Can a Nonsignatory to an Arbitration Agreement Compel Arbitration by Estoppel? North Carolina Court of Appeals Says Yes — But Not in This Particular Case

Smith Jamison Constr. v. Apac-Atlantic, Inc., 2018 N.C. App. LEXIS 132 (N.C. Ct. App. Feb. 6, 2018)

General contractor APAC-Atlantic (“APAC”) hired Smith Jamison Construction (“Jamison”) as a subcontractor to perform concrete work on a highway project.  The APAC-Jamison subcontract included an agreement that the parties would arbitrate all claims arising out of or relating to their subcontract.  Jamison alleged that APAC later sought to have Jamison further subcontract the concrete work to Yates Construction Company (“Yates”).  According to Jamison, APAC terminated the subcontract when Jamison refused to subcontract with Yates.

Jamison sued APAC and Yates in state court, alleging that APAC had breached its subcontract with Jamison and that Yates had committed fraudulent misrepresentation, tortious interference, civil conspiracy, and violations of the North Carolina unfair and deceptive trade practices statute.  Both APAC and Yates sought to compel arbitration of the claims Jamison asserted against them.  The court ordered arbitration of Jamison’s claims against APAC based on the arbitration agreement in their subcontract.  The court denied Yates’s attempt to compel arbitration.  Like APAC, Yates also based its argument on the arbitration agreement in the subcontract between Jamison and APAC – a contract to which Yates was not a party.  Yates appealed. Continue reading “Can a Nonsignatory to an Arbitration Agreement Compel Arbitration by Estoppel? North Carolina Court of Appeals Says Yes — But Not in This Particular Case”

Supreme Court of Vermont Holds That Contractor Waived its Right to Challenge the Validity of Arbitration Agreement by Actively Participating in the Arbitration for Six Months Before Raising an Objection

Adams v. Barr, 2018 VT 12, 2018 Vt. LEXIS 10 (VT 2018)

On February 24, 2016, Barr Law Group (“Barr”) filed a demand for arbitration with the American Arbitration Association to recover $40,000 in unpaid legal fees from its client, Adams Construction VT, LLC (“Adams”).  Adams responded by filing an answer and counterclaim, seeking to recover $97,000 in damages from Barr.  Thereafter, Adams and Barr each actively participated in the arbitration, including arbitrator selection, preliminary conferences, extensive discovery and motion practice over a period of more than five months.  At the request of Adams, the matter was set for a three day hearing.

In October of 2016, just one week before the three day hearing was set to begin, Adams filed an objection and motion to dismiss the arbitration, arguing that the arbitration clause in its fee agreement with Barr was unenforceable.  Specifically, Adams argued that Barr, as Adams’ counsel, owed a fiduciary duty and ethical obligations that required it to disclose to Adams the rights it would forego by signing the agreement.  According to Adams, Barr had failed to explain the legal implication of the arbitration clause and failed to advise Adams to obtain independent counsel before signing the agreement.  However, Adams’ objection and motion to dismiss was the first time it had raised any objection to the arbitration proceedings.   Continue reading “Supreme Court of Vermont Holds That Contractor Waived its Right to Challenge the Validity of Arbitration Agreement by Actively Participating in the Arbitration for Six Months Before Raising an Objection”

Sovereign Immunity Bars Contractor’s Claims for Unjust Enrichment and Promissory Estoppel Against City Government on Semi-Public Project

Harakas Constr., Inc. v. Metro Gov’t of Nashville, 2018 Tenn. App. LEXIS 45 (Tenn. App. January 29, 2018)

 BK Partners LLC (“BK”) sought to build a condominium complex in Davidson County.  This required an upgrade to the existing public sewer system.  Therefore BK and the Metropolitan Government of Nashville and Davidson County (“Metro”) entered into an agreement whereby Metro agreed to contribute $200,000 to the cost of the sewer upgrade with BK responsible for the actual construction.  BK hired Harakas Construction, Inc. (“Harakas”) to upgrade the system (the “Project”).  Metro was not a party to that contract (the “Contract”).

Harakas encountered unforeseen soil conditions, which resulted in two change orders that increased the Contract amount.  Under the Contract, Metro was not required to authorize change orders; nevertheless, Metro was involved in the discussions.  Harakas performed the extra work and achieved substantial completion.  However, after a defect was discovered in the upgraded system, Metro refused to fund the Project.  When BK failed to pay Harakas, Harakas sued both Metro and BK.  Against Metro, Harakas claimed promissory estoppel and unjust enrichment.  The trial court granted Metro summary judgment based on sovereign immunity.  Continue reading “Sovereign Immunity Bars Contractor’s Claims for Unjust Enrichment and Promissory Estoppel Against City Government on Semi-Public Project”