Carothers Construction, Inc. v. Midwest Mechanical Contractors, Inc., NO. 3:94CV95-B-D (N.D. Miss. 9/__/1995), NO. 3:94CV95-B-D.

• Court: United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Northern District of Mississippi
• Writing for the Court: Neal B. Biggers, Jr.
• Parties: CAROTHERS CONSTRUCTION, INC., Plaintiff, v. MIDWEST MECHANICAL CONTRACTORS, INC., Defendant.
• Decision Date: 01 September 1995
• Docket Number: NO. 3:94CV95-B-D.

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CAROTHERS CONSTRUCTION, INC., Plaintiff,
v.
MIDWEST MECHANICAL CONTRACTORS, INC., Defendant. NO. 3:94CV95-B-D. United States District Court, N.D. Mississippi, Western Division. September __, 1995. MEMORANDUM OPINION

NEAL B. BIGGERS, JR., District Judge.

This cause comes before the court on the defendant's motion to dismiss or stay proceedings and to compel arbitration.¹ The court has duly considered the parties' memoranda and exhibits and is ready to rule.

This action arises out of a subcontract between the plaintiff prime contractor and the defendant subcontractor to perform certain work in the construction of a psychiatric facility. Upon notice that the plaintiff would not honor the defendant's claims for additional compensation, the defendant filed a Demand for Arbitration. The complaint seeks a declaratory judgment that the defendant is not entitled to proceed with arbitration since its claims are prohibited and barred by the terms and conditions of the

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subcontract and, in the alternative, a declaratory judgment that the defendant is required to submit its claims through the plaintiff to the Owner of the facility. The complaint further seeks a permanent injunction prohibiting arbitration. The plaintiff moved for a preliminary injunction on the ground that the defendant is procedurally estopped from arbitrating or otherwise waived its claims. The court denied the motion and the plaintiff has moved for summary judgment asserting the same defenses to the defendant's claims.

The subcontract clearly contains an arbitration agreement as follows:

26.1. Unless otherwise prohibited by this Subcontract or barred by the Subcontractor's failure to adhere to terms and conditions of this Subcontract, all claims, disputes, and other matters in controversy or question between the Contractor [plaintiff] and the Subcontractor [defendant] arising out of or relating to this Subcontract shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Abitration (sic) Association, except as specifically excluded below.

The parties deleted paragraph 26.1.3 providing that the contractor has the option to litigate any controversy between the contractor and the subcontractor. The plaintiff contends that the defendant's claims are "barred by the Subcontractor's failure to adhere to terms and conditions of this Subcontract" and thus not arbitrable under paragraph 26.1. The plaintiff alleges that the defendant's claims are barred on the ground of noncompliance with timely notice and written change order requirements set forth in the subcontract. The plaintiff further contends that the

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defendant's claims are prohibited by the defendant's execution of waivers.

The issues before the court are the existence of a written agreement to arbitrate and whether the issues raised fall within the reach of the agreement. In re Complaint of Hornbeck Offshore (1984) Corp., 981 F.2d 752, 754 (5th Cir. 1993). The unambiguous arbitration clause in the parties' subcontract raises a presumption of arbitrability in accordance with the federal policy favoring arbitration agreements. Torrence v. Murphy, 815 F. Supp. 965, 970-71 (S.D. Miss. 1993); Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil, 767 F.2d 1140, 1145 (5th Cir. 1985). It is well settled that:

as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay or a like defense to arbitrability.

City of Meridian v. Algernon Blair, Inc., 721 F.2d 525, 527-28 (5th Cir. 1983) (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 74 L. Ed. 2d 765, 785 (1983)). Once the court determines that the subject matter of the dispute is arguably referable to arbitration, it is for the arbitrator, not the court, to decide whether the dispute may be arbitrated, e.g., procedural questions which bear on the final disposition of the dispute. Alabama Power Co. v. Local Union No. 391, IBEW, 612 F.2d 960, 962-63 (5th Cir. 1980); Wiley & Sons, Inc. v. Livingston, 376 U.S. 543,

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557, 11 L. Ed. 2d 898, 909 (1964). The Fifth Circuit in Algernon Blair, Inc. held:

Even if Blair does not have what we consider to be a valid substantive claim, the...