poultry-processing facility, and, to that end, entered into a "Design/Build Agreement" with Primus in 2017, that specifically addressed work to be completed by Primus in connection with the expansion of Wayne Farms' freezer warehouse. Primus subcontracted with Republic Refrigeration, Inc.; Republic hired Steam-Co, LLC for "passivation services." Upon draining a condenser for the freezer warehouse, it was discovered that the interior of the condenser was coated with corrosive "white rust." Primus then replaced the damaged condenser at a cost of approximately $500,000 under a change order, pursuant the Design/Build Agreement with Wayne Farms. Wayne Farms paid Primus for both the original damaged condenser and the replacement condenser. Both Primus and Steam-Co have claimed that the other is responsible for the damage to the condenser. Wayne Farms sued Primus and Steam-Co asserting claims of breach of contract and negligence and seeking damages for the damaged condenser and the cost of replacing it. Primus moved the trial court to compel arbitration as to the claims asserted against it by Wayne Farms. Primus also moved the trial court to dismiss, or in the alternative, stay Steam-Co's cross-claims against it. Wayne Farms opposed Primus's motion to compel arbitration, arguing that no contract existed between the parties requiring it to arbitrate claims arising from the passivation process. The Alabama Supreme Court found that the contract between Wayne Farms and Primus specified arbitration would apply to only those disputes arising from obligations or performance under the Design/Build Agreement, Wayne Farms could not be compelled to arbitrate with Primus a dispute arising from the performance of passivation work that was not an obligation agreed to in the Design/Build Agreement. Judgment was reversed and the matter remanded for further proceedings. View "Wayne Farms LLC v. Primus Builders, Inc." on Justia Law
Russell Construction of Alabama, Inc. v. Peat
Russell Construction of Alabama, Inc. ("Russell"), appealed a circuit court order that vacated an arbitration award in favor of Russell and against Christopher Peat. In 2015, Russell and Peat entered into a contract pursuant to which Russell agreed to construct a residence for Peat on "a cost plus a fee basis." The documents executed in connection with the contract provided, in the event of a controversy or dispute, first for mediation and then for arbitration in accordance with the rules of the American Arbitration Association. Upon completion of the residence, a dispute arose between Russell and Peat regarding Russell's performance and the balance due Russell under the contract. In January 2018, Russell filed a formal demand for arbitration, seeking $295,408 allegedly due from Peat for the construction of the residence. Peat counterclaimed, alleging breach of fiduciary duty and breach of contract and disputing his consent to costs incurred by Russell; Peat sought specific performance and an award of $255,000 on his counterclaims. Thereafter, in May 2018, the parties reached, as a result of mediation, a settlement agreement. In essence, the settlement agreement required Russell to make certain repairs to the residence; required Peat to pay Russell $245,408 on or before June 15, 2018, at which time Russell agreed to release its recorded lien; and required Peat to deposit into escrow an additional $50,000 to ensure completion, by the end of August 2018, of a "punch-list" to the satisfaction of a third-party "Construction Consultant." The Alabama Supreme Court determined the circuit court did not err to the extent that it set aside the judgment entered pursuant to the arbitrator's Final Award. The Court affirmed the trial court's July 25, 2019 order to the extent that it vacated any judgment on the arbitrator's Final Award related to Russell's and Peat's breach of the provisions of the settlement agreement that remained in effect after the Modified Partial Final Award and the distribution of the outstanding $50,000 at issue. The Court reversed that same order to the extent it purported to vacate any judgment on the Modified Partial Final Award of $258,959.89 and remanded this case for further proceedings. View "Russell Construction of Alabama, Inc. v. Peat" on Justia Law
San Antonio River Authority v. Austin Bridge & Road, L.P.
In this construction contract dispute, the Supreme Court held that the San Antonio River Authority possessed the authority to agree to arbitrate claims under Texas Local Government Code Chapter 271 and exercised that authority in the contract and that the judiciary, rather than an arbitrator, retains the duty to decide whether a local government has waived its governmental immunity.The River Authority hired Austin Bridge and Road L.P. for a construction project. The parties agreed to submit any disputes about the contract to arbitration. Austin Bridge invoked the contract's arbitration provisions when disagreements about the scope of work and payment arose. After the arbitrator denied the River Authority's plea of governmental immunity, the River Authority sued Austin Bridge, arguing that it lacked the authority to agree to the contract's arbitration provisions. The trial court concluded that the arbitration provisions in the contract were enforceable. The court of appeals agreed that the River Authority had the authority to agree to arbitrate but concluded that a court, rather than an arbitrator, must decide whether the River Authority was immune from the claims against it. The Supreme Court affirmed, holding that chapter 271 waived the River Authority's immunity from suit for Austin Bridge's breach of contract claim. View "San Antonio River Authority v. Austin Bridge & Road, L.P." on Justia Law
Williams v. TAMKO Building Products, Inc.
Defendant-appellee TAMKO Building Products, Inc. was a roof shingle manufacturer incorporated in Missouri. Plaintiffs-appellants were homeowners whose contractors installed Defendant's shingles on homeowner's roof. Plaintiffs filed suit alleging they were entitled to compensation for damage to their home caused by Defendant's faulty shingles and the expense of installing a new roof. Defendants moved to stay proceedings and compel arbitration pursuant to an arbitration agreement on the shingle's packaging. The trial court granted the Defendant's Motion to Stay Proceedings and Compel Arbitration concluding the Plaintiffs were charged with the knowledge of the contract even if they did not read it, that TAMKO did not waive its right to compel arbitration, and that the contract was not unconscionable. Plaintiffs appealed. The Oklahoma Supreme Court reversed, finding that the arbitration clause at issue in this case was printed on the shingles' wrapping, which was seen only by the contractors installing them. The wrapping was discarded once the shingles were unpackaged and placed on rooftops. The Supreme Court concluded the Homeowners were not bound by the arbitration agreement: "n implied agent whose sole authority is to select and install shingles does not have the authority to waive the principal's constitutional rights. Further, the intentional printing of an agreement to waive a constitutional right on material that is destined for garbage and not the consumer's eyes is unconscionable. The Homeowners never had an opportunity to make a knowing waiver of access to the courts." View "Williams v. TAMKO Building Products, Inc." on Justia Law
Girolametti v. Michael Horton Associates, Inc.
In this construction dispute between a property owner and a general contractor the Supreme Court affirmed the judgment of the appellate court that, in the absence of clear evidence of contrary intent by the parties, subcontractors are presumptively in privity with the general contractor for purposes of res judicata as to the subcontractors' claims that did not participate in arbitration.These appeals arose from disputes regarding the construction of a store expansion. Plaintiffs, the store owners, and the general contractor, pursuant to a contract between them, entered arbitration to resolve various disputes regarding the project. None of the five subcontractors (Defendants) were formally a party to the arbitration. The arbitrator issued an award ordering Plaintiffs to pay the general contractor $508,597 for sums due. Plaintiffs subsequently filed suit seeking to recover from Defendants. Defendants moved for summary judgment based on res judicata. The trial court denied the motions on the grounds that Defendants were not parties to the arbitration and were not in privity with the general contractor. The appellate court reversed. The Supreme Court affirmed, holding that Defendants were in privity with the general contractor for purposes of res judicata and that Plaintiffs' claims were barred because they could have been raising during the arbitration. View "Girolametti v. Michael Horton Associates, Inc." on Justia Law
Stempien v. Marnie Properties, LLC
In this construction dispute, the Court of Chancery granted Defendant’s motion to dismiss Plaintiffs’ complaint seeking to vacate or modify an arbitration award for failure to state a claim and denying Plaintiffs’ motion for summary judgment, holding that the arbitrator did not exceed the scope of his authority or act in manifest disregard of the law when he awarded Defendant damages.In their first claim, Plaintiffs argued that the arbitrator’s interpretation of the provisions in the contract between the parties regarding the total cost of the construction project evidences a manifest disregard for the law. In their second claim, Plaintiffs argued that the arbitrator exceeded his authority and acted in manifest disregard of the law when he issued an award for fees and expenses to Defendant. The Court of Chancery disagreed, holding that the arbitrator did not act in manifest disregard of the law in either respect. View "Stempien v. Marnie Properties, LLC" on Justia Law
State ex rel. CityDeck Landing LLC v. Circuit Court for Brown County
The Supreme Court vacated the decision of the circuit court ordering the arbitration of a private construction dispute stayed, holding that the circuit court lacked the authority to issue the order staying the arbitration.In this private construction dispute, the circuit court ordered arbitration stayed until the court could decide an insurance coverage dispute between one of the contractors connected to the arbitration and the contractor’s insurer. CityDeck Landing LLC petitioned the Supreme Court for a supervisory writ asking the Court to exercising its superintending constitutional authority to vacate the circuit court’s order. The Supreme Court granted the writ, holding that the circuit court exceeded its jurisdiction by putting the private arbitration on hold. View "State ex rel. CityDeck Landing LLC v. Circuit Court for Brown County" on Justia Law
Olshan Foundation Repair Company of Jackson, LLC v. Moore
Phillip Moore, Gloria Moore, and Katelyn Moore sued Olshan Foundation Repair of Jackson, LLC (Olshan), and Wayne Brown. Olshan and Brown sought to compel arbitration pursuant to an arbitration provision within a contract between Phillip Moore and Olshan for the repair of the foundation of the Moores’ home. The circuit court ordered Phillip and Gloria Moore to arbitrate their claims. But because the circuit court declined to order Katelyn Moore to the arbitral forum, Olshan and Brown appealed. Finding that Katelyn Moore was neither a third-party beneficiary to the foundation-repair contract nor was she bound by direct-benefit estoppel, the Mississippi Supreme Court found Katelyn Moore’s claims, including negligence and intentional/negligent infliction of emotional distress, were wholly independent of the terms of the contract to which she was not a party. As such, Olshan was not allowed to enforce an arbitration clause respecting Katelyn Moore’s claims, which were unrelated to the contract. View "Olshan Foundation Repair Company of Jackson, LLC v. Moore" on Justia Law
D. W. Caldwell, Inc. v. W.G. Yates & Sons Construction Company
Yates Construction, LLC, and D.W. Caldwell, Inc., entered into a construction subcontract for the roof installation on a residential dormitory at Auburn University in Auburn, Alabama. When Caldwell completed both the repairs and the roof installation, it had yet to receive total payment for the structural repairs. The companies disputed the scope and expense of these repairs and quickly negotiated to an impasse. Thereafter, Caldwell filed a claim against Yates for causing delay and increased costs by failing to pay for work performed, which was in breach of the agreements between the parties. The parties proceeded to arbitration. Although the arbitration record was neither recorded nor transcribed, the parties conceded that the arbitrator considered arguments, reviewed evidence, and heard witness testimony over the course of three days. He then reopened the proceedings for additional documentation, before issuing his thirteen-page award. Within two weeks of the arbitrator’s decision to deny Yates’s motion for reconsideration, Caldwell requested that the circuit court confirm the award under Mississippi Code Section 11-15-125. Yates moved the trial court to alter, amend, or vacate the award under Mississippi Code Section 11-15-25. With the understanding that Yates would provide oral argument on its motion at the award confirmation hearing, Caldwell filed a request to limit the presentation of proof before the circuit court. Ultimately, the trial court reviewed fourteen exhibits and the testimony of one witness in making its decision. Based on this evidence, the court issued its order modifying the arbitrator’s award. Finding that the arbitrator had duplicated the labor costs for shingle installation in its award–once under the original subcontract and once under the oral agreement to repair the structural damage (referred to as the Repair Agreement)–it amended the award, reducing the total by $104,507. After its review, the Mississippi Supreme Court determined: (1) the miscalculations alleged in this matter were not evident from the award itself, nor were they apparent from the agreed-upon record; and (2) the judge erred when he allowed the parties to present witness testimony regarding the extent of any alleged miscalculations, rather than relying on the award and the arbitration record as the relevant law suggested. Finding error, the Court therefore reversed the circuit court’s decision and remanded this case to the circuit court with directions to confirm the arbitration award. Furthermore, because the subcontract between the parties provided that each contractor would be responsible for his own fees and costs, the Court declined to assess costs to one party over the other, and instead, enforced their bargained-for agreement. View "D. W. Caldwell, Inc. v. W.G. Yates & Sons Construction Company" on Justia Law
Rainbow Cinemas, LLC v. Consolidated Construction Company of Alabama
Rainbow Cinemas, LLC ("Rainbow"), Ambarish Keshani, and Harshit Thakker (collectively, "the defendants") appealed a circuit court order denying their motion to compel arbitration of a contract dispute with Consolidated Construction Company of Alabama ("CCC"). In the contract at issue here, CCC agreed to provide specified services in constructing a movie theater for Rainbow. The parties signed the American Institute of Architects "Document A101-2007 -- Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum" ("the agreement"). The agreement incorporated by reference American Institute of Architects "Document A201-2007 -- General Conditions of the Contract for Construction" ("the general conditions"). In 2016, after having already initiated the arbitration process, CCC sued the defendants. Among other things, CCC alleged that the defendants had fraudulently induced it into entering into the contract. Specifically, CCC alleged that the defendants knew that the contract required an initial decision maker and that the defendants also "knew they had not contracted for [initial-decision-maker] services from the [initial decision maker]." CCC alleged that the defendants "failed to inform CCC ... that Rainbow had not contracted with [architect Hay] Buchanan to act as [the initial decision maker]." The Alabama Supreme Court reversed and remanded, finding that the contract incorporated the AAA's Construction Industry Arbitration Rules, which state that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement." Although the question whether an arbitration provision may be used to compel arbitration between a signatory and a nonsignatory is a threshold question of arbitrability usually decided by the court, here that question was delegated to the arbitrator. The arbitrator, not the court, had to decide that threshold issue. View "Rainbow Cinemas, LLC v. Consolidated Construction Company of Alabama" on Justia Law