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EDITOR'S NOTES | Issue 10-20 (in: Volume 10 - Number 20 | May 14, 2012): Arbitration offers several advantages for resolving construction disputes. Many consider it faster and more expeditious than court litigation. But, a party that contractually commits to binding arbitration of disputes may not be allowed to change its mind. The party can be compelled to participate and will not be allowed to take the matter to court.
Disputes on construction projects frequently involve multiple parties working under different sets of contract documents. A problem can arise when some parties are committed to arbitration and others are not. It may be impossible to bring all parties together in a single forum to produce a result that is comprehensive, consistent and fair to all. A recent case in Florida illustrates such a situation.

A general contractor withheld payment from its steel fabricator because the sub delayed the project. The dispute was submitted to arbitration in accordance with the terms of the subcontract. The masonry subcontractor filed a delay claim against the general contractor. This, too, was submitted to arbitration and consolidated with the delay dispute with the fabricator. The fabricator then asserted a delay claim against the masonry sub, alleging it was the real cause of the problem. But there was no contract – and thus no arbitration agreement – between the two subcontractors.

Other cases this week involved the licensing of a limited liability company and a contractor’s failure to conduct a pre-bid site inspection. The LLC was an independent legal entity, which was required to have its own contractor’s license. The license of an LLC member did not bring the company into compliance. And, the failure to inspect the site doomed the contractor’s differing site condition claim.

SUBCONTRACTOR FORCED TO ARBITRATE WITH ANOTHER SUB DESPITE LACK OF AGREEMENT (in: Volume 10 - Number 20 | May 14, 2012): A subcontractor had to arbitrate its delay claim against another sub despite the lack of an arbitration agreement between the two. Arbitration was the only forum in which the two subcontractors and the prime contractor could be assembled for resolution of multiple, intertwined disputes arising out of a common set of facts.

LLC REQUIRED TO HAVE SEPARATE CONTRACTOR’S LICENSE (in: Volume 10 - Number 20 | May 14, 2012): A state contractor licensing statute required a limited liability company to register as a contractor. The registration of one of the LLC’s members did not bring the LLC itself into compliance. Without proper registration, the LLC could not maintain a mechanic’s lien or sue for payment.

LACK OF SITE INSPECTION DEFEATS CLAIM (in: Volume 10 - Number 20 | May 14, 2012): A contractor was charged with knowledge of readily observable site conditions even though the contractor failed to avail itself of the opportunity to conduct a pre-bid site inspection.