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Florida Court Required to Address Arbitration Motion Before Awarding Summary Judgment in Construction Contract Dispute

drywallIn many commercial contracts, the parties will agree to arbitrate their disputes in certain circumstances. In one recent case, the courts were required to resolve a dispute in which a subcontractor sought summary judgment in its breach of contract claim, while the contractor demanded that the case first go to arbitration. The Fifth District Court of Appeal concluded that the trial court was required to resolve the motion to compel arbitration before addressing the motion for summary judgment.

The dispute in this case related to a construction project. That project was owned by a company named Kellogg, Brown & Root. Kellogg contracted with American Eagle Veteran Contracting, LLC to be the contractor on the project. American Eagle, in turn, signed a deal with Architectural Drywall Systems, Inc. to serve as a subcontractor on the same Kellogg project.

Eventually, though, the relationship between American and the subcontractor broke down. Architectural accused American of failing to make payments that American was obligated to make under the terms of their contract. Based upon this failure, Architectural sued American for breach of contract. American, in turn, asked the trial court to bring a halt to the proceedings until the parties could arbitrate the dispute. According to American, the two sides’ contract stated that American had the option of demanding that any dispute over an alleged breach of the contract be resolved through arbitration.

Architectural decided to ask the trial court to issue a summary judgment in its favor and end the dispute right away. The trial court, without addressing American’s effort to compel arbitration, simply granted Architectural’s request and awarded summary judgment in favor of the subcontractor. American appealed, and it was successful. American argued that there was at least one issue of material fact in dispute, which made summary judgment inappropriate in this case:  namely, whether or not the contractor and the subcontractor were contractually obligated to arbitrate this breach of contract dispute.

When one party to a contract invokes a right to arbitrate, there are three things the court must analyze:  whether the parties had a valid agreement to arbitrate certain disputes, whether the issue that is the subject of the lawsuit was a dispute covered by the arbitration agreement, and whether the party seeking to compel arbitration has already waived that right.

In American’s case, it consistently insisted upon its right to compel arbitration in this dispute, so there was no evidence supporting an argument that American had somehow waived its right to arbitration. Additionally, the parties clearly had an arbitration clause in their agreement, and it expressly stated that any “controversy arising out of this Agreement or a breach of it may be settled by arbitration.” Since the basis for Architectural’s lawsuit was a claim that American had breached the agreement, that factor also favored American’s position.

When you are facing a commercial contract dispute, talk to the skilled Florida commercial litigation attorneys at Stok Folk + Kon. Our attorneys have helped businesses, in the roles of both plaintiffs and defendants, achieve successful outcomes in their commercial litigation cases.

Contact us online or by calling (305) 935-4440 to schedule your consultation.

More blog posts:

Federal Court Denies Florida Franchisor’s Arbitration Request Due to Contract Clause’s Specifics, Florida Business Lawyers Blog, Dec. 6, 2016

What to Do When Your Florida Business is Not Paid for Services Rendered, Florida Business Lawyers Blog, Aug. 21, 2015