On September 14, the U.S. Court of Appeals for the Third Circuit addressed the perennially thorny issue of whether the courts or arbitrators retain the authority to resolve questions involving the enforceability of arbitration agreements. In MZM Construction Company, Inc. v. New Jersey Building Laborers Statewide Benefits Funds,[1] the Third Circuit held that the courts must decide questions of arbitrability in cases where a party challenges the validity of the underlying contract that contains the arbitration agreement — even when the putative arbitration agreement refers these questions to the arbitrators. The court’s decision highlights the complexities associated with the enforcement of arbitration clauses and the limits to a party’s ability to compel arbitration.
Continue Reading Not So Severable After All: Third Circuit Lets Courts Determine Arbitration Agreement Existence When Underlying Contract’s Validity Is Challenged

BML Properties Ltd. v. China Construction America Inc., et al., 101 N.Y.S. 3d 597 (N.Y. App. Div. 2019)

On July 2, 2019, a New York appellate court upheld a lower court ruling by Justice Saliann Scarpulla, denying a state-backed Chinese contractor’s attempt to compel international arbitration arising out of a dispute involving the construction of the multibillion Baha Mar mega-resort in the Bahamas.  As a result of the ruling in BML Properties Ltd. v. China Construction America Inc., et al., 101 N.Y.S. 3d 597 (N.Y. App. Div. 2019), aff’ing No. 657550/2017 (N.Y. Sup. Ct. Jan. 24, 2019), the $2.25 billion lawsuit alleging “one of the largest construction-based frauds in this hemisphere” will remain in the New York courts.  As explained below, for those in the international construction industry, the case will be worth following.

Continue Reading New York Appellate Court Affirms Decision to Deny Motion to Compel Arbitration in Multi-Billion Dollar Construction Dispute

Dolan v. Hurd Millwork Co., No. 2951 EDA 2015, 2019 BL 229344 (Pa. Super. Ct. June 21, 2019)

This cases arises out of defective windows installed in a residential construction project. In 1999, Leo J. Dolan purchased a custom home from Bentley Homes, Ltd. and its affiliates (“Bentley Homes”).  Hurd Millwork Company, Inc. provided many of the home’s windows.   Dolan almost immediately observed issues in the home’s construction, including air and water leaks around the windows.   Bentley Homes, however, led him to believe the issues had been fixed.

Continue Reading Pennsylvania Appellate Court Affirms Homeowner’s Recovery Against Developer on Tort Claims, Despite Contract and Challenges Based on Gist of the Action Doctrine, Economic Loss Rule, and Statute of Limitations

Fisk Elec. Co. v. DQSI, L.L.C., 2018 U.S. App. LEXIS 17914 (5th Cir., June 29, 2018)

 DQSI, L.L.C., (“DQSI”) a general contractor, was hired by the Army Corps of Engineers (“Corps”) for a pump station construction project.  Western Surety Company (“Western”) issued a Miller Act payment bond on DQSI’s behalf.  DQSI hired Fisk Electric Company (“Fisk”) as subcontractor to perform electrical work on the project.

The project was delayed 464 days due, in part, to adverse weather conditions.  Fisk asserted expenses due to the delay of over $400,000 against DQSI and submitted a Request for Equitable Adjustment (“REA”) to DQSI for the 464 days of delay.

Fisk sued DQSI and Western pursuant to the Miller Act.  The parties then entered into a settlement agreement wherein Fisk would release DQSI for payment of approximately $55,000 and for DQSI’s agreement that it would submit the REA to the Corps and pursue it. 
Continue Reading Claimant Is Not Required to Conduct an Investigation Into the Veracity of the Representation to Prove Justifiable Reliance When Asserting a Fraudulent Inducement Claim Under the Miller Act