Beware of Waiving Your Arbitration Rights Through Your Conduct

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Phil Puccio

Contractors are no strangers to arbitration or conciliation clauses in construction contracts. These provisions clearly state the dispute resolution process at the beginning of a project, rather than dealing with disputes about how disputes can be resolved. However, a recent case in Florida shows how important it is to follow the requirements of these regulations to protect your rights.

In leather v. Imburgia Constr. Serving., 325 So. 3d 256 (Fla. Dist. Ct. App. 2021), the plaintiff’s homeowners contracted the defendant general contractor to perform renovations on the home. The contract required the parties to submit any dispute to an original decision-maker within 21 days of the dispute arising, and then provided for arbitration.

In this case, after a dispute over a change order, the general contractor canceled the job and the homeowners filed a lawsuit for breach of contract. In response, the contractor filed a motion to dismiss the suit, arguing that the suit was unreasonable given the arbitration clause in the contract. The district court agreed and dismissed the claim of the homeowner.

On appeal, the Florida Court of Appeals reviewed the language of the arbitration provision and the conduct of the parties. The court found that neither party had filed a complaint with the original adjudicator within 21 days of the dispute and therefore failed to comply with the requirements of the arbitration provision. The court found that by failing to meet those requirements, both parties waived their right to enforce contract arbitration and the homeowners’ suit was wrongly dismissed.

leather shows that it is important to follow the terms of an arbitration or conciliation clause in a contract in order to preserve the protections those clauses offer in the event of a dispute. Failure to comply with such terms may be deemed a waiver of the clause altogether and subject the waiving party to litigation rather than the dispute resolution process originally intended. Be sure to identify any arbitration or mediation clauses in your current or future contracts, particularly the requirements set out in those terms in the event of a dispute.

This article was written by Seth McCauley.

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Original Source: https://www.ldmlaw.com/2022/04/beware-of-waiving-your-arbitration-rights-through-your-conduct/
Category – Construction

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