{"id":901311,"date":"2023-06-20T15:59:49","date_gmt":"2023-06-20T21:59:49","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901311"},"modified":"2023-06-20T15:59:52","modified_gmt":"2023-06-20T21:59:52","slug":"arbitration-splitsville","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/arbitration-splitsville\/","title":{"rendered":"Construction Litigation\u00a0Roundup: \u201cSplitsville\u201d"},"content":{"rendered":"\n<p>Daniel Lund III | <a href=\"https:\/\/www.lexology.com\/library\/detail.aspx?g=73480611-9be8-4d84-bcc8-6188b5013412&amp;utm_source=Lexology+Daily+Newsfeed&amp;utm_medium=HTML+email+-+Body+-+General+section&amp;utm_campaign=Lexology+subscriber+daily+feed&amp;utm_content=Lexology+Daily+Newsfeed+2023-06-16&amp;utm_term=\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Phelps Dunbar<\/a><\/p>\n\n\n\n<p>A New York general contractor on a Louisiana commercial construction project sought to enjoin an ongoing arbitration with the Illinois project owner (represented by Phelps). The general contractor raised its own lack of licensure as a basis for invalidating the entire construction contract at issue, including the arbitration clause contained therein.<\/p>\n\n\n\n<p>Federal case law interpreting the Federal Arbitration Act on the point \u2013 that is, a party seeking to avoid arbitration based upon a contract alleged to be a nullity \u2013 has seen fit to refer the challenge to the contract to the arbitrator, unless there is some other unique challenge to the arbitration clause itself (for example, an argument that arbitration is truly not contemplated by the allegedly void agreement). In essence, federal courts split out the arbitration clause as enforceable irrespective of the alleged status of the contract as a whole.&nbsp;<\/p>\n\n\n\n<p>Attempting to work around the foregoing rule, the contractor argued that Louisiana law on \u201cformation\u201d of contracts should be separately considered by the reviewing federal court, and a different result reached because \u201cformation\u201d of the arbitration clause was being challenged rather than just validity or invalidity of the clause.<\/p>\n\n\n\n<p>The federal court refused the contractor\u2019s argument. Relying on Supreme Court decisions in Buckeye Check Cashing (546 U.S. 440 (2006)) and its predecessor, Prima Paint (388 U.S. 395 (1967)), the court held:&nbsp;<\/p>\n\n\n\n<p>\u201cPlaintiff\u2019s argument fails for at least two reasons. First, Plaintiff cannot avoid Prima Paint&#8217;s severability doctrine by merely re-framing a legality challenge to the Construction Contract as a formation question under Louisiana law. The present case presents almost the same issue addressed by the Supreme Court in Buckeye. Specifically, Plaintiff argues that the \u2018container contract\u2019 here is an illegal contract and therefore void under state law. Like Buckeye, however, Plaintiff does not argue that the Arbitration Provision, standing alone, is an illegal contract or that the parties did not agree to arbitrate their disputes. Under the severability doctrine, the validity of the Construction Contract is a question for the arbitrator. Nothing in the language of the Civil Code provisions cited by Plaintiff obviates the severability doctrine\u2014nor could it. The severability doctrine is a federal doctrine rooted in the \u2018strong federal policy in favor of compelling arbitration over\u00a0litigation.\u2019 \u2026 As explained by the Court in Buckeye, state law or public policy cannot overcome the severability doctrine with respect to the enforceability of an arbitration agreement. Similarly, for the same reasons, state law cannot overcome the federal severability doctrine merely by characterizing an illegality defense as a question of contract formation.\u201d<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Daniel Lund III | Phelps Dunbar A New York general contractor on a Louisiana commercial construction project sought to enjoin an ongoing arbitration with the Illinois project owner (represented by Phelps). The general contractor raised its own lack of licensure as a basis for invalidating the entire construction contract at issue, including the arbitration clause&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/arbitration-splitsville\/\">Continue reading <span class=\"screen-reader-text\">Construction Litigation\u00a0Roundup: \u201cSplitsville\u201d<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[41],"tags":[9895,42],"class_list":["post-901311","post","type-post","status-publish","format-standard","hentry","category-arbitration","tag-advise-consult","tag-arbitration-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Construction Litigation\u00a0Roundup: \u201cSplitsville\u201d - Advise &amp; 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