Ninth Circuit Finds Arbitration Award Is ‘Irrational’ Because It Disregards the Contract’s Plain Text Simply to Reach a Just Result

Aspic Eng’g & Constr. Co. v. ECC Centcom Constructors LLC, No. 17-16510, 2019 BL 26363 (9th Cir. Jan. 28, 2019)

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Ryan R. Deroo

Aspic Engineering and Construction Company (“Aspic”), a local Afghan subcontractor, entered into multiple subcontracts with ECC Centcom Constructors and ECC International (“ECC”), the prime contractor, to construct buildings and facilities in Afghanistan.  The subcontracts contained terms and conditions “applicable to all U.S. Government subcontracts,” and mandated that Aspic owed ECC the same obligations that ECC owed to the federal government.  The subcontracts also incorporated multiple Federal Acquisition Regulation (“FAR”) clauses, including FAR 49.2 through 49.6, which govern the recovery of expenses in the event a contractor is terminated for convenience, i.e. required documentation and procedures.

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Federal Court in Maryland Holds Subcontractor Waived Right to Bring Labor Inefficiency Claim Despite Voicing ‘Expression[s] of Frustration’ and ‘General Complaints’ of Mismanagement Throughout Project

Hagen Constr. Inc. v. Whiting-Turner Contracting Co., No. JKB-18-1201, 2019 BL 36862 (D. Md. Feb. 04, 2019)

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John J. Gazzola

This case arises out of the construction of a pediatric outpatient center in southern New Jersey.  Plaintiff subcontractor Hagen Construction, Inc. (“Hagen”) filed suit in New Jersey state Court against defendant general contractor Whiting-Turner Construction Co. (“W-T”), seeking reimbursement for labor inefficiency costs incurred as a result of W-T’s alleged project mismanagement.  Hagen claimed it incurred additional costs to repeat work and remobilize to multiple areas because it was not afforded unimpeded access or timely supply of necessary materials and information.  Once the case was removed and transferred to Maryland federal Court, W-T moved for partial summary judgment on the portion of Hagen’s breach of contract claim reflecting labor inefficiency costs. Continue reading “Federal Court in Maryland Holds Subcontractor Waived Right to Bring Labor Inefficiency Claim Despite Voicing ‘Expression[s] of Frustration’ and ‘General Complaints’ of Mismanagement Throughout Project”

The Doctrine of Arbitral Immunity Applied to an Arbitral Organization Absent a Showing of Clear Lack of Jurisdiction

Univ. of Iowa Bd. of Regents v. Am. Arbitration Ass’n, No. 17-0949, 2019 BL 7069 (Iowa Ct. App. Jan. 09, 2019)

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Michelle Beth Rosenberg

Modern Piping, Inc. (“Modern Piping”) and the University of Iowa, Board of Regents, and State of Iowa (“University”) entered into two construction contracts, both containing arbitration provisions.  Disputes arose related to each contract and Modern Piping filed a demand for arbitration with the American Arbitration Association (AAA).  The University filed an action against AAA, seeking to enjoin it from arbitrating the disputes.  AAA filed a motion for summary judgment on the grounds that arbitral immunity doctrine applied.  The district court granted AAA’s motion and the University appealed.

The doctrine of arbitral immunity provides that arbitrators are immune from liability for acts performed in their arbitral capacity and generally shields all functions which are integrally related to the arbitral process.  The doctrine applies to a claim against an arbitrator where the claim effectively seeks to challenge the decisional act of an arbitrator or arbitration panel.  The immunity extends to associations administering arbitration procedures.

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