A contract between a homeowner and contractor set forth dispute resolution procedures calling for any dispute to be submitted to an Independent Decision Maker within twenty-one days of the occurrence of the event giving rise to the claim. Receipt of an IDM decision was a condition precedent to mediation, and mediation was a condition precedent to arbitration. The Owner, however, brought a complaint against the contractor in court, completely ignoring the contract dispute process. The contractor filed a motion to dismiss the complaint, arguing that the contract stipulated arbitration not litigation, and the trial court granted the motion. This was reversed on appeal. Leder v. Imburgia Construction Services, Inc. 2021 WL 3177338 (Fla. 2021).
The appellate court conclude that the arbitration provision had been waived by both parties. The court found that either party had the ability to initiate a claim with the IDM because the dispute affected both parties and was related to the construction contract. The contractor waived its right to arbitrate based on its pre-litigation action and the language in the contract. Specifically, the contractor failed to file a claim with the IDM and it therefore could not mediate or arbitrate. The court therefore remanded this to the trial court with instructions to order the Contractor to answer the Owner’s complaint and proceed through the litigation.
Comment: It should be noted here that the contractor sought to require this dispute to be resolved through arbitration. Once again I will remind our readers, that our firm ConstructionRisk, LLC reviews and redlines well over 2,000 contracts per year for our clients and we routinely strike out the arbitration clause and replace it with litigation. We think the parties here may ultimately be pleased that this particular dispute is decided through litigation instead of arbitration.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 23, No. 7 (November 2021).
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