Life Receivables Trust v. Syndicate 102 at Lloyd’s of London
2008 U.S. App. LEXIS 24977 (Nov. 25, 2008)

The Second Circuit held that section 7 of the Federal Arbitration Act (“FAA”) does not permit an arbitrator to compel pre-hearing document discovery from non-parties to the arbitration. However, the court noted that a non party could be subpoenaed to produce documents at a preliminary hearing on non-merits issues before one or more arbitrators.

Continue Reading Second Circuit Holds Arbitrators Cannot, Under the Federal Arbitration Act, Compel Pre-Hearing Discovery of Documents of Third Parties, Except That Production May be Compelled at a Preliminary Hearing Before an Arbitrator

Hall Street Associates, LLC v. Mattel, Inc.
2008 U.S. LEXIS 2911 (U.S. Mar. 25, 2008)
In a 6-3 decision, the Supreme Court held that in an arbitration case subject to the Federal Arbitration Act (“FAA”), the scope of judicial review of an award could not be expanded by agreement of the parties beyond the grounds for vacating or modifying an award specified in the FAA.
The case originally stemmed from a lease dispute between the toy maker Mattel and its landlord, Hall Street Associates. Mattel terminated its lease when the property’s water tested for high levels of contaminants, which was the result of the previous tenant’s use of the property as a manufacturing site. Hall Street filed suit claiming that a provision in the lease obligated Mattel to indemnify Hall Street for the costs of cleaning up the site.
Continue Reading U.S. Supreme Court Holds That Parties May Not Contract for Expanded Judicial Review of an Arbitration Award in Proceedings Governed by the Federal Arbitration Act

Perdue Farms, Inc. v. Design Build Contracting Corp.
2008 U.S. App. LEXIS 2861 (4th Cir. Feb. 8, 2008)
The Fourth Circuit held that where a condition precedent to arbitration, in this case voluntary mediation, was not fulfilled, a party to a contract had no right to force arbitration of the underlying dispute. The case arose

Liberty Mutual Insurance Company v. N. Picco & Sons Contracting Co., Inc.
2008 U.S. Dist. LEXIS 4915 (S.D.N.Y. Jan. 16, 2008)
The United States District Court for the Southern District of New York (“SDNY”) recently had to decide whether a surety was entitled to assert subrogation rights against other project participants when the surety completed the construction work abandoned by the general contractor and performed remediation work. The SDNY determined that the surety did not voluntarily undertake the remediation work and, therefore, was entitled to assert subrogation rights.
Continue Reading U.S. District Court in New York Holds That Completing Surety Could Assert Claims Against Other Project Participants Responsible For Costs of Remediation Work Which Had to Be Addressed to Complete Its Principal’s Work

C&I Steel, LLC v. Travelers Casualty & Surety Co.
70 Mass. App. Ct. 653, 2007 Mass. App. LEXIS (App. Ct. Nov. 6, 2007)
The town of Westford awarded Peabody Construction Company, Inc. (“Peabody”) a contract for construction of a middle school. The project required a payment bond which Peabody obtained from Travelers Casualty and Surety Company (“Travelers”) for the full value of the contract. Peabody, as principal, and Travelers, as surety, jointly and severally bound themselves “to [Westford] to pay for labor, materials and equipment furnished for use in the performance of the [c]onstruction [c]ontract.” The bond set forth that the construction contract incorporated the agreement between Westford and Peabody, including all the contract documents and changes thereto.
Continue Reading Massachusetts Court Holds Surety Not Responsible For Punitive Damages Assessed Against Its Principal

Charles Boyd Construction Inc. v. Vacation Beach, Inc.
No. 5D06-2168, 2007 Fla. App. LEXIS 9597 (Fla. Dist. Ct. App., June 22, 2007)
Following the precedent of the United States Supreme Court in Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006), the Fifth District Court of Appeal of Florida reversed its prior decision and held that whether a contract is illegal in its entirety and, thus, an arbitration provision contained therein would be unenforceable, must in the first instance be decided by the arbitrator, and not a court.
Continue Reading Florida Court Holds that Arbitrator, Rather Than Court, Should Determine Validity of Contract

DGS v. Pittsburgh Building Co.
2007 Pa. Commw. LEXIS 160 (Pa. Commw. Ct. April 5, 2007)
The Pennsylvania Commonwealth Court held that a contractor was entitled to recover penalty interest and attorney fees under the Pennsylvania Prompt Payment Act from the Department of General Services (“DGS”) when DGS had engaged in arbitrary and vexatious conduct by withholding payment for costs associated with a five-month suspension and unsuitable soil conditions when DGS was aware of, yet failed to disclose, problematic soil conditions.
Continue Reading Pennsylvania Department Of General Services’ Conduct In Withholding Memorandum Disclosing Unsuitable Soil Conditions From Bidders Was Vexatious, Entitling Contractor To Recover Penalty Interest And Attorney Fees Under Prompt Payment Act

City of Ferndale v. Florence Cement Co
2006 Mich. App. LEXIS 129, No. 254572 (January 17, 2006)
In City of Ferndale v. Florence Cement Co. and Hartford Casualty Insurance Co., 2006 Mich. App. LEXIS 129, No. 254572 (January 17, 2006), the Court held that the engineer’s decision under the disputes resolution provision of the contract did not constitute a final and binding arbitration award.
Continue Reading Engineer’s Decision Did Not Constitute an Arbitration Award

Montgomery v. Decision One Financial Network
2005 U.S. Dist. LEXIS 3031 (E.D. Pa. Mar. 1, 2005)
A borrower brought an action against her lender in connection with the lender’s institution of foreclosure proceedings. The lender moved to dismiss the complaint and sought an order compelling plaintiff’s compliance with the claims resolution provisions contained in the parties’ arbitration agreement. Relying upon the Pennsylvania Superior Court’s decision in Lytle v. CitiFinancial Services, Inc., 2002 Pa. Super. 327, 810 A.2d 643 (2002), the borrower argued in opposition that the arbitration agreement was presumptively unconscionable because it excepted from the scope of arbitrable disputes certain remedies available only to the lender, such as foreclosure. In the Lytle case, the Pennsylvania Superior Court several years earlier declared that “under Pennsylvania law, the reservation by [the lender] of access to the courts for itself to the exclusion of the consumer creates a presumption of unconscionability.”
Continue Reading Contract Clause Providing Unilateral Reservation of Right to Litigate Claims is Enforceable

Carll v. Terminex Int’l. Co., L.P.
2002 PA Super 44; 793 A.2d 921; 2002 Pa. Super. LEXIS 183 (2002)
The Carlls (“Plaintiffs”) instituted an action against Terminex International Company (“Terminex”) and other entities (collectively the “Defendants”), claiming that they sustained severe and permanent injuries as a result of Terminix’s negligent application of pesticides in and around their home. The Defendants responded with a petition to compel arbitration of the matter in accordance with the arbitration provisions of the contract at issue.
Continue Reading Pennsylvania Court Holds Arbitration Clause Which Did Not Permit Arbitrators to Question Enforceability of Exculpatory Clause Was Not Enforceable