Universal Acad. v. Berkshire Dev., 2017 Mich. App. LEXIS 975 (Ct. App. June 20, 2017)

The dispute arose out of an agreement between Universal Academy (“Universal”) and Berkshire Development (“Berkshire”), under which Berkshire agreed to provide demolition services to Universal and Hamadeh Education Services (“HES”).  The agreement also contained an arbitration provision which provided in part:

In the event of a dispute between Contractor and the Owner that cannot be resolved, the parties agree to binding arbitration with the American Arbitration Association in accordance with the Construction Industry’s Rules of the American Arbitration Association in effect as of the date of this Agreement.

The agreement was terminated by Universal, alleging material breaches by Berkshire.  Following termination, subcontractors for the project filed a complaint against Berkshire, Universal, and HES, requesting foreclosure of construction liens and payment for services.  In response, Berkshire filed a cross-complaint against Universal and HES, requesting foreclosure of its lien and asserting claims of promissory estoppel and fraudulent inducement.  Five months after it filed the cross-complaint, Berkshire filed a motion to enforce the arbitration agreement between it and Universal.Continue Reading Michigan Appellate Court Rules That, Absent Proof of Prejudice, Defendant’s Filing of a Cross-Complaint Does Not Constitute a Waiver of Arbitration

Girolametti v. Michael Horton Assoc., 2017 Conn. App. Lexis 228 (June 6, 2017)

A General Contractor brought claims for unpaid added work, via mandatory arbitration, against a building owner who asserted defective work claims in response.  The Owner abandoned the arbitration mid-process after a partial presentation of its claims.  The arbitrator ruled in favor of the General Contractor, awarding $508,597 in damages, which was affirmed by the Superior Court and Appellate Court.  The Owner then attempted to bring the same defective work claims in state court against the General Contractor, its subcontractors, and the Owner’s testing company on the project.  The defendants all filed motions for summary judgment asserting the defenses of collateral estoppel and res judicata.
The trial court granted the General Contractor’s motion but denied the subcontractors’ and testing company’s motions on the basis that both collateral estoppel and res judicata required privity between those entities and the General Contractor.

The Court of Appeals discussed each motion in detail.  As to the Owner’s claims against the General Contractor, the Court found that the Owner’s complaint involved the same claims of design and installation defects as had been raised or could have been raised in the arbitration.  The Owner had a full and fair opportunity to present his claims against the General Contractor in arbitration.  Thus, the trial court’s grant of summary judgment was affirmed on the basis of res judicata.Continue Reading Connecticut Appellate Court Holds That Owner’s Loss in Arbitration to General Contractor on Claims of Defective Work Operates as Res Judicata to Bar Owner’s Claim Against Subcontractors Who Were Not Parties to the Arbitration