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Dispute Resolution Clause In Your Contract Applies To Contract Claims Only

Saturday, July 04, 2009 06:06 pm


Arbitration--Tort CEI Engineering Associates, Inc. v. Elder Construction Co. Court of Appeals of Arkansas, Division One 2009 Ark.App.LEXIS 312, No.CA 08601(April 8, 2009)

If a contractor fails to perform a contractual duty that causes"foreseeable and unreasonable"damage, it may be responsible for more than a contract breach and end up paying the higher price of a costly lawsuit and reimbursement for injuries.

Elder Construction Company(Elder)hired CEI Engineering Associates, Inc.(CEI), to perform engineering services on six construction projects, one of which was known as Fox Creek.The Elder-CEI contract specified that any claims or disputes that arose out of the agreement and could not be resolved by discussion or mediation would be resolved by binding arbitration.Both Elder and CEI would be bound to whatever happened in arbitration and could not take their claims to court.

According to Elder, CEI negligently concluded that the Fox Creek property had access to adequate sewage.Elder relied on that conclusion and bought the property for $600,000, but later discovered that the property did not contain adequate sewage access.Allegedly, CEI's project manager concealed the lack of sewage access and performed and billed for services that Elder would not have approved had it known the truth about the property.Elder sued CEI in state court, alleging negligence, fraud and breach of contract claims.

Elder also claimed that CEI violated the Arkansas Deceptive Trade Practices Act(the A [...]

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