Arbitration and Mediation

March 2, 2021

Article by Michael Clark in today’s Daily Business Review: “Certified Question to High Court: Do Original Arbitration Provisions Apply to Subsequent Homebuyers?”

by Siegfried Rivera

Siegfried Rivera

An article authored by the firm’s B. Michael Clark, Jr. is featured as the expert guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. The article, which is titled “Certified Question to High Court: Do Original Arbitration Provisions Apply to Subsequent Homebuyers,” focuses on the contractual provisions prescribing arbitration as the means of dispute resolution for construction defect claims. These stipulations, which are used by developers for sales of their new homes, are probably known and understood by the initial buyers of newly built properties, but are subsequent buyers of these homes also subject to the arbitration provisions of the original warranty deeds? Michael writes that is the question that an appellate court has certified as one of great public importance for consideration by the Florida Supreme Court. His article reads:

. . . In Hayslip v. U.S. Home, the Hayslips appealed a nonfinal order granting U.S. Home Corp.’s motion to stay their claim and compel arbitration pursuant to the terms of the original special warranty deed for the property. As subsequent buyers of the home from the original owners, the Hayslips asserted they were not bound by the arbitration provision because it is not a covenant running with the land but rather a personal covenant binding only to the original purchasers.

The Second District Court of Appeal found a valid arbitration agreement existed and, as a restrictive covenant running with the land, the arbitration provision contained in the original special warranty deed bound the Hayslips to arbitrate as subsequent purchasers. The court affirmed the circuit court’s order compelling arbitration, but it certified a question of great public importance to the Florida Supreme Court as an issue of first impression.

July 25, 2019

Appellate Ruling Over Arbitration Order Illustrates Repercussions of Ambiguous Provisions in Construction Contracts

by B. Michael Clark, Jr.

B. Michael Clark, Jr.

A recent ruling by the Fifth District Court of Appeal demonstrates the potential ramifications of ambiguities in the mediation and arbitration provisions of construction contracts. The ruling found the lower court correctly determined that the parties had a valid agreement to arbitrate certain claims because the contract clearly required arbitration for claims arising before final payment was due. However, it was silent regarding the procedure for resolving claims arising after the final payment became due, so the case was remanded back to the lower court for a determination as to whether the claims arose before or after final payment was due.

In Royal Palms Senior Apartments Limited Partnership v. Construction Enterprises Inc. et al., Royal Palms appealed the nonfinal order entered in favor of Construction Enterprises Inc. staying the developer’s lawsuit pending mediation and arbitration based on its assertion that the trial court erred in finding a valid arbitration agreement existed and its claim was subject to arbitration.

The Fifth DCA affirmed lower court’s finding that the parties had a valid agreement to arbitrate certain claims. However, because it is unclear whether Royal Palms’ claim was one subject to arbitration, it remanded the case for a determination of that issue.

The parties entered into a contract in 2006 for CEI to build the Royal Palms Senior Apartments. The agreement was comprised of the “AIA Document A201-1997 General Conditions of the Contract for Construction” (“General Conditions”) and a supplementary document (“Supplementary Conditions”), which modified and deleted portions of the General Conditions and controlled if the two documents conflicted.

September 1, 2016

Article on Firm’s Case in Today’s Daily Business Review: “Caribbean Construction Firm Scores $4M Judgment”

by Siegfried Rivera

Siegfried Rivera

Firm partners Steven M. Siegfried, Stuart Sobel and Berenice M. Mottin-Berger were featured in an article about their work on behalf of one of the firm’s construction clients that appeared in today’s Daily Business Review, South Florida’s exclusive business daily and official court newspaper. The report, which was titled “Caribbean Construction Firm Scores $4M Judgment,” chronicles the highly contentious litigation and arbitration that led their securing a $4.3 million judgment against DeVry Education Group (NYSE: DV) for Moorjani Caribbean Ltd., a Barbados-based construction company. The article reads:

Coral Gables lawyers won a $4.3 million award against a subsidiary of for-profit college company DeVry Education Group in what they say was one of the nastiest arbitration battles they’ve ever fought.

Barbados-based construction company Moorjani Caribbean Ltd. sued over alleged underpayment for the construction of student housing and classroom projects at DeVry’s St. Kitts veterinary school.

Although both parties admitted some aspects of their work relationship was relaxed, with unsigned contracts and loose deadlines, the father-and-son construction company claimed it submitted detailed accounting for both projects and spent years trying to get payment before filing suit.

DeVry Medical International Inc. fought back with counterclaims, alleging it spent more than $1 million fixing design and construction defects in Moorjani Caribbean’s work on the student housing project.

But arbitrators found DeVry made improvements to the residence hall so that it could qualify as a place of refuge during a hurricane, not because of deficient construction.

By the time the 2009 bills for the two projects came to the arbitration panel this year, interest and attorney fees made the award much larger than it might have been, Moorjani Caribbean’s lawyers said. Interest on the award continues to grow at a rate of about $593 per day, according to the Aug. 19 final arbitration award.

May 5, 2016

Firm’s Stuart Sobel Authors Article on Dispute Resolution Boards in May Issue of Construction Executive Magazine

by Siegfried Rivera

Siegfried Rivera

Firm shareholder Stuart Sobel authored a guest column that appeared in the May issue of Construction Executive magazine, one of the leading construction industry trade publications in the country. His article, which was titled “Dispute Review Boards: An ADR Technique That Works,” focused on the use of DRBs for major projects as an effective means to avoid or resolve disputes that may arise during construction. Stuart’s article reads:

Disputes are endemic to the collaborative nature of construction. It seems prudent to anticipate the disputes, even where the precise nature of the dispute is unknowable, and create a structure for proactively addressing and resolving them when they do arise. Traditional dispute resolution, whether arbitration or litigation, when invoked at the end of the project, takes place too late to save it or get it back on track. Instead, proactive onsite real-time dispute resolution is warranted to protect working relationships, cash flows and schedule progress.

Arbitration has become the preferred alternative dispute resolution forum for resolving construction disputes because it is private, streamlined and presided over by experienced construction professionals.

However, just as with litigation, arbitration only comes into play after a dispute has ripened. The arbitration process usually extracts a considerable toll on the project participants through damaged relationships and expenses. The parties involved are very unlikely to continue doing business together in the future. In addition, discovery in arbitration proceedings is now wider, longer and more expensive, and its growing resemblance to litigation has become unmistakable. Thus, despite its reputation as a cheaper alternative to litigation, arbitration has become more expensive as the process permits more litigation-like discovery, with attendant administrative costs and arbitrators’ fees.

Instead, consider the scenario where an independent person or board, respected by all project participants, is designated in the operative construction contracts to stay abreast of the design and construction and to attend and observe all pertinent meetings (owner/architect/contractor meetings, change order meetings and even important contractor/subcontractor meetings). Through this process, the dispute resolution neutral or, where there is more than one, the Dispute Resolution/Review Board (DRB), can quickly understand the nature and genesis of disputes that are blossoming — before they slow or stop the construction progress.

November 18, 2015

Article from Stuart Sobel in Daily Business Review: The Art of Mediating Catastrophic Construction Claims

by Siegfried Rivera

Siegfried Rivera

The firm’s Stuart Sobel has once again written an article that appeared in the annual special report on Alternative Dispute Resolution published by the Daily Business Review, South Florida’s exclusive business daily and official court newspaper. Stuart’s article, which was published in today’s edition of the DBR and also appeared in Texas Lawyer and the Daily Report (Atlanta), focused on the use of formal mediation proceedings to resolve claims involving catastrophic construction accidents. Earlier this year he represented Miami Dade College in a $33.5 million mediated settlement that included 22 defendants for the collapse of a parking garage during construction.

Stuart’s article reads:

Tragically, a collapsed structure introduces personal injuries, wrongful deaths, economic losses and disappointed expectations on top of the impact to the completion of the project. As such, any formal dispute resolution, whether it be arbitration, litigation or several of both types of proceedings, will involve many parties and claims as well as many issues related to each party and each claim.

Add to this, many parties will have insurance available, but the coverage may be offered in layers, with underlying and surplus policies introducing even more grist for the dispute mill. Insurance policies may have several of the construction participants as additional insureds, and they may also have subrogation waivers and other nuances that must be considered in working toward a just resolution. Additionally, there will also likely be performance bond sureties that will have indemnity rights to bring to the party.

Consider then what the trial or arbitration hearing will look like. How long will it take to select a jury given the number of peremptory challenges? How long will a simple side-bar in a jury trial take? How long do depositions take to conclude, with 20-plus parties each having the opportunity to question important lay and expert witnesses? And, how much will all this cost?

How then best to manage this not so rare occurrence? At the risk of being accused of blasphemy, the answer is to run a mediation track parallel to the formal dispute resolution track.

Statistics tell us that nearly 99 percent of all filed lawsuits are settled. The settlement rate of arbitrations is not quite as high, but we should take some solace in the fact that, in all likelihood, a well-managed mediation process can also resolve our catastrophic construction claim.

So then, what is a well-managed mediation process? It must begin with the recognition that mediation is, itself, a process, not an event. Mediation is most effective when the parties understand the process, which calls for everyone to be brought together with a common goal — settling the claim — even if the goals diverge when each party wants someone else’s money to be used. Still, with everyone in the room, the opportunity for cooperative compromise in furtherance of the common goal becomes possible.

His article concludes:

When successful, mediation also allows for creative solutions that may not be available through formal dispute resolution. Correction of work, rather than the payment of money, may prove an attractive piece of a settlement. Resolutions may be kept confidential and private, while a jury verdict is never confidential.

Successful mediation requires a clear vision of what success will look like on paper. With so many parties, claims and issues, documenting a settlement reached in principle presents its own challenges.

Will all the insurers join in the settlement, disclosing their contributions and submitting to the jurisdiction of the court for the purpose of enforcement? If not, what default mechanism will work best to ensure that all of the parties pay, so that the plaintiff is not left with some paying, some not, and questions about collectability? Consider bringing a draft settlement agreement, leaving numbers blank, to the mediation so that it too can be negotiated, rather than leaving that task, with its own hazards, for the days or weeks after the dollar settlement is achieved.

Mediation provides parties the opportunity to see how their presentation of their case is received by others, and also to see their opponent’s case articulated in a manner that allows for more objective consideration. The process enables principals to sit across from each other with the ability to control the outcome of the dispute — as opposed to placing their fate in the hands of a judge, a jury or a panel of arbitrators. That control is appealing, and it has led the construction industry to embrace mediation as an important tool for the resolution of disputes involving construction catastrophes.

Our firm congratulates Stuart for sharing his insights into this important topic with the readers of the Daily Business Review, Texas Lawyer and the Daily Report. Click here to read the complete article in the DBR’s website (registration required).

August 7, 2015

Herald Editorial Takes Note of PortMiami Tunnel’s Success After its First Year

by Stuart H. Sobel

Stuart H. Sobel

A recent editorial by the Miami Herald commemorated the one-year anniversary of the opening of the PortMiami Tunnel by highlighting the impact that this remarkable project has already made.

The editorial reads:

. . . it has been largely smooth sailing for the $643-million tunnel, which came in $90 million under budget — a feat unheard of for such massive projects. “We did it without the drama,” Christopher Hodgkins, CEO of Miami Access Tunnel, told the Editorial Board on Monday.

Built through an innovative public/private partnership, the tunnel is operated and maintained by Miami Access Tunnel, which also built the facility through a contractor, the French firm Bouygues — all with the help of a German-built tunnel boring machine.
In its first year, the tunnel has diverted 80 percent of the street-clogging cargo trucks headed for the port away from downtown Miami. Thousands of cruise-ship passengers have done the same. Now passengers landing at Miami International Airport don’t even have to get on Biscayne Boulevard. They can travel on state roads 836 or 112 and connect to I-395 east to the tunnel, which spills out at the port.

“The tunnel has been a great success,” Mr. Hodgkins said. “We have changed the quality of life in downtown Miami.”

Mr. Hodgkins is absolutely correct, as more than 14,000 vehicles are now using the tunnel every day and bypassing the city’s downtown streets. He is also right about the fact the builder was able to avoid “the drama” that typically accompanies construction projects of such a massive scale, and I was pleased to have helped tunnel builder Bouygues Civil Works Florida to do so when it encountered unexpected site conditions that required additional work and funds to overcome. The issue could have created a lengthy impasse during construction, and my work as the lead legal counsel for the builder helped the company to secure a $58.5 million settlement that was the subject of a front-page article in the February 5, 2013 edition of the Daily Business Review titled “Dispute Resolution Board Reaches Rapid Settlement with PortMiami Tunnel Builder.” The article read:

Imagine securing a $58.5 million settlement from a dispute panel that bans lawyers from the room.

That’s the scenario Coral Gables attorney Stuart Sobel faced while representing Bouygues Civil Works Florida Inc., which is constructing the $1 billion tunnel that will connect PortMiami to I-395.

It didn’t surprise Sobel — he helped set up the tunnel’s Technical Dispute Resolution Board when his client won the project.

The report chronicled how I devoted many hours to preparing for the hearings on liability before the Technical Dispute Resolution Board outside of normal schedules. “My work was at night, trying to anticipate the issues that were going to be discussed the next day,” I was quoted in the article, which continued to read:

For the board presentation, Sobel put together PowerPoint presentations for his witnesses to use and coached them on how to answer the panel’s anticipated questions. The board heard evidence for 13 days before making its decision largely in favor of Bouygues.

The article explained that the tunnel dispute was over extra work for grouting the limestone as the company dug. “We determined there was a changed condition. The geologic conditions were different than what we’d been led to expect,” I noted.

I was also quoted discussing the merits of using Technical Dispute Resolution Boards for major construction projects. “The concept is you have construction people dealing with construction problems,” I concluded.

I am very proud of our firm’s work in enabling the tunnel builder to quickly and fairly resolve this matter and avoid any delays during construction. The award-winning tunnel is emblematic of the potential for public/private partnerships, which are expected to continue growing as the predominant paradigm for such large scale infrastructure projects in the years to come.

May 11, 2015

Stuart Sobel, Steven Siegfried and Michael Clark Secure $33.5 Million Settlement for Miami Dade College Garage Collapse, Sobel Discusses Settlement in Reports by NBC 6, The Miami Herald and Daily Business Review

by Siegfried Rivera

Siegfried Rivera

The firm’s Stuart Sobel, Steven Siegfried and Michael Clark represented Miami Dade College in securing a $33.5 million settlement over the partial collapse of its parking garage while it was under construction at the school’s West Campus in Doral in 2012.

After repeated mediations over period of more than a year, the construction settlement that was finalized last week enabled all of the 22 parties that were involved to avoid the uncertainties and vicissitudes of litigation.

According to Stuart, the most significant obstacle for the college was to have all of the parties accept the engineering reality that the remaining portion of the newly constructed garage had to be demolished, including removal of its foundation, with a new garage being constructed from the ground up. Based on its belief that it was the safest and most appropriate course, the college demolished the remaining portion of the garage while the mediation was still in progress and before a settlement had been reached. It relied on its trial team to either convince the responsible parties and their insurers through the mediation process or, if necessary, convince a jury through trial that its action was justified. Through the settlement, the SRHL trial team achieved consensus supporting the college’s course of action.

Click below to watch the video of the report by Willard Shepard of NBC 6, click here to read the article from the Daily Business Review (registration required), and click here for the article that appeared in The Miami Herald.

September 2, 2014

Fourth District Court of Appeal: Waiver of Jury Trial Provision Does Not Invalidate Arbitration Clause in Construction Contract

by Nicholas D. Siegfried

Nicholas D. Siegfried

A recent ruling by the Fourth District Court of Appeal reiterates that Florida’s courts will favor arbitration when there is a clear arbitration provision in construction contracts, even if the contracts also include a jury waiver provision.In the case of Bari Builders, Inc. v. Hovstone Properties Florida, LLC, a condominium association sued the developer for construction defects, and the developer filed a third-party complaint against Bari Builders (its subcontractor). The subcontract with Bari included both a provision that the parties agreed to binding arbitration to resolve any claim as well as a separate provision stating that “the parties waive the right to jury and agree to determination of all facts by the court.”

Hovstone prevailed in having the trial court find that the jury waiver provision in its subcontract with Bari rendered the arbitration provision ambiguous and unenforceable. The Fourth DCA reversed this decision, finding that under Florida law arbitration is a preferred method of dispute resolution, and all doubt regarding the scope of an arbitration clause should be resolved in favor of arbitration. The appellate panel also found that the two provisions were actually not in conflict, as the jury waiver provision would be applied if the parties waived their right to arbitrate.

The ruling reads:

“The jury waiver language in the subcontract does not render the arbitration provision ambiguous, as the two provisions can be reconciled in favor of arbitration. Read together, the provisions provide that the parties agree to submit any ‘controversy or claim’ to arbitration and, thereafter, any award may be reduced to judgment in court without the right to a jury trial. Additionally, in the event that the parties choose to waive their right to arbitration, the clause provides that any ‘action’ in court will be in the form of a bench trial.”

This recent ruling is another reminder to developers and general contractors of the significance of arbitration clauses in construction contracts and subcontracts, and it highlights the importance of working closely with qualified and experienced legal counsel in order to ensure that the provisions of their subcontracts adhere with those of the primary contracts for all construction projects.

Our firm’s other construction law attorneys and I write regularly in this blog about important legal and business issues that impact the construction industry in Florida, and we encourage industry followers to submit their email address in the subscription box at the top right of the blog in order to automatically receive all of our future articles.

August 21, 2014

Stuart Sobel Played Critical Role in Helping PortMiami Tunnel Builder to Resolve Dispute, Avoid Delay as Chronicled in Report from the Daily Business Review

by Siegfried Rivera

Siegfried Rivera

The firm’s Stuart Sobel played a very important role in helping the builder of the new PortMiami Tunnel, which opened for traffic last month, to resolve a significant dispute and avoid a potentially lengthy delay during construction. Stuart served as the lead legal counsel for tunnel builder Bouygues Civil Works Florida, Inc., and he was instrumental in helping the company to secure a $58.5 million settlement that was the subject of a front-page article in the February 5, 2013 edition of the Daily Business Review.

The article, which was titled “Dispute Resolution Board Reaches Rapid Settlement with PortMiami Tunnel Builder,” read:

“Imagine securing a $58.5 million settlement from a dispute panel that bans lawyers from the room.

That’s the scenario Coral Gables attorney Stuart Sobel faced while representing Bouygues Civil Works Florida Inc., which is constructing the $1 billion tunnel that will connect PortMiami to I-395.

It didn’t surprise Sobel — he helped set up the tunnel’s Technical Dispute Resolution Board when his client won the project.”

The report chronicled how Stuart devoted many hours to preparing for the hearings on liability before the Technical Dispute Resolution Board outside of normal schedules.

“My work was at night, trying to anticipate the issues that were going to be discussed the next day,” he was quoted as saying in the article, which continued to read:

“For the board presentation, Sobel put together PowerPoint presentations for his witnesses to use and coached them on how to answer the panel’s anticipated questions. The board heard evidence for 13 days before making its decision largely in favor of Bouygues.”

The article explained that the tunnel dispute was over extra work for grouting the limestone as the company dug. “We determined there was a changed condition. The geologic conditions were different than what we’d been led to expect,” Stuart noted.

Stuart is also quoted discussing the merits of using Technical Dispute Resolution Boards for major construction projects. “The concept is you have construction people dealing with construction problems,” he said.

On behalf of all of the attorneys and professionals at our firm, we congratulate Stuart on his work in helping the builder of this vital new infrastructure project for South Florida to quickly resolve this dispute and avoid a delay. Click below to watch a remarkable time lapse video that illustrates the extraordinary work that went into the construction of the new PortMiami Tunnel. Continue reading

July 14, 2014

Appellate Decision Finds Contractor’s Lien Rights Can Expire in Arbitration Cases

by Nicholas D. Siegfried

Nicholas D. Siegfried

Florida’s Second District Court of Appeal recently issued an important opinion in the case of Snell v. Mott’s Contracting Services, Inc., over the issue of lien rights and the differences between arbitration and litigation.

The case involves a construction contract between homeowners and a contractor that included a provision calling for disputes to be resolved through arbitration. When a dispute arose, the contractor recorded its claim of lien, and the homeowners filed a lawsuit asking the court to determine that the lien was invalid. The contractor responded by asking the court to stay the litigation and compel the parties to arbitration, as stipulated under the contract, and the court agreed.

After the arbitration proceeding, the arbitrator found in favor of the contractor and determined that it was entitled to recover its attorney’s fees in accordance with the Florida Construction Lien Law.

However, the appellate court found that the contractor did not bring an action “in a court of competent jurisdiction” within one year of recording its lien as required under the lien law because it had requested to have the dispute resolved through arbitration. The appellate panel found that the contractor’s rights under the construction lien law had expired, and it now had no legal basis for recovering its attorney’s fees.

Arbitration has become a popular and effective alternative to litigation in the construction field, and this recent decision now calls into question how contractors and other lienors in the industry can protect themselves if they turn to arbitration to resolve a dispute as stipulated by their contracts. Given this ruling, lienholders would now be well advised to first file an action in a court of competent jurisdiction within a year and promptly request that the court stay the proceedings so that the parties can turn to arbitration to resolve the dispute. Otherwise, they may risk losing their right to recover fees or even enforce a lien.