Tribal Casino Gaming Enterprise v. W.G. Yates & Sons Constr. Co., 2016 U.S. Dist. LEXIS 86100 (W.D. NC July 1, 2016)

Tribal Casino Gaming Enterprise (the “Casino”) contracted with joint general contractors, W.G. Yates & Sons Construction Company and Rentenback Constructors Inc. (the “Contractor”) for an expansion of the Casino’s facility in Cherokee, North Carolina.  Following completion, two parking decks constructed during the project partially collapsed.  The Casino contended that the parking deck failures resulted from the Contractor’s faulty work.

The Casino submitted a demand for arbitration with the American Arbitration Association (“AAA”), asserting contractual, tort, and statutory claims against the Contractor.  The Contractor filed a motion with the Western District of North Carolina seeking to stay the AAA arbitration.  Citing the doctrine of contractual impossibility and due process concerns, the Contractor argued that the arbitration clause in the parties’ contract was unenforceable because it required that the arbitral panel issue an award within 30 days, which the Contractor contended was unreasonable under the circumstances of the complex dispute.

The court addressed the Contractor’s argument by inspecting the language of the arbitration provision.  The arbitration clause provided that all claims arising out of or relating to the contract would be resolved by binding arbitration in accordance with the Commercial Arbitration Rules of the AAA.  The clause also provided that the “arbitration panel shall be required to render a decision within thirty (30) days after being notified of their selection.”  Although the court agreed that issuing an award on the merits of the dispute within 30 days would be difficult, if not impossible, the court denied the motion to stay on the basis that the Contractor’s argument overlooked other pertinent language in the arbitration clause.
The parties’ arbitration clause contemplated that some claims arising out of the project might require more than 30 days to resolve.  The clause provided the arbitral panel with discretion to extend the time frames for the arbitration and expressed that the panel’s refusal to postpone the hearing or to hear evidence pertinent to the controversy would be misconduct sufficient to warrant vacating an award.  The Commercial Arbitration Rules of the AAA, which the contract invoked, similarly granted the panel authority to extend the date for the final hearing.  Because the clause allowed the panel to extend the time frame for arbitrating the dispute where the complexity of the case required it, the agreement to arbitrate was neither contractually impossible nor in violation of the due process clause.  The court therefore denied the motion to stay, and it compelled the parties to proceed with arbitration.

To view the full text of the court’s decision, courtesy of Lexis ®, click here.