Washington Construction Law Blog

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It's Arbitration Day here at WCL.

The U.S. Supreme Court today issued its decision in Main Street LLC v. Mattel.  The main issue in the case (previewed here) is whether the parties to an arbitration clause are free under the Federal Arbitration Act to provide for a broader scope of judicial review than is otherwise allowed in the FAA itself.  For example, can the parties ask the court to review the award for an error of law by the arbitrator (something which would not ordinarily be allowed under the FAA)?

The Court said no -- once the FAA applies, its limited grounds for vacating an award are exclusive.

The obvious question about this case is why the parties even bothered to bring an appeal involving a $2,500 arbitration award arising from the construction of a dental office. 

With that said, however, the case is instructive by demonstrating the broad authority of the arbitrator to fashion remedies -- here, by conditioning the owner's recovery on its counterclaim upon timely payment to the AAA of the required filing fee.  Because the owner for unexplained reasons never paid the fee, it lost its right to recovery any sums on its counterclaim.

Thanks to a tip from a vigilant reader who is plainly using this website for its intended purpose, here's a fresh crop of construction jokes for your amusement....

So you wrap up a lawsuit and enter into a settlement agreement in which one side agrees to pay money to the other side in exchange for mutual releases and other typical settlement clauses.

But then the party required to make the payment, well, doesn't pay.  What happens to the claims that were released?  Do they come back to life?  Or does the failure to pay merely give the wronged party to right to sue to enforce the payment obligation in the settlement agreement?

Division 1 holds in this case that, unless clearly stated otherwise, a settlement agreement is merely an "executory" contract rather than a "substituted" contract -- and therefore the wronged party can revive its released claim and go back to court. 

Copy of decision also available here Download file