Hughes-Bechtol, Inc. v. W. Va. Bd. of Regents, No. C-3-81-038.

• Court: United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
• Writing for the Court: RICE
• Citation: 527 F. Supp. 1366
• Parties: HUGHES-BECHTOL, INC., Plaintiff, v. WEST VIRGINIA BOARD OF REGENTS, Defendant.
• Decision Date: 04 December 1981
• Docket Number: No. C-3-81-038.

527 F. Supp. 1366

HUGHES-BECHTOL, INC., Plaintiff,
v.
WEST VIRGINIA BOARD OF REGENTS, Defendant.

No. C-3-81-038.

United States District Court, S. D. Ohio, W. D.

December 4, 1981.

527 F. Supp. 1367

COPYRIGHT MATERIAL OMITTED

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John O. Henry and Daina B. Van Dervort, Dayton, Ohio, for plaintiff

Victor A. Barone, Deputy Atty. Gen., Charleston, W. Va., Daniel Lee Swigert, Dayton, Ohio, for defendant.

DECISION AND ENTRY OVERRULING PLAINTIFF'S REQUEST FOR A PRELIMINARY INJUNCTION; FINDINGS OF FACT AND CONCLUSIONS OF LAW; DECISION AND ENTRY SUSTAINING DEFENDANT'S MOTION TO DISMISS; JUDGMENT TO DEFENDANT; ENTRY OF JUDGMENT; PLAINTIFF'S MOTION TO COMPEL DISCOVERY AND SEEKING STATEMENT OF COURT'S DISINCLINATION TO SUSTAIN DEFENDANT'S MOTION TO DISMISS DEEMED MOOT; TERMINATION ENTRY

RICE, District Judge.

I. Introduction

On February 9, 1981, Hughes-Bechtol, Inc., filed the within action against the West Virginia Board of Regents (hereinafter Board), requesting that the Court both declare the arbitration clause in a contract between the Plaintiff and Defendant to be binding on the parties, and that it award damages in the amount established by the arbitrator. The facts before this Court indicate that on April 5, 1979, Hughes-Bechtol and the Board entered into a standard American Institute of Architects (AIA) agreement, which provided that Hughes-Bechtol would perform mechanical work on the Multi-Purpose Physical Education Facility (gymnasium) to be constructed at Marshall University in Huntington, West Virginia. The contract between the parties also provided for arbitration in the event of contractual disputes. Problems arose during construction, and Hughes-Bechtol requested arbitration. The Board refused to participate in arbitration proceedings, claiming that the arbitration clause was of no effect, since the Board had no authority to obligate the State of West Virginia for amounts beyond those which had been appropriated by the state legislature. Moreover, since the Board was immune from suit

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under principles of sovereign immunity, the Board contended that Hughes-Bechtol's only, and proper remedy lay in the West Virginia Court of Claims, where suits against the state were allowed to be brought. Hughes-Bechtol proceeded through arbitration anyway, and just prior to the granting of the arbitration award, filed the present action. The Board then filed a Motion to Dismiss, requesting that the suit be dismissed, inter alia, for the aforementioned reasons. However, before the Court issued a ruling on Defendant's Motion to Dismiss, Hughes-Bechtol filed a Motion for a Preliminary Injunction on August 4, 1981, requesting that the Court enjoin the Board from interfering with its (Hughes-Bechtol's) contractual rights, and from its performing the work left unfinished under the contract entered into by the parties. Appropriate Opposing and Reply Memoranda were filed by the parties, and on August 11, 1981, Plaintiff's Motion for a Preliminary Injunction came on for hearing before the Court, at which time the Court received testimony on behalf of the Plaintiff, from Philip Thompson, the Regional Director of the Cincinnati Office of the American Arbitration Association, and from D.R. Hughes, Jr., the President of Hughes-Bechtol, Inc. Plaintiff also offered nine exhibits, which were admitted into evidence. Defendant offered testimony from Karl Egnatoff, the Vice-President of Administration for Marshall University, and from Kenneth E. Grose, the Vice-Chancellor for Administrative Affairs for the West Virginia Board of Regents. Defendant additionally has filed with the Court, in conjunction with its Motion to Dismiss, the Affidavit of Dr. Robert Ramsey, Jr., the Chancellor and Chief Administrative Officer for the West Virginia Board of Regents, to which is attached the purchase order issued to Hughes-Bechtol by the Commissioner of Finance and Administration for the West Virginia Board of Regents

After consideration of the above materials, the Court indicated to the parties on August 13, 1981, that it would overrule the Plaintiff's Motion for a Preliminary Injunction, and would thereafter file a decision more fully outlining its reasoning. The Court also stated that a decision would be forthcoming at the same time with regard to the Motion to Dismiss previously filed by the Defendant. After an analysis of the facts and legal authority pertinent to the matters under consideration, the Court has concluded that: (1) Under the balancing test followed by the Sixth Circuit in Roth v. Bank of the Commonwealth, 583 F.2d 527 (6th Cir. 1978), cert. dism'd., 442 U.S. 925, 99 S.Ct. 2852, 61 L.Ed.2d 292 (1979) (Roth), for ruling upon a motion for preliminary injunction, the Plaintiff has not demonstrated either a likelihood of success on the merits, or that it will suffer irreparable harm; (2) Defendant's Motion to Dismiss should be granted, since the Court does not have jurisdiction over the subject matter involved in this action. Because Fed.R. Civ.P. 52(a) requires specific findings of fact and conclusions of law by the Court upon refusal of interlocutory injunctions, the Court will first set forth its determinations with respect to the injunction request, and will then follow with an analysis of the other matters brought forth in the Defendant's Motion to Dismiss.

II. Preliminary Injunction

A. Findings of Fact

Based on the testimony adduced at the hearing held on August 11, 1981, and the Exhibits, affidavit, and the pleadings presented herein, the Court makes the following findings of fact:

1. Hughes-Bechtol, Inc. (also "contractor") is a corporation organized under the laws of the State of Ohio, with a principal place of business in Ohio, and an annual volume of business of approximately thirty million dollars ($30,000,000).

2. Marshall University is a state university located in Huntington, West Virginia. Marshall University has an enrollment of approximately twelve thousand students, and participates in Division I athletics.

3. In 1979, the West Virginia Board of Regents (also "owner") solicited bids in connection with the construction at Marshall

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University of Henderson Center, which was intended to be a multipurpose physical education facility including a basketball arena seating ten thousand persons, classrooms for the department of health and physical education, and offices for the athletic department. Also included in this project was the renovation of an existing building, Gullickson Hall

4. Hughes-Bechtol was awarded a contract in the amount of three million, one hundred sixty two thousand, one hundred and seventy-three dollars ($3,162,173.00) for the mechanical work for the Multi-Purpose Physical Education Facility. According to the terms of the contract, the work to be performed was to be commenced upon the date specified in the "Notice to Proceed" given by the Board to Hughes-Bechtol. From the time specified, Hughes-Bechtol would have eight hundred and fifty (850) consecutive calendar days to fully complete the project.

5. On April 5, 1979, a purchase order was issued by the State of West Virginia, Department of Finance and Administration for the above contract price.

6. The original anticipated completion date for the Henderson Center Project was April 6, 1981, but at the time of the injunction hearing, the physical activities center was scheduled for occupancy on October 15, 1981, due to delays in the project. At the time of the hearing herein, the project was ninety percent (90%) finished.

7. During the first year of the contract, little progress was made on the construction project. Hughes-Bechtol requested an extension of time and payments for the increased costs due to the delay, but the Board refused, and instead directed that Hughes-Bechtol perform the unfinished work in the time remaining under the contract.

8. Paragraph 7.9.1 of the contract between the Board and Hughes-Bechtol provided that all disputes arising between the owner and the contractor would "be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association," that the agreement to arbitrate "shall be specifically enforceable under the prevailing arbitration law," and that "the award entered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof."

9. On December 11, 1980, Hughes-Bechtol filed a demand for arbitration with the Cincinnati office of the American Arbitration Association. The arbitration inquiry was bifurcated, with consideration being first given to whether the issue was one subject to arbitration. On February 20, 1981, the arbitrator ruled that the matter was arbitrable, and notified the parties of his decision. A hearing on the claims of Hughes-Bechtol was held, and on June 9, 1981, after the filing of the within lawsuit, the arbitrator issued his decision, finding that Hughes-Bechtol was entitled to an additional sum of five hundred twenty-one thousand three hundred twenty-six dollars and forty-eight cents ($521,326.48).

10. The Board did not participate directly in the arbitration hearings, but did have a legal representative present. On various occasions, the Board and the West Virginia Attorney General's Office advised Hughes-Bechtol and the American Arbitration Association that the Board of Regents was not authorized to engage in binding arbitration.

11. Paragraph 9.7 of the contract provided that if an amount awarded through arbitration was not paid by the owner, the contractor was permitted to stop work. After the Board refused payment of the arbitration award, Hughes-Bechtol removed its work forces from the Henderson Center construction site on July 20, 1981.

12. The other contractors on the Henderson Center project have agreed to pursue remedies for contractual claims against the Board in the West...