Tribal Casino Gaming Enterprise v. W.G. Yates & Sons Construction Company et al

Filing 37

ORDER that the motions 29 and 31 filed by Plaintiff Tribal Casino Gaming Enterprise to stay all pending deadlines, to stay this matter pending arbitration, and to compel arbitration as to Defendant W.G. Yates & Sons Con struction Company, Defendant Rentenbach Constructors Incorporated, and Defendant Metromont Corporation are hereby GRANTED. FURTHER ORDERED that this matter is stayed pending the resolution of the parties' arbitration proceeding as ordered herein. Signed by District Judge Martin Reidinger on 9/26/2016. (khm)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:16-cv-00132-MR-DLH

TRIBAL CASINO GAMING
ENTERPRISE,

)
)
)
Plaintiff,
)
)
vs.
)
)
W.G. YATES & SONS
)
CONSTRUCTION COMPANY,
)
RENTENBACK CONSTRUCTORS
)
INCORPORATED, and METROMONT )
CORPORATION,
)
)
Defendants.
)
_______________________________ )

MEMORANDUM OF
DECISION AND ORDER

THIS MATTER is before the Court on two motions. The Plaintiff, Tribal
Casino Gaming Enterprise (“TCGE”), has filed a Motion to Stay Pending
Arbitration and to Compel Arbitration [Doc. 29], as well as a Motion to Stay
Pending Deadlines. [Docs. 31]. Defendant W.G. Yates & Sons Construction
Company (“Yates”) and Defendant Rentenbach Constructors Incorporated
(“RCI”) jointly have filed a Memorandum in Opposition to TCGE’s Motion to
Stay Pending Arbitration and to Compel Arbitration. [Doc. 33]. Likewise,
Defendant Metromont Corporation (“Metromont”) has filed a Memorandum
in Opposition to TCGE’s said motion. [Doc. 34].

This is the second lawsuit filed in this Court by the Plaintiff against
these Defendants seeking to recover damages for what Plaintiff contends
were defects in the construction of two parking decks. By Order entered July
1, 2016, the Court stayed the previous lawsuit and directed the parties to
arbitration. TCGE v. W.G. Yates, et al., File No. 1:16-cv-00030, Doc. 58
(herein “First Lawsuit”). For the reasons that follow, the Court will also stay
this proceeding and direct the parties to arbitration.
BACKGROUND
On April 3, 2008, TCGE entered into a construction contract with Yates
and RCI (as joint general contractors), inter alia, to expand the facilities at
Harrah’s Cherokee Casino in Cherokee, North Carolina. [Doc. 1 at 3]. This
project included the construction of two separate parking decks. One parking
deck was an 8-level, 2,300+ space parking garage to be used by patrons,
guests, and employees of Harrah’s Cherokee Casino (the “Casino Deck”).
The other deck was a 6-level, 1,200 space parking garage connected to the
Harrah’s Cherokee Hotel and intended for use by hotel guests (the “Hotel
Deck”). [Id.]. Yates/RCI, in turn, hired Metromont pursuant to a subcontract
to build the parking decks. [Id.].
Following the construction of the parking decks, TCGE alleges that
certain components of them failed. [Id. at 4]. On February 19, 2015, TCGE
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reported that a ramp in the smaller Hotel Deck had partially collapsed. The
partial collapse in the Hotel Deck is the subject of Plaintiff’s First Lawsuit filed
on February 9, 2016. [First Lawsuit, File No. 1:16-cv-00030, Doc. 1]. On
April 15, 2016, TCGE reported that a ramp in the larger Casino Deck had
partially collapsed. [Doc. 33 at 3]. The partial collapse in the Casino Deck is
the subject of this lawsuit filed by TCGE on May 10, 2016. [Doc. 1].
In this matter, TCGE is seeking damages based on claims for breach
of contract, breach of warranty, negligence, gross negligence, breach of
implied warranty of fitness, and unfair and deceptive trade practices. [Doc.
1 at 7-16]. Yates and RCI filed a joint Answer admitting that they were the
general contractors for TCGE’s parking decks but denying any liability for the
collapse within the Casino Deck. [Doc. 24]. Similarly, Metromont admitted
in its Answer that it entered into a subcontract with Yates/RCI to provide
precast concrete materials and construction services for the construction of
TCGE’s parking decks but denying any liability for the collapse within the
Casino Deck. [Doc. 22].
The present dispute pertains to the arbitration clause contained in the
general contract1 executed by and between TCGE and Yates/RCI. This

1

Article 1.0 of the subcontract executed by Metromont has an adoption clause which
provides, in pertinent part, that Metromont “shall assume toward [Yates/RCI] all the

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arbitration clause, found at section 26.5.B of the general contract, provides
in full as follows:
Arbitration. Any controversy or claim arising out of or relating to
this Agreement shall, except to the extent modified by the mutual
agreement of the parties be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the
American Arbitration Association and judgment upon the award
rendered by the arbitrators may be entered in a court subject to
the provisions of this Section and Section 26.4.2.(ii) above. Either
party may specify and require that any arbitrator selected shall
be an attorney licensed to practice law in the North Carolina or a
United States District Court. If more than one arbitrator is used,
Owner shall select one, the Contractor shall select one, and the
two so selected shall select a third. The party desiring to submit
any matter to arbitration under this Section shall do so by written
notice to the other party and said notice shall set forth the item(s)
to be arbitrated, such party's position as to such items and such
party's choice of arbitrator. The party receiving said arbitration
notice shall have fifteen (15) days after receipt of such notice to
designate one of the remaining two arbitrators by written notice
to the first party and to set forth in writing its position as to such
terms. The two chosen arbitrators, within fifteen (15) days after
designation, shall select the third arbitrator. The arbitration panel
shall be required to render a decision within thirty (30) days after
being notified of their selection. The fees and expenses of the
arbitration panel shall be paid by the non-prevailing party unless
the arbitrators determine there is no prevailing party, in which
case the parties shall each pay one-half (1/2) of such expenses.
In all arbitration proceedings submitted to the arbitration panel,
the panel shall be required to agree upon and approve the
substantive position advocated by either Owner or Contractor
with respect to each disputed item. Any decision rendered by the
panel that does not reflect a substantive position advocated by
either Owner or Contractor shall be beyond the scope of authority
granted to the panel and shall be void. The arbitrators shall be
obligations and responsibilities which [Yates/RCI], by the Prime Contract, assumes
toward [TCGE].” [Doc. 29-2 at 4].

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persons familiar, by profession or experience, with the issue(s)
ln controversy. The awards of any arbitration shall be governed
by Title 9 of the United States Code except as may be changed
or limited by the provisions of this Agreement. The parties agree
that binding arbitration shall be the sole remedy as to financial
disputes arising out of this Agreement and that disputes requiring
injunctive or declaratory relief shall be pursued as provided in
this Agreement unless the parties mutually agree otherwise.
The parties agree that the only grounds for appeal of any
arbitration award procured pursuant to this Article 26 shall be:
A.
B.
C.

D.

E.

where the award was procured by corruption, fraud or
undue means;
where there was evident partiality or corruption in the
arbitrators or any of them;
where the arbitrators were guilty of misconduct in refusing
to postpone the hearing, upon sufficient cause shown, or
in refusing to hear evidence pertinent and material to the
controversy, or any other misbehavior by which the rights
of any party have been prejudiced;
where the arbitrators exceeded their powers or imperfectly
executed them that a mutual, final and definite award upon
the subject matter submitted was not made; and/or
where an award is vacated and the time within which this
Agreement required an award to be made has not expired,
the Court may, in its discretion direct a rehearing by the
arbitrators.

The parties agree that an arbitration award appealed pursuant to
this Article 26 shall not be subject to review or modification by
the Court, but shall be (i) affirmed strictly as rendered by the
arbitrators, or (ii) vacated. Notwithstanding any laws, rules or
ordinances that might allow for a longer time period for appeal
the parties agree that an arbitration award rendered pursuant to
this Article 26 shall be deemed final for enforcing and executing
an arbitration award as authorized herein if such appeal has not
been filed with the Court within thirty (30) calendar days of the
date of the arbitration panel's written order issuing an arbitration
award.
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[Doc. 29-1 at 4-5].
On February 9, 2016, TCGE invoked this arbitration clause, filing a
Demand for Arbitration with the American Arbitration Association (“AAA”),
and asserted a claim based upon the partial collapse in the Hotel Deck. [First
Lawsuit, File No. 1:16-cv-00030, Doc. 31-3]. On May 17, 2016, TCGE filed
its First Amended Demand with the AAA and designated its arbitrator
according to the provisions of the arbitration clause. [Id., Doc. 50 at 7-8]. On
July 27, 2016, TCGE filed its Second Amended Demand which included its
Casino Deck claim thus consolidating its claims for both parking decks in the
same arbitration proceeding. [Doc. 30-3].
The Defendants in the First Lawsuit filed motions challenging the
arbitration clause and TCGE filed a motion seeking to enforce it. [First
Lawsuit, File No. 1:16-cv-00030, Docs. 30; 32; 43; 45; 47; 49]. The Court
conducted a hearing in the First Lawsuit on June 21, 2016, regarding these
motions. On July 1, 2016, the Court entered an Order in the First Lawsuit
upholding the applicability of the arbitration clause to the parties, staying the
First Lawsuit, and directing the parties to arbitration. [Id., Doc. 58]. In its
present motion in this matter, TCGE seeks to stay this action and compel the
Defendants into arbitration regarding its Casino Deck claim so that it may be
resolved in the same proceeding with its Hotel Deck claim. [Doc. 29 at 6].
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DISCUSSION
The parties take the same positions in this matter with regard to the
arbitration clause as they did in the First Lawsuit. TCGE contends that the
arbitration clause is enforceable against Yates/RCI, and that based thereon
the Federal Arbitration Act and corresponding North Carolina Revised
Uniform Arbitration Act require that the Court compel arbitration and stay this
action pending the completion thereof. Further, TCGE contends that
Metromont may be compelled to arbitrate the claims against it because
Metromont’s subcontract with Yates/RCI contains an adoption clause
subjecting Metromont to any obligations Yates/RCI has to TCGE pursuant to
the general contract. [Doc. 29].
Yates/RCI, while not contesting the validity of the general contract,
challenge the applicability and enforceability of the arbitration clause.
Yates/RCI contend that TCGE’s claim falls outside the scope of the
arbitration clause, or alternatively, that the arbitration clause itself is
unenforceable due to its unreasonably short time period within which the
arbitration panel must render a decision. [Doc. 33]. Metromont, in turn,
argues that the arbitration clause is unenforceable as its timeframe for
resolving this dispute, together with its other mandatory provisions, violates
the constitutional guarantees of due process and fundamental fairness.
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Further, Metromont argues that the subcontract’s adoption clause provides
TCGE no legal basis to bring Metromont into any arbitration proceeding
commenced against Yates/RCI. [Doc. 34].
All of these arguments presented by the Defendants opposing TCGE’s
motion to stay and compel are the same ones the Court entertained in the
First Lawsuit. For the reasons given in its Order filed in the First Lawsuit on
July 1, 2016, the Court rejects the Defendants’ same arguments made in this
matter.
This does not end the discussion of TCGE’s motion to stay and compel,
however, as Metromont has raised an additional argument not put forth in
the First Lawsuit. In this matter, Metromont makes the added assertion that
the 30-day period within which the arbitrators must make an award, as
contained in the arbitration clause, is absolute and jurisdictional. [Doc. 34 at
8].

Further, because the arbitration panel did not formally extend the

deadline for such decision period before the requisite 30-day time limit
expired, according to Metromont, it contends the arbitration panel no longer
has jurisdiction to render an award.

[Id.]. Metromont misapprehends the

concept of jurisdiction. In particular, Metromont confuses whether the AAA
has the authority to resolve the parties’ dispute (which Metromont refers to

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as “jurisdiction”) with the manner in which it may do so (potential basis for
modification or vacation of an award).
The Court begins by looking to the nature of the dispute about which
TCGE contends arbitration is appropriate. The Sixth Circuit addresses the
issue thus:
Generally, there are two flavors of arbitration cases: labor
arbitrations pursuant to collective-bargaining agreements and
commercial arbitrations pursuant to other agreements. Review of
the former class of cases is governed by federal labor law, such
as the Railway Labor Act and the Labor Management Relations
Act, … whereas the FAA [Federal Arbitration Act, codified at 9
U.S.C. § 1 et seq.] frames the review of the latter[.]
Samaan v. General Dynamics Land Systems, Inc., --- F.3d ----, 2016 WL
4536522, slip op. at 4 (6th Cir. Aug. 31, 2016).
Because this is a commercial law dispute, the FAA governs, and
further, in enacting the FAA, Congress expressed a “federal policy favoring
arbitration.” Volt Info. Scis., Inc. v. Leland Stanford Junior Univ., 489 U.S.
468, 475–76 (1989). The authority of the AAA to adjudicate the parties’
dispute is a matter of contract. The parties agreed that “[a]ny controversy or
claim arising out of or relating to this Agreement shall, except to the extent
modified by the mutual agreement of the parties be settled by binding
arbitration[.]”

[Doc. 29-1 at 4-5].

Accordingly, the parties contractually

conferred the exclusive authority to adjudicate “any claim or controversy” to
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the AAA for resolution by binding arbitration. Therefore, the question of
whether the AAA possesses “jurisdiction” was decided by the parties at the
time they executed their respective contracts. How the AAA accomplishes
its adjudicatory task is a different question altogether and one governed by
its rules, any subsequent agreement by the parties, and any pertinent
contractual provisions construed in accordance with state law. See Volt, 489
U.S. at 475 (general state-law principles of contract interpretation apply to
the interpretation of an arbitration agreement).
Metromont asserts, by way of an affidavit, that “no decision has been
made by the arbitration panel that sufficient cause has been shown to extend
the 30 day period, nor has the 30 day period been extended by the panel by
any act or ruling[.]” [Doc. 34 at 13]. Metromont argues, in essence, that the
arbitration panel’s inaction precludes it from proceeding forward to render an
award. TCGE responds with a proffer of emails sent by Metromont’s counsel
to the arbitration panel which TCGE contends demonstrates that any delay
of the 30-day period is directly related to Metromont’s requests for the same.
[Doc. 36-8]. Whether the arbitration panel’s failure to act in a timely manner,
as Metromont argues, constitutes the panel’s “exceeding the powers”
granted it by the parties is a matter not ripe for the Court’s consideration at
this time.

If, after the arbitration panel issues an award, Metromont’s
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contention ultimately proves true, Metromont’s argument may be a basis
warranting the vacatur of such award pursuant to 9 U.S.C. § 10(a)(4). Carroll
v. Ferro, 179 N.C. App. 402, 406, 633 S.E.2d 708, 711 (2006) (defendants
who object to the untimeliness of an award prior to the time the award is
rendered preserve the issue for a later determination of whether the award
should be vacated). For these reasons, Metromont’s argument in opposition
to the arbitration going forward on this ground is premature.
ORDER
IT IS, THEREFORE, ORDERED that the motions filed by Plaintiff
Tribal Casino Gaming Enterprise to stay all pending deadlines, to stay this
matter pending arbitration, and to compel arbitration as to Defendant W.G.
Yates & Sons Construction Company, Defendant Rentenbach Constructors
Incorporated, and Defendant Metromont Corporation [Docs. 29; 31], are
hereby GRANTED.
IT IS FURTHER ORDERED that this matter is stayed pending the
resolution of the parties’ arbitration proceeding as ordered herein.
IT IS SO ORDERED.
Signed: September 26, 2016

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