Federal Court Compels Arbitration of Contractor’s Claims Against Engineer
In a recent case, Lewis Brisbois successfully moved a federal court to compel arbitration of all of a contractor’s claims against an engineering firm and to preclude an interlocutory appeal of the ruling.
In a seven-count complaint, the plaintiff contractor alleged that the defendant engineering firm (in its role as construction manager) wrongfully terminated the contractor from a project involving the construction of a performing arts center at a university in Brooklyn, New York. The engineering firm terminated the contractor for cause, alleging that the contractor failed to timely perform the work. The plaintiff alleged that the engineering firm delayed its work by making the site unavailable, improperly administered the contract, and knowingly misrepresented the project in the bid documents.
The engineering firm directed the contractor to pursue its claims before the university/owner (as required by the ADR provisions of the contract); however, the plaintiff sued the engineer in federal court. The complaint alleged causes of action sounding in fraud, fraud in the inducement, tortious interference with contract, and wrongful termination, among others. Including its claim for punitive damages, plaintiff sought in excess of $50 Million.
The engineering firm moved, pursuant to the Federal Arbitration Act, to dismiss or stay the action pending compliance with the ADR provisions of the contract. The plaintiff vigorously opposed the motion, advancing numerous contractual, statutory and constitutional arguments, and it sought discovery in order to obtain evidence to support of its defense of the motion.
The district court referred every one of the plaintiff’s claims to ADR and stayed the lawsuit. On the plaintiff’s motion for reconsideration, the court adhered to its prior ruling and also refused to certify the order as an appealable interlocutory order, thereby precluding plaintiff’s requested appeal to the Second Circuit. The decision reinforced a modern trend of courts compelling parties to participate in arbitration or other forms of ADR, where their contract clearly contemplates the resolution of any contractual disputes in that kind of forum.
New York Partners David Pollack and Kenneth O’Reilly handled the case on behalf of the engineering firm.